2014 (2) TMI 1120 - HC - Income Tax

Charging of interest u/s 139(8) and 215/217 of the Act Effect of amendment u/s 139(8) w.e.f. AY 1985-86 - Whether the ITAT is right in law in reversing the order of the learned DCIT(A) who upheld the order of the Assessing Officer passed under Section 154 holding that no mistake was apparent from records Held that - The decision in COMMISSIONER OF INCOME-TAX Versus KD. PRABHAKAR (HUF) 2007 (8) TMI 335 - PUNJAB AND HARYANA HIGH COURT followed the amendment was applicable from 1985-86 and subsequent years thus, the interest for the assessment year 1981-82 is not valid Decided against Revenue.

Summary

Issues:
1. Interpretation of law regarding the charging of interest under sections 139(8) and 215/217 for the assessment year 1981-82.

Analysis:
The judgment pertains to a question of law referred to the High Court by the Tribunal for the assessment year 1981-82. The issue revolves around the correctness of the order of the Deputy Commissioner of Income Tax (Appeals) [DCIT(A)] who upheld the Assessing Officer's decision under Section 154 regarding the charging of interest under sections 139(8) and 215/217. The Assessing Officer initiated proceedings under section 147 of the Act for the assessment years 1974-75 to 1983-84 after discovering additional compensation received by the assessee due to compulsory acquisition of land. The Assessing officer contended that the interest income should have been assessed on an accrual basis from the assessment year 1974-75 onwards, following a court decision, but the assessee only did so from the assessment years 1984-85 onwards. The Assessing Officer charged interest under sections 139(8) and 215/217, leading to the assessee filing an application under Section 154, which was rejected by the Assessing Officer and the DCIT(A). The Tribunal later allowed the appeal, setting aside the DCIT(A)'s order and remanding the matter back to the Assessing officer, prompting the revenue to seek the High Court's opinion on the matter.

The High Court noted that the revenue did not dispute a similar issue previously decided against them in another case involving the same assessee. The High Court referenced the concluded case where the issue was decided against the revenue, indicating a precedent that favored the assessee. Consequently, the High Court answered the question referred against the revenue, thereby disposing of the reference in favor of the assessee. The judgment highlights the importance of consistency in interpreting and applying tax laws, emphasizing the significance of precedents in determining similar issues. The decision underscores the need for tax authorities to adhere to established legal principles and past judgments to ensure fair and just outcomes in tax assessments and disputes.