Advance tax estimate not required after regular assessment; interest levy based on contrary assumption was rectifiable

An assessee already regularly assessed could not be treated as a new assessee for advance-tax purposes merely because an earlier return was nil, so the statutory obligation to furnish an estimate under section 212(3) did not arise for the later years. A levy of interest under section 217 made on the contrary assumption was therefore based on an obvious mistake apparent from the record. That error was rectifiable under section 154 because the underlying liability premise was incorrect, and the assessee obtained relief on both issues.

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Issues: (i) Whether an assessee who had already been subjected to a regular assessment was bound to furnish an estimate of advance tax under section 212(3) for the subsequent assessment years. (ii) Whether levy of interest under section 217 on the footing that no such estimate had been furnished could be rectified under section 154 as a patent mistake.

Issue (i): Whether an assessee who had already been subjected to a regular assessment was bound to furnish an estimate of advance tax under section 212(3) for the subsequent assessment years.

Analysis: The assessee had been regularly assessed for the earlier year, and the authorities treated it as a new assessee for the later years only because the return for the earlier year had been nil. That treatment was inconsistent with the earlier assessment position. On the legal position governing advance tax, the obligation to furnish an estimate under section 212(3) did not arise in such circumstances.

Conclusion: The assessee was not under a statutory obligation to furnish an estimate under section 212(3) for the later assessment years.

Issue (ii): Whether levy of interest under section 217 on the footing that no such estimate had been furnished could be rectified under section 154 as a patent mistake.

Analysis: Once the assessee was not liable to furnish the estimate, the levy of interest based on the contrary assumption was an obvious mistake apparent from the record. Such an error was amenable to rectification under section 154 because the assessment proceeded on an incorrect assumption of the assessee's status and liability.

Conclusion: The rectification application under section 154 was maintainable and the levy of interest was liable to be corrected.

Final Conclusion: The assessee succeeded on both issues, and the Revenue's appeals were dismissed.

Ratio Decidendi: Where an assessee has already been regularly assessed, it cannot be treated as a new assessee for purposes of the advance-tax estimate requirement, and an interest levy founded on that incorrect premise constitutes a rectifiable mistake apparent from the record.

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