KERALA CHEMCALS and PROTEINS LTD. vs COMMISIONER OF INCOME TAX

P.A. MOHAMMED, J.:

The question referred to us for decision in this case is as follows :

''Whether the Tribunal is bound to consider all the provisions of s. 214 including si 214(1A) when the assessee did not refer to s. 214(1A) in the course of the argument and.the case proceeded only on the provisions of s. 214(1) of the IT Act?"

This IT reference case is coming up for decision before us at the instance of the assessee, a company engaged in the business of manufacture of chemicals. The original assessment for the asst. yr. 1983-84 wag completed on 27th March, 1986, fixing the total income of Rs. 19,94,620 and demanding a total sum of Rs. 11, 18,460 towards Income Tax interest, etc. On appeal, the CIT(A) vide order dt. 27th Feb., 1987 granted certain reliefs. Consequently the advance tax paid by the assessee was found to be in excess of the tax demand which resulted in refund. Consequently, the-amouht on which interest Was payable under sub-s. (1) of s. 214 increased and the assessee became entitled to interest in terms of s. 214(1A) ofthe Act. However, the AO did not allow any interest under s. 214(1A). On appeal, CIT(A) directed the AO to grant interest under s. 214. However, the Revenue went up in appeal. But the Tribunal following the Full Bench decision of.this Court in COMMISSIONER OF Income Tax, KERALA-II, ERNAKULAM Vs. G. B. TRANSPORTS, GURUVAYUR., and the decision of the Bombay High Court in Commissioner of Income Tax, Bombay City - IV Vs. Carona Sahu Co. Ltd., , held that the interest under s. 214 is payable only upto the date of first assessment under s. 143 or under s. 144 on the amount found to be in excess of the tax demand.

Later, the assessee filed a miscellaneous application before the Tribunal and contended that it had. committed a mistake by not referring to the piovisions of sub-s.'' OA) of s. 214. However, the: Tribunal rejected.the said petition holding, that. no reference was made to s. 214(1A) in the course of lwaring of the Revenue''-s appeal. What was contend by,,the counsel for the assessee was that it ''was the duty of the,Tribunal to, rnake ''reference to the provided contained in s. 214(1A) of the Act, In; view of the said submiss '' ion the Tribunal allowed the reference on the question redrafted by the Tribunal. Thai is how the matter is coming before us.

The only question is whether the Tribunal is bound to take note of provision contained in sub-s. (1A) of s. 214 and to apply the same while deciding the quantum of interest. The said provision was there in the statute when the question came up for decision before the Tribunal. Even though the assessee did not specifically refer to sub-s- (1A), we cannot say''that the Tribunal can ignore the said provision when taking the decision. We are of the view that the Tribunal ought to have considered- and referred -to the said provision. It is the duty of the Tribunal to consider. the law as e)dsted then- even though the assessee failed to bring it to its notice. The Supreme Court in Commissioner of Income Tax, Delhi Vs. Mahalaxmi Sugar Mills Co. Ltd., , observed thus:

1n the second place, there is a duty cast on the ITO to apply the relevant provisions of ther Indian IT Act for the purpose of determining the true figure of the assessee''s ''taxable m''come and the consequential tax liability. Merely because the assessee fails,to claim the benefit of a setaff, it cannot relieve the ITO of his duty to apply s. 24 in an appropriate case".

It is difficult for us to say that the, principle emerging from the above decision cannot be extended to the cases b efore the other authorities under the IT Act. We are of the, view that the above principle can equally be applied to the cases coming before the Tribunal. Also refer the decision of this Court in Parekh Brothers Vs. Commissioner of Income Tax and Others, . In the result, the question referred to us for decision is answered in the affirmative, that is to say, in favour of the assessee and against the Revenue.

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