Case Law Details
Brief of the case:
Punjab & Haryana High Court in CIT Vs M/s Mahesh Munjal HUF held that if the assesse had paid advance tax in his individual capacity after considering his estimated share in his firm’s income without any anticipation that the firm’s income on which he was paying advance tax was false then interest u/s 215 could not be levied. Moreover as the assesse had no reason to believe that the accounts of the firm in which he was partner was false and he had paid advance tax on the same. So as there was no malafide intention of the assesse to pay less advance tax so interest u/s 215 could not be levied.
Facts of the case:
Assessee had filed return of income in the status of HUF declaring income of Rs 42,810/-paid advance accordingly but the AO considered the income from firm in assesse’s individual capacity instead of HUF capacity. With this the advance tax should have been paid more than what assessee had actually paid. So AO levied interest u/s 215 for paying less advance tax which was challenged by assessee because he said that he was no reason to believe that the estimated income which assesse had estimated was incorrect.
Contention of the assesse:
Assessee was of the view that as he was not having any anticipation that the share of income in the firm’s income on which assesse paid advance tax was false. There was no willful attempt on the part of the assesse to declare incorrect income. He was not having intuition that the method of accounting followed by firm would not be accepted by AO. As his intention was clear in paying advance tax so interest u/s 215 should not be levied. Moreover he was unaware that the income of the firm would be assessed by the revenue at higher income.
Contention of the revenue:
Revenue was of the view that as the assesse had paid less advance tax on his income because he had shown less share of his income from firm as the income of the firm got enhanced when assessment of firm was completed. So interest u/s 215 should be levied because interest u/s 215 was levied when there was difference between the advance tax paid by the assesse on his returned income and his assessed income.
Held by High Court:
High Court held that there was no document which proves that the income which assesse had estimated for paying advance tax was estimated by the assesse with malafide intention and he intuitionally paid less advance tax. Moreover as Deputy Commissioner was having the power to reduce or waive the interest u/s 215 if he considered fit. So as the assesse had paid the advance tax without knowing that the income of firm was false means that assesse had paid advance tax with clear intention.
Appeal of the revenue was dismissed.
