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Interpretation of Section 214 of the Income-tax Act, 1961 regarding the grant of interest to the assessee. Divergence of judicial opinion on whether interest under section 214 is payable only up to the date of the original assessment. Validity of rectification proceedings under section 154 of the Income-tax Act. Analysis: The judgment pertains to a reference under section 256(2) of the Income-tax Act, 1961, for the assessment year 1981-82. The primary issue revolves around the grant of interest under section 214 of the Income-tax Act to the assessee. The Assessing Officer initially granted interest to the assessee up to the date of assessment, resulting in a refund. Subsequently, the assessee filed a petition under section 154 seeking interest up to the date of the order giving effect to the appellate order. The Assessing Officer rejected the petition, stating that no mistake was apparent from the record. The Commissioner of Income-tax (Appeals) intervened, citing the decision in the case of Chloride India Ltd., and directed the Assessing Officer to accept the rectification petition and grant interest in line with the principles laid down in the aforementioned case. The crux of the matter lies in the divergence of judicial opinion regarding the interpretation of section 214 of the Income-tax Act. While the Calcutta High Court, Rajasthan, and Gujarat High Courts support the view that interest is payable beyond the original assessment date, other High Courts like Allahabad, Kerala, Punjab and Haryana, Andhra Pradesh, and Bombay have held that interest is only payable up to the date of the original assessment. The Tribunal, in this case, upheld the Commissioner's decision based on the Chloride India Ltd. case, leading to a conflict of opinions. The Court, after considering the conflicting views, held that in cases where there is a divergence of judicial opinion on a question of law, rectification proceedings under section 154 cannot be entertained. Citing the V. R. Sonti case, the Court emphasized that when multiple High Courts hold contrary views on an issue, rectification proceedings should not proceed. Consequently, the Court ruled in favor of the Revenue, stating that the Tribunal erred in directing the Assessing Officer to grant interest under section 214 in a section 154 proceeding due to the existing divergence of judicial opinions. In conclusion, the Court answered the reference question in the negative and in favor of the Revenue, highlighting the importance of consistency in judicial interpretation and the limitations on rectification proceedings in cases of conflicting legal opinions.
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