2002 (10) TMI 336 - AT - Income Tax

Summary

Issues:
Departmental appeals against CIT (Appeals) orders for assessment year 1988-89 regarding interest charged under sections 215/217 of the Income-tax Act in reassessment proceedings.

Analysis:
1. Interest Charged in Reassessment Proceedings: The Assessing Officer completed original assessments under section 143(1) without charging interest under sections 215/217. Subsequently, upon reopening the cases under section 147, interest was charged in the reassessment orders. The CIT (Appeals) deleted the interest, stating that interest under section 215/217 cannot be charged during reassessment proceedings and can only be charged during regular assessment. The CIT (Appeals) relied on the provisions of section 215 and 217 to support the deletion of interest charged during reassessment. The Tribunal found the CIT (Appeals) reasoning valid and declined to interfere with the orders.

2. Definition of Regular Assessment: The Tribunal referred to the decision of ITAT Jodhpur Bench in the case of K.V. Palace v. Asstt. CIT, which emphasized that interest under section 217 can only be levied on making a regular assessment defined under section 2(4) as an assessment under section 143 or 144. The Tribunal also cited the Supreme Court case of Modi Industries Ltd. v. CIT, which defined 'regular assessment' as the original assessment under section 143 or 144. The Tribunal concluded that the assessment under section 143(1) was a 'regular assessment' and as no interest was charged during this regular assessment, no interest under sections 215/217 was leviable in the reassessment proceedings.

3. Decision: The Tribunal dismissed the departmental appeals, upholding the CIT (Appeals) orders to delete the interest charged under sections 215/217 during reassessment. The Tribunal's decision was based on the legal interpretation that interest under these sections can only be charged during regular assessments and not during reassessment proceedings. The Tribunal's analysis aligned with the legal definitions of 'regular assessment' and the specific provisions of the Income-tax Act regarding the levy of interest.

In conclusion, the Tribunal's judgment clarified the legal position regarding the charging of interest under sections 215/217 of the Income-tax Act during reassessment proceedings and upheld the CIT (Appeals) decision to delete the interest charged by the Assessing Officer. The judgment highlighted the importance of distinguishing between regular assessments and reassessments for the purpose of levying interest under the Income-tax Act.