1987 (7) TMI 80 - HC - Income Tax

Summary

Issues Involved:
The issues involved in this case are related to the interpretation of provisions of the Income-tax Act, 1961, specifically regarding the withdrawal of excess interest allowed under section 214 and the applicability of a binding decision of the Andhra Pradesh High Court as a mistake apparent from the record.

Withdrawal of Excess Interest u/s 214:
For the assessment year 1973-74, the assessee paid advance tax, including a sum paid after the due date. The Income-tax Officer initially allowed interest under section 214 but later sought to withdraw it under section 154, leading to a dispute. The Appellate Assistant Commissioner upheld the interest, but the Tribunal held that the Officer lacked jurisdiction under section 154. The High Court noted that the decision in Kangundi Industrial Works case was rendered after the Officer's action, and as there was no clear mistake apparent, the Officer's exercise of jurisdiction under section 154 was erroneous.

Applicability of Binding Decision:
The High Court considered the argument that a previous decision of the court should allow the Income-tax Officer to rectify the assessment. However, the court highlighted that the decision in question was rendered after the Officer's action and that there were conflicting views from other High Courts. As the matter was not free from debate at the time of the Officer's action, the court held that the Officer could not rectify the assessment under section 154 based on a subsequent judgment. The court also noted the existence of contrary decisions from the Madhya Pradesh High Court but deemed them unnecessary to consider in this context.

In conclusion, the High Court upheld the Tribunal's order, emphasizing that the Officer's exercise of jurisdiction under section 154 was erroneous due to the lack of a clear mistake apparent from the record at the time of assessment. The court answered the questions in favor of the assessee and against the Revenue, highlighting the importance of timing and clarity in invoking provisions of the Income-tax Act.