1992 (9) TMI 25 - HC - Income Tax

Summary

Issues: Challenge to notice under section 154 of the Income-tax Act, 1961 regarding rectification of interest calculation under section 214 of the Act.

Analysis:
The judgment by Ruma Pal J. deals with a challenge to a notice passed under section 154 of the Income-tax Act, 1961, seeking to rectify an order of assessment related to the payment of interest under section 214 of the Act. The petitioner was initially assessed for the year 1972-73, with a subsequent rectification reducing the refundable amount and interest payable. A further order under section 263 set aside the original assessment, leading to a reassessment on August 21, 1979, where a higher refundable amount and interest were determined. The impugned notice sought to rectify this interest calculation, prompting the petitioner's challenge.

The High Court noted that the income-tax authorities had treated the original assessment date of March 10, 1975, as the regular assessment date for interest calculation under section 214, contrary to the subsequent reassessment date of August 21, 1979. The court referenced precedents like Chloride India Ltd. v. CIT and Calcutta Electric Supply Corporation Ltd. v. CIT to establish that the regular assessment date should be post the order under section 263. The respondents' reliance on a Supreme Court order regarding "regular assessment" was noted, but the court clarified the correct interpretation based on local precedents.

Ultimately, the court found that the impugned notice was issued without proper application of mind by the Income-tax Officer, as the authorities could not be aggrieved by the August 21, 1979, order. The petitioner's potential grievance was related to the interest amount, not the assessment date. Consequently, the court quashed the notice and made the rule absolute, with no order as to costs. The judgment highlights the importance of correctly determining the regular assessment date for interest calculations under the Income-tax Act, ensuring proper application of legal principles in administrative actions.