Commissioner of Income Tax vs Raza Buland Sugar Company Ltd.

R.R. Rastogi, J.—The following question has been referred for our opinion:

"Whether, on the facts and in the circumstances of the case, the Tribunal is justified in holding that the Income Tax Officer was not justified in law in invoking the provisions of Section 154 and to make an order under that section withdrawing excess interest of Rs. 22,281 holding it to be a mistake apparent from the record ? "

The facts found by the Appellate Tribunal and about which there is no dispute, are that for the assessment year 1962-63, the assessment in the case of the respondent-assessee, a public limited company, was made on August 31, 1966, and the total income determined was Rs. 6,11,778. Since the aggregate sum of installments paid by way of advance tax exceeded the amount of tax determined as a result of this assessment, the assessee was allowed interest u/s 214 of the I.T. Act, 1961, which amounted to Rs. 1,28,778. Subsequently, by an order dated April 3, 1972, u/s 154 of the Act the assessment order was rectified as a result whereof interest allowable to the assessee u/s 214 came to Rs. 1,06,447. The ITO being of the view that there was excess allowance of interest and that it was a mistake apparent from the record, initiated proceedings u/s 154 of the Act. A notice was issued to the assessee and on receipt of its explanation the ITO modified the assessment order by withdrawing the excess interest allowed which came to Rs. 22,281.

The assessee appealed and contended before the Assistant Commissioner that the I f O was not justified in reducing the amount of interest admissible to it u/s 214, on the basis of the original assessment as modified in appeal and, reliance was placed on a decision of one of the Delhi Benches of the Appellate Tribunals, in the case of another assessee. In the opinion of the Assistant Commissioner, the facts of that case were similar to that of the assessee and hence he cancelled the order of the ITO.

The revenue took up the matter before the Appellate Tribunal. In the opinion of the Appellate Tribunal, the controversy in the case which had been decided by it on an earlier occasion and which decision had been relied upon was: What is the date up to which interest is admissible ? Is it the date when the assessment was originally made or is it up to the date when the assessment was modified by the Appellate Tribunal ? This question was highly controversial and debatable. In the opinion of the Appellate Tribunal, the ITO could not treat it as a mistake apparent on the record liable to be rectified u/s 154 of the Act. Thus, the Tribunal confirmed the order of the Assistant Commissioner.

After hearing counsel for the parties, we find that the question to which the Appellate Tribunal addressed itself did not arise from the facts of this case. There was no controversy here whatsoever about the date up to which interest u/s 214 is admissible. The bare facts were that in the original assessment made on August 31, 1966, the assessee had been allowed interest u/s 214 in a sum of Rs. 1,28,778. Subsequently, when it was found that the assessee had been allowed depreciation in excess of what was admissible to it, a rectification order was made on December 30, 1972, and as a consequence of that order the amount of interest allowable to the assessee u/s 214 should have been correspondingly reduced, but that was not done. Hence, when on scrutiny of record this mistake was detected, the ITO took action u/s 154 and reduced the amount of interest to which the assessee was entitled u/s 214 and the amount so reduced was Rs. 22,281. The impugned order, therefore, was merely a consequential order. There was no controversy at all involved of the nature to which the Appellate Tribunal addressed itself while disposing of the department''s appeal. We, therefore, do not agree with the Appellate Tribunal that there was any debatable or controversial question involved in this proceeding so that action could not be taken u/s 154 of the Act.

Our answer to the question referred, therefore, is in the negative, in favour of the department and against the assessee. The department is entitled to its costs which we assess at Rs. 200.