Advance Tax Estimates Must Precede Due Date for Instalment Payment Under the Income-tax Act

Sections 210, 212 and 218 of the Income-tax Act were read together to require an advance-tax estimate to be furnished in the prescribed form before the relevant instalment due date. Although section 212(1) allows an estimate before the last instalment falls due, that provision does not permit payment for a particular instalment on the basis of an estimate sent only on the due date. Section 218(1) reinforces this view by treating failure to send the estimate before the due date, along with non-payment of the demanded tax, as default. The assessee could not pay the first instalment on that basis, and the petition was dismissed.

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Issues: Whether an assessee can pay an instalment of advance tax in accordance with an estimate of income and tax sent on the very date the instalment became due, and whether such estimate, if not sent before that date in the prescribed form, authorises payment according to the estimate instead of the demand.

Analysis: Sections 210, 212 and 218 of the Income-tax Act, 1961 were read together to hold that the statutory scheme requires the estimate to be sent in the prescribed form before the date on which the relevant instalment becomes due. Section 212(1) permits an estimate to be furnished before the last instalment falls due, but that does not dispense with the requirement that, for any particular instalment, the estimate must precede its due date. Section 218(1) supports this construction by treating a person as a defaulter if the estimate is not sent before the instalment due date and the tax demanded is not paid.

Conclusion: The assessee was not entitled to pay the first instalment of advance tax on the basis of an estimate sent on the due date. The petition was dismissed, in favour of the Revenue.

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