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of <h1>No section 215 interest on advance tax paid before April 1; interest on unpaid balance; reassessment invalid when grounds absent</h1> HC held that no interest under section 215 was payable on the advance-tax sum paid in March 1972, since interest runs from April 1 following the financial ... Interest u/s 215 - Non-payment of advance tax and cancellation of reassessment proceedings u/s 148 - HELD THAT:- We have to consider section 215(1) of the Act, which provides that if default is committed by an assessee in payment of advance tax, simple interest at the rate of 15 per cent. per annum is payable on the short deposit with effect from the 1st day of April next following the said financial year up to the date of the regular assessment. That means the Department wants to levy interest on the amount of Rs. 6,01,750 with effect from April 1, 1972, till the date of the regular assessment, but once the aforesaid amount is paid before April 1, 1972, how can interest thereon be calculated with effect from April 1, 1972, till the date of the regular assessment. If the amount had not been paid before April 1, 1972, and had been paid some time thereafter before the regular assessment, interest could have been charged with effect from April 1, till the date of payment. See in this behalf section 215(2)(i). The word 'or otherwise' in subsection (2) signifies that in whatever manner tax is paid, it shall be taken note of in calculating the interest. In spite of default having been committed by the assessee in not paying the due advance tax within time, yet by virtue of the provisions of section 215(2) read with sub-section 2(1) of the Act, which provides for charging interest with effect from April 1 next following till payment, no interest is payable on the amount of Rs. 6 lakhs odd, as mentioned above, as the payment of that amount was made in March, 1972. Thus, we answer the question, in the negative, in favour of the Revenue, but at the same time say that on the amount of Rs. 6 lakhs odd paid in March, 1972, no interest is payable but on the balance unpaid amount of advance tax interest would be payable as per section 215 of the Act. We hold that the Income-tax Officer did not have the jurisdiction to proceed with the reassessment, the moment he found the two grounds mentioned in the reassessment notice incorrect or non-existent. Accordingly, we answer the referred question in favour of the assessee, in the affirmative, that the Tribunal was right in cancelling the reassessment. Issues Involved: Assessment of interest u/s 215 of the Income-tax Act, 1961 for non-payment of advance tax and cancellation of reassessment proceedings u/s 148 of the Act.Assessment of Interest u/s 215:The case involved the assessment of interest u/s 215 of the Income-tax Act, 1961 for non-payment of advance tax by the assessee. The Income-tax Officer had charged interest as less than 75% of the advance tax was paid by the end of the accounting year. The Commissioner of Income-tax (Appeals) deleted the interest levy, which was upheld by the Tribunal. The main question was whether interest was chargeable on the amount paid after the accounting year ended. The court analyzed the provisions of section 215(1) of the Act, which mandates interest on short deposits. It was concluded that no interest was payable on the amount paid after the accounting year as per the Act's provisions. The court ruled in favor of the Revenue on the unpaid balance but exempted the interest on the amount paid in March 1972.Cancellation of Reassessment Proceedings u/s 148:The reassessment proceedings were initiated by the Income-tax Officer u/s 148 of the Act based on alleged excess benefits granted to the assessee. However, the Tribunal found the grounds for reassessment to be erroneous and canceled the reassessment. The court held that once the grounds for reassessment were found to be non-existent, the Income-tax Officer lacked jurisdiction to proceed with reassessment. Citing Supreme Court decisions and supporting precedents, the court affirmed the Tribunal's decision to cancel the reassessment. The referred question was answered in favor of the assessee, affirming the cancellation of the reassessment proceedings.Both references were disposed of accordingly, with no order as to costs.
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