The meaning of "underestimate" under Section 216 of the Income Tax Act, 1961, and the time of filing the estimate.

R.R. Rastogi, J.

1. THESE two references relate to similar set of facts and are, therefore, being disposed of by a common judgment. Income-tax Reference No. 1151 of 1976 relates to the assessment years 1967-68 and 1968-69 and the question referred for our opinion is ;

"Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that levy of interest under Section 216 in this case for assessment years 1967-68 and 1968-69 was not justified and then in dismissing the departmental appeals?"

2. INCOME-tax Reference No, 986 of 1976 relates to the assessment years 1969-70 and 1970-71 and the question referred for our opinion is ;

"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that levy of interest under Section 216 for the two years under appeal was not justified ?"

The respondent-assessee, M/s. Elgin Mills Company Ltd., Kanpur, is a public limited company. For the assessment years 1967-68 and 1968-69, the accounting period ended on September 30, 1966, and September 30, 1967, respectively. Thereafter, the assessee opted for the calendar year as its year of accounting and for the assessment years 1969-70 and 1970-71 the accounting period ended on December 31, 1968, and December 31, 1969, respectively. Thus, for the assessment year 1969-70, the period of assessment was fifteen months.

3. FOR the assessment years 1967-68 and 1968-69, notices were served on the assessee under Section 210/156 of the Income-tax Act, 1961 (hereinafter " the Act "), requiring it to pay Rs. 20,60,079 and Rs. 5,99,909, respectively, payable in equal quarterly instalments on the 1st day of June, 1st day of September, 1st day of December and 1st day of March of the relevant financial years. The assessee filed estimates of its income and advance tax payable thereon for these years in May, 1966, and in May, 1967, respectively. The income disclosed in these estimates was Rs. 22,00,000 and Rs. 10,00,000 on which advance tax payable was Rs. 11,42,000 and Rs. 5,50,000. The assessee paid the first three instalments according to the aforesaid estimates in both these financial years. On February 28, 1967, and February 21, 1968, the assessee filed revised estimates and the income disclosed was Rs. 31,50,000 and Rs. 19,00,000 and the shortfall in the advance tax was paid for both these years in the last instalment. Returns of income were filed and the assessments were completed almost on the same figures. FOR the assessment year 1967-68, the total income computed was Rs. 33,33,800 and for 1968-69, Rs. 22,64,880. The ITO was also of opinion that by filing estimates the assessee had reduced the amounts payable by way of advance tax and hence charged interest under Section 216 which amounted to Rs. 9,214 and Rs. 15,626 for these two years respectively.

4. FOR the assessment years 1969-70 and 1970-71, by notice under Section 210/156 of the Act the assessee was required to pay Rs. 15,69,678 for each of these two years, again payable in four instalments, though in view of the amendment made in Section 211 of the Act by the Finance Act, 1969, with effect from 1st of April, 1969, the advance tax was payable in three equal instalments on the 15th day of June, the 15th day of September, and the 15th day of December, because of the fact that the previous year of the assessee ended on 31st day of December. In respect of 1969-70 the assessee filed an estimate of its income in May, 1968, in which the income at which advance tax was payable was shown at nil. Subsequently, on November 20, 1968, a revised estimate was filed estimating the income at Rs, 12,00,000 and advance tax was paid thereon. Yet another revised estimate was filed on February 26, 1969, in which the income shown was Rs. 23,50,000 and the shortfall in advance tax on the basis thereof was paid in the last instalment. Ultimately, the assessment was made at a total income of Rs. 22,87,596.

For the assessment year 1970-71 also, the asse