Section 216 interest applies only to underestimated advance tax payable, not merely to a lower income estimate.

Interest under section 216 of the Income-tax Act is leviable only where the advance tax payable is underestimated in the manner required by the statute. A mere understatement of estimated current income, followed by a higher assessed income, is not enough because the scheme distinguishes between estimating income under section 212 and estimating advance tax payable on that income. The provision applies only if the assessee understated the advance tax payable and thereby reduced the instalments due. On the stated facts, section 216 could not be invoked because the advance tax payable itself was not underestimated.

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Issues: Whether interest under section 216 of the Income-tax Act, 1961 could be levied where the advance tax payable was not understated, but the income estimate was understated and this resulted in lower instalments being paid.

Analysis: Section 216 is attracted only where the advance tax payable is underestimated in the manner contemplated by the statute. The statutory scheme distinguishes between the estimate of current income under section 212 and the estimate of advance tax payable on that income. The provision for interest does not extend to every case in which the final assessment exceeds the earlier estimate of income, because an income estimate is necessarily provisional and may differ from the actual income ascertained at the end of the year. Interest can be charged where the advance tax estimate is wrong for reasons other than mere underestimation of income, and the statutory condition precedent requires a finding that the assessee underestimated the advance tax payable and thereby reduced the instalments payable.

Conclusion: Section 216 cannot be invoked merely because the estimated income was lower than the income ultimately assessed, if the advance tax payable itself was not underestimated.

Ratio Decidendi: Interest under section 216 is leviable only when the advance tax payable is underestimated within the meaning of the statute, and not where the shortfall in instalments results solely from an underestimated estimate of current income.

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