1989 (9) TMI 85

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....by T. D. SUGLA J. -The question of law raised in this reference at the instance of the Department reads thus "Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that since penalty proceedings under section 273(a) have been dropped by the Income-tax Officer, section 216 which provides for the levy of interest in cases of underestimate is clearly not ....

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.... rectification under section 154 of the Act on February 20, 1971. The application was rejected by the Income-tax Officer. The appeal was dismissed by the Appellate Assistant Commissioner. Before the Tribunal, it was, inter alia, urged for the first time that penalty proceedings having been dropped, it was obvious, that interest under section 216 could not have been charged. In other words, the sub....

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....In any event, it will have to be argued whether the word " underestimated" used in section 216 meant the same thing as a statement which the assessee knew or had reason to believe to be untrue within the meaning of section 273(a). The argument thus was that unless charging of interest under section 216 must automatically fail with the dropping of the penalty proceedings under section 273(a), the c....