1990 (2) TMI 90 - AT - Income Tax

Tribunal recognizes advance tax payment exceeding tax determined, entitling interest under section 214.

The Tribunal held in favor of the assessee, ruling that the payment made should be recognized as advance tax for the subsequent assessment year. The ... Advance Tax, Tax Liability Issues:1. Whether a payment made by the assessee to the Department could be considered as payment of tax in advance for a specific assessment year.2. Whether the estimate filed by the assessee and the subsequent payment made by her should be recognized as advance tax.Analysis:1. The appeal was against the order of the Commissioner of Income-tax (CIT) regarding a payment made by the assessee during the financial year ended 31-3-1980, in relation to the assessment year 1980-81. The main issue was whether this payment could be considered as advance tax for the following assessment year. The CIT contended that the payment was not advance tax as the assessee did not file the required statement of advance tax under section 209A(1)(a). The CIT directed the Income-tax Officer (ITO) to withdraw the interest allowed to the assessee under section 214. The assessee argued that the payment made should be considered as advance tax.2. The Tribunal analyzed the provisions of section 209A regarding the payment of advance tax by an assessee previously assessed through regular assessment. The Tribunal noted that the assessee had paid an amount exceeding the tax determined on assessment, leading to interest being allowed by the ITO. However, the CIT argued that since the assessee did not file the necessary statement of advance tax, the estimate filed by the assessee was not valid, and thus, the payment should not be considered as advance tax. The Tribunal disagreed with the CIT's interpretation, emphasizing that the filing of the estimate is an integral part of the advance tax payment scheme. It highlighted that the estimate filed by the assessee should not be disregarded as null and void merely because there was no legal obligation to file it. The Tribunal held that the payment made should be recognized as advance tax, and the assessee was entitled to interest under section 214 on the excess amount paid.3. The Tribunal further rejected the Department's argument that since the assessee did not file a statement of advance tax under section 209A(1)(a), the filing of an estimate was unnecessary. The Tribunal clarified that the filing of a statement of advance tax is not a prerequisite for filing an estimate. Ultimately, the Tribunal allowed the appeal of the assessee, holding that the payment made should be considered as advance tax, and the assessee was entitled to interest under section 214 on the excess amount paid.