1983 (11) TMI 103 - AT - Income Tax

Tribunal clarifies interest charges in tax assessment orders

The Tribunal held that charging interest under sections 139(8) and 217 without explicit direction in the assessment order cannot be considered a mistake ... Rectification Of Mistakes, Apparent From Record Issues:1. Charge of interest under sections 139(8) and 217 without explicit direction in the assessment order.2. Treatment of advance tax payment for calculating interest under sections 139(8) and 217.3. Applicability of interest under section 217 for the assessment year 1978-79.4. Mistake apparent from the record in charging interest under section 217.Detailed Analysis:1. The appeal involved a challenge to the charge of interest under sections 139(8) and 217 without a specific direction in the assessment order. The assessee contended that unless the assessment order explicitly includes a direction for interest payment, the demand notice cannot unilaterally impose penal interest. The learned counsel cited relevant case laws to support this argument. However, the departmental representative argued that such directions can be given post-assessment, at the time of issuing the demand notice. The Tribunal noted conflicting judicial opinions on this issue but concluded that the charge of interest without a specific direction in the assessment order cannot be deemed a mistake apparent from the record.2. The dispute also revolved around the treatment of an advance tax payment for calculating interest under sections 139(8) and 217. The assessee claimed that a specific advance tax payment was not considered while calculating interest under section 139(8), leading to an erroneous interest charge. The departmental representative argued that post-due date payments cannot be treated as advance tax payments. The Tribunal, considering the Supreme Court precedent, held that the failure to consider a payment made after the last date for advance tax installment does not constitute a mistake apparent from the record.3. Regarding the applicability of interest under section 217 for the assessment year 1978-79, the Tribunal analyzed the pre-amendment provisions of section 217. The assessee argued that as a regular assessee, there was no obligation to file a voluntary estimate of advance tax. However, the absence of a finding on this matter in previous orders necessitated further verification. The Tribunal directed the Income Tax Officer to confirm whether the assessee was obligated to file a voluntary estimate of advance tax and cancel the interest under section 217 if the assessee was already assessed at the time the estimate was due.4. The Tribunal concluded that there was no mistake apparent from the record regarding the charge of interest under section 139(8). However, in the case of interest under section 217, further verification was required to determine if the assessee was obligated to file a voluntary estimate of advance tax. Consequently, the appeal was partly allowed, with directions to cancel the interest under section 217 if the verification confirmed the assessee's claim of being already assessed at the time the estimate was due.