1995 (3) TMI 63 - HC - Income Tax

Summary

Issues:
1. Interpretation of "regular assessment" under the Income-tax Act, 1961.
2. Levy of interest under section 139(8) and section 215 in the case of fresh assessments.

Issue 1: Interpretation of "regular assessment" under the Income-tax Act, 1961

The case involved a situation where the Commissioner of Income-tax set aside an earlier assessment made under section 144 of the Income-tax Act and directed a fresh assessment to be conducted. The question was whether the fresh assessment made in pursuance of the Commissioner's order could be considered a "regular assessment." The High Court referred to precedents to determine this issue. In the case of Rayon Traders P. Ltd. v. ITO [1980] 126 ITR 135, the court held that an assessment made to give effect to an appellate order is considered a "regular assessment." Similarly, the Calcutta High Court in Calcutta Electric Supply Corporation Ltd. v. CIT [1989] 179 ITR 580, ruled that a fresh assessment made under section 263 of the Act qualifies as a regular assessment. The High Court concluded that the fresh assessment made in this case should be considered a regular assessment since the earlier assessment under section 144 was set aside. Therefore, interest under section 139(8) and section 215 was deemed exigible up to the date of the fresh assessment.

Issue 2: Levy of interest under section 139(8) and section 215 in the case of fresh assessments

The controversy in this case revolved around whether interest under section 139(8) and section 215 of the Income-tax Act could be levied in a situation where a fresh assessment was conducted following the setting aside of an earlier assessment. The Income-tax Officer had levied interest in the fresh assessment, considering it a regular assessment. However, the Commissioner of Income-tax (Appeals) and the Tribunal disagreed, holding that interest should not be charged in such circumstances. The High Court, after analyzing the legal provisions and precedents, determined that the fresh assessment made in compliance with the Commissioner's order should be considered a regular assessment. Consequently, the Court ruled that interest under section 139(8) and section 215 was indeed payable up to the date of the fresh assessment. The Court's decision favored the Department, answering the questions referred in the negative and in favor of the Department.

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