1992 (9) TMI 35 - HC - Income Tax

Summary

Issues Involved:
The assessment year 1973-74; Refund of advance tax; Modification of assessment order u/s 154/155; Appeal before Appellate Assistant Commissioner; Application for rectification of total income computation; Application for interest u/s 214; Appeal by Income-tax Officer; Revision of assessment; Application u/s 264 for interest; Rejection of application by Commissioner of Income-tax; Interpretation of regular assessment for interest calculation u/s 214.

Refund of Advance Tax:
The petitioner paid advance tax for the assessment year 1973-74. An order u/s 141A of the Income-tax Act, 1961 found a refundable amount of Rs. 23,20,294 due to the petitioner. Subsequently, modifications were made to the assessment order based on the petitioner's application u/s 154/155, leading to a refund of Rs. 2,31,248 after appeal and adjustment of previous refunds.

Interest Calculation u/s 214:
The petitioner sought interest u/s 214 on the refunded tax amount. Despite applying u/s 264 for interest, the Commissioner of Income-tax dismissed the application citing conflicting views of different High Courts. The Calcutta High Court emphasized that the authority is bound by decisions of the state High Court and directed a fresh consideration of the matter in line with Calcutta High Court decisions, granting the petitioner an opportunity to be heard.

Regular Assessment Interpretation:
The issue of what constitutes a regular assessment for interest calculation u/s 214 was raised, with reference to a pending Supreme Court matter. The High Court clarified that the impugned order rejecting interest cannot be sustained as the authority is bound by state High Court decisions. The High Court set aside the order, directing the Commissioner to reconsider the matter based on Calcutta High Court decisions, with a stay on the order's operation until a specified date.

This judgment highlights the importance of adhering to state High Court decisions, especially in matters of interest calculation on tax refunds, and emphasizes the authority's obligation to follow established legal precedents.