ITAT Bombay-C rules in favor of assessee, nullifying interest charges under Income-tax Act

The appeal was allowed in part by ITAT BOMBAY-C, concerning the charging of interest under section 216 of the Income-tax Act, 1961. The Tribunal ruled in favor of the assessee, setting aside the levy of interest under section 216. This decision was based on the distinction between statements and estimates under section 209A, highlighting that interest under section 216 could only be imposed in case of an under-estimate, which required the filing of an estimate. Since the assessee had not filed an estimate for the first two instalments, the Tribunal ruled in favor of the assessee, thereby setting aside the interest charged under section 216.

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Issues:
- Charging of interest under section 216 of the Income-tax Act, 1961.

Analysis:
The judgment by the Appellate Tribunal ITAT BOMBAY-C involved an appeal by a registered firm for the assessment year 1979-80. The main issue in question was the charging of interest of Rs. 255 under section 216 of the Income-tax Act, 1961. The assessee had filed Form No. 28A on specific dates, stating income and advance tax payments. The contention was that section 216 should not apply as there was no estimate filed for the first two instalments, only statements under section 209A(1)(a). The departmental representative argued in favor of applying section 216 based on the Commissioner (Appeals) order. The Tribunal analyzed the provisions of section 209A, distinguishing between statements and estimates required to be filed. It was highlighted that an under-estimate triggering interest under section 216 could only occur when an estimate was filed. Since the assessee had not filed an estimate for the first two instalments, the Tribunal ruled in favor of the assessee, setting aside the levy of interest under section 216.

In conclusion, the appeal was allowed in part, specifically concerning the charging of interest under section 216 of the Income-tax Act, 1961. The Tribunal's decision was based on the distinction between statements and estimates under section 209A, emphasizing that interest under section 216 could only be levied in case of an under-estimate, which necessitated the filing of an estimate. The Tribunal accepted the assessee's argument that interest could not be levied in the absence of an estimate for the first two instalments, ultimately ruling in favor of the assessee and setting aside the interest charged under section 216.

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