1980 PLP (Trib (PTD)

M. T. SIDDIQUI (PRESIDENT).‑--The appeal by a public limited company contests the order of the Inspecting Assistant Commissioner issued under section 34‑A of the Income‑tax Act, in the following circumstances. The facts of the case show that for the assessment under appeal the appel lant had paid advance tax under section 18‑A of the Income‑tax Act, on the basis of the latest completed provisional assessment for the year 1973‑

74. According to this assessment the total demand payable was Rs. 9,61,760 but the appellant had made actual payment of Rs. 9,42,247 only. It is explained that tax payable on the amounts attributed towards labour welfare fund contributions were retained, as according to the assessee these were admissible expenditure against the returned income for the year 1973‑

74. The Income‑tax Officer however, missed the levy of penal interest under section 18‑A (6) and accordingly passed an order under section 35 of the Income‑tax Act, to charge this levy. The appellant thereupon made a representation to the Income‑tax. Officer contending that the provisions of section 18‑A (6) were not applicable to its case, as it had not submitted any estimate of its own under provisions of section 18‑A (2). The Income- tax Officer accepted this plea and by another order under section 35 cancelled his original order passed under section 35 of the Act. The learned Inspecting Assistant Commissioner thereupon considered that the second order of the Income‑tax Officer was erroneous in law, as the provisions of sec tions 18‑A (6) and 18‑A (8) were applicable to this case. He accordingly issued a notice under section 34‑A of the Income‑tax Act to the appellant, who once again contended before the Inspecting Assistant Commissioner that the subsequent order under section 35 passed by the Income‑tax Officer was perfectly legal and suffered from no flaw. Therefore, the same should not be cancel. But the learned Inspecting Assistant Commissioner did not accept this contention and held that the second order passed by the income‑tax Officer under section 35 of the Income‑tax Act was erroneous in law and that it was prejudicial to the interest of the revenue. He therefore cancelled that order. He directed the Income‑tax Officer to charge addi tional tax under section 18‑A (6)/18‑A (8). The appellant contests this, direction of the learned Inspecting Assistant Commissioner to be without any sanction of law. It is started that admittedly the appellant had paid advance tax on the basis of the completed assessment. If he had made a short payment the appel lant could be penalised under any other available provision. But as he had not submitted any estimate of its own, the provisions of, section 18‑A (6) read with 18‑A (8) were not attracted to this case. The first order of the Income‑tax Officer under section 35 imposing penal interest under sec tion 18‑A (6) was, therefore, patently erroneous. He therefore, properly and lawfully cancelled the same on 3‑5‑1977. We agree with the appellant's contention that since no estimate was submitted in this case under the provisions of section 18‑A (2) or 18‑A (3), the case did not attract the provisions of section 18‑A (6). Therefore, levy of penal interest under that provision by the first rectificatory order under section 35 issued by the Income‑tax Officer was itself erroneous A and a subsequent order properly corrected the earlier bad order. Since the second order suffered from error of law, the Inspecting‑Assistant Commis sioner had no jurisdiction under section 34‑A of the Income‑tax Act to interfere with that order, under the powers vested in him by section 34‑A the income‑tax Act. Accordingly we cannot sustain the order of the Inspecting Assistant Commissioner which is hereby cancelled. Appeal allowed.