Interest on advance tax is payable from April 1 next following the financial year till payment, but no interest is payable on the amount paid before April 1.

Gokal Chand Mital, J.

1. The Atlas Cycle Industries is the assessee and the matter relates to the assessment year 1972-73. Since the calendar year was the accounting year, it ended on December 31, 1971. On May 21, 1971, notice was issued by the Income-tax Officer under Section 210 of the Income-tax Act, 1961 (for short "the Act"), for payment of advance tax of Rs. 31,29,358. The assessee paid the amount as follows : Date of deposit Amount deposited Rs. 14-6-1971 4,63,340 14-9-1971 8,23,330 15-12-1971 6,43,330 2-3-1972 5,40,000 14-3-1972 61,750

2. Up to December 15, 1971, Rs. 19,30,000 was paid and Rs. 6,01,750 was paid thereafter in March, 1972. In this manner, till March 14, 1972, Rs. 25,31,750 was paid as advance tax, against the demand of Rs. 31,29,358. Since the accounting year ended on December 31, 1971, and less than 75 per cent, of the advance tax was paid by then on the balance, interest was charged by the Income-tax Officer under Section 215 of the Act.

3. The assessee challenged the imposition of interest but on appeal the Commissioner of Income-tax (Appeals) deleted the levy of interest, and the Department failed before the Tribunal. On the aforesaid facts, at the instance of the Department, the Tribunal has referred the following question for the opinion of this court:

"Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the interest under Section 215 was not chargeable in this case ?"

4. For the assessment year in question, the original assessment was made on January 31, 1973 at Rs. 51,88,420 which was amended to Rs. 50,59,780. On March 29, 1977, the Income-tax Officer issued notice for reassessment under Section 148 of the Act and mentioned therein that the benefits under Section 80G and 40(c) (sic) of the Act were granted in excess. In the reassessment proceedings, the Income-tax Officer did not find merit in the two grounds mentioned in the notice for reassessment but made an addition of Rs. 16,541 on some other grounds.

5. The order of reassessment was challenged by the assessee in appeal and the Tribunal came to the conclusion that the reassessment could not be sustained as the two items mentioned in the notice for reassessment were found to be erroneous and since the very ground for initiating reassessment proceedings disappeared, no reassessment order could be passed. On this matter, the Department has got the following question referred for the opinion of this court:

"Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in cancelling the reassessment made by the Income-tax Officer ?"

6. Since the two references related to the same assessee and for the same assessment year, one common statement of the case with both the questions mentioned therein has been sent to this court.

7. We propose to deal with each question separately. Adverting to the question relating to interest, on a reading of the chart tabulated above regarding payment of advance tax, we find that till the end of the accounting year, i.e., up to December 31, 1971, against the demand of Rs. 31,29,358, Rs. 19,30,000 was paid which is less than 75 per cent, of the advance tax, and, therefore, it is clear that the assessee committed default in payment of advance tax. If 75 per cent, of the advance tax had been paid up to December 31, 1971, interest would not have been leviable but this is not the case here.

8. The assessee paid Rs. 6,01,750 more towards advance tax in March, 1972. Payment of interest on the said amount is being disputed. On behalf of the assessee, it is not disputed that on the difference between the total amount paid, that is, Rs. 25,31,750, and the demand of advance tax of Rs. 31,29,358, the liability of interest is not the subject-matter of dispute in this reference and would be dealt with or has been dealt with separately. Therefore, the only question for our determination is whether on the amount of Rs. 6,01,750, which was paid