Law:

Section:

Section 216 of the Income-tax Act, 1961 - Advance tax - Interest payable by assessee in case of underestimate - Assessment year 1978-79 - Whether underestimation in itself may not be sufficient to attract provisions of section 216 for levying interest if there had been a bona fide mistake on part of assessee while making underestimation - Held, yes - Whether where satisfactory explanation for substantial difference in first estimate and subsequent estimate had not been furnished by assessee, imposition of interest under section 216 was justified - Held, yes FACTS For the assessment year 1978-79, the assessee-company submitted its return from the income derived from manufacture and sale of sugar, showing an estimate of Rs. 15 lakhs. Subsequently, the revised return was filed on an estimate of Rs. 65 lakhs. The assessment order was passed on the basis of the revised return with a direction to charge interest as per law. While issuing the demand notice along with the demand of charge of interest under section 215, interest was also demanded under section 216. On appeal, the Commissioner (Appeals) held that the interest under section 216 could not be recovered as it had not been directed by the assessing authority. On appeal filed by the revenue, the Tribunal sustained the levy of interest under section 216 on the ground that the assessee failed to furnish any satisfactory explanation for the unexpected increase in income and set aside the finding of the Appellate Commissioner. On reference : HELD Underestimation in itself may not be sufficient to attract the provisions of section 216 for levying the interest if there had been a bona fidemistake on the part of the assessee while making the underestimation. [Para 11] The Tribunal is the final Court of findings of fact. In the instant case, the Tribunal had considered every aspect of the matter including the submissions of the assessee that the assessment order did not specifically provide for charging the interest under section 216, but it was specifically provided for under section 215 only. The assessing authority itself had mentioned about charge of interest as per law. [Para 12] The assessee-company could not…

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