Advance-tax instalment flexibility upheld where late notice allowed fewer payments and the related penalty was sustained.

Bombay HC construed the advance-tax scheme as permitting a demand to be spread over fewer than four instalments where the notice of demand was served after the dates fixed in the provision. The court treated the order, notice of demand and governing rules as one statutory framework, and held that the instalment schedule was directory rather than mandatory. On that basis, the advance-tax demand was valid. Because the challenge to penalty under section 28 read with section 18A(9)(a) depended on the same invalidity argument, and the assessee had failed to furnish a correct estimate, the penalty was also upheld.

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Issues: (i) Whether an order for advance tax under section 18A(1) of the Indian Income-tax Act could validly require payment in fewer than four installments when the notice of demand was served after the dates specified in the clause; (ii) Whether penalty imposed under section 28 read with section 18A(9)(a) was valid in law.

Issue (i): Whether an order for advance tax under section 18A(1) of the Indian Income-tax Act could validly require payment in fewer than four installments when the notice of demand was served after the dates specified in the clause.

Analysis: The provision used permissive language and did not state that the order must be confined to the four quarterly dates. The first proviso showed that the legislature contemplated different installment structures in appropriate cases, and clause (b) expressly dealt with notices served after one or more installment dates by making the amount payable in the remaining installments or in one sum. The relevant rules also treated the order and the notice of demand as part of the same statutory transaction, and rules made under the Act had effect as if enacted in the Act itself. The scheme therefore showed that the officer could validly require payment in fewer than four installments, including one installment where the notice was served late.

Conclusion: The order and notice of demand were valid, and this contention failed against the assessee.

Issue (ii): Whether penalty imposed under section 28 read with section 18A(9)(a) was valid in law.

Analysis: The challenge to penalty depended on the invalidity of the advance-tax order and the related demand procedure. Once the advance-tax order and notice of demand were held valid, the basis for attacking the penalty disappeared. The assessee's failure to furnish a correct estimate accordingly attracted the penal consequences provided by the Act.

Conclusion: The penalty was valid in law and the contention failed against the assessee.

Final Conclusion: The statutory scheme was construed as permitting advance-tax demands in fewer than four installments where the notice of demand was served late, and the penalty based on the incorrect estimate was sustained.

Ratio Decidendi: Where the language and scheme of the advance-tax provision, read with the demand clause and the governing rules, contemplate flexibility in the timing and number of installments, the installment schedule is directory rather than mandatory and a late-served notice may validly require payment in fewer installments.

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