1985 (11) TMI 53 - HC - Income Tax

Summary

Issues Involved:
1. Whether the Tribunal was correct in holding that there was no mistake apparent from the record in the original order which could be rectified under section 154 of the Income-tax Act, 1961.
2. Whether the non-consideration of the matter regarding levy of interest amounted to waiver by the Income-tax Officer.
3. Whether the Income-tax Officer could waive interest exceeding Rs. 1,000 without prior approval of the Inspecting Assistant Commissioner under rule 117A of the Income-tax Rules, 1962.

Issue-wise Detailed Analysis:

1. Mistake Apparent from the Record:
The Tribunal held that there was no mistake apparent from the record in the original order which could be rectified under section 154 of the Income-tax Act, 1961. However, the High Court found this conclusion incorrect. The Court reasoned that the Income-tax Officer's failure to levy interest, despite being obligated to do so, constituted an error apparent on the face of the record. The Court emphasized that section 154 allows for the rectification of such apparent mistakes. It was noted that the Income-tax Officer was bound to levy interest due to the late filing of the return, and his omission to do so was a clear error.

2. Waiver of Interest:
The primary question was whether the non-consideration of the levy of interest by the Income-tax Officer amounted to a waiver. The Tribunal had presumed that the interest was waived. However, the High Court clarified that waiver is a deliberate act and cannot be assumed from an omission or oversight. The Court highlighted that the Income-tax Officer did not have the jurisdiction to waive interest exceeding Rs. 1,000 without prior approval from the Inspecting Assistant Commissioner. Since no such approval was obtained, the non-levy of interest could not be deemed a waiver.

3. Jurisdiction under Rule 117A:
Rule 117A of the Income-tax Rules, 1962, allows the Income-tax Officer to waive interest in certain circumstances, but with a significant proviso. If the interest exceeds Rs. 1,000, prior approval from the Inspecting Assistant Commissioner is mandatory. In this case, the interest amount was Rs. 3,051, and no prior approval was obtained. Therefore, the Income-tax Officer lacked the jurisdiction to waive the interest. The High Court emphasized that without this approval, any assumption of waiver was legally untenable. The Court cited previous judgments to support this view, including the decision of the Gujarat High Court in CIT v. Ramjibhai Hirjibhai & Sons, which reinforced the necessity of adhering to procedural requirements for waiver.

Conclusion:
The High Court concluded that the Tribunal erred in holding that there was no apparent mistake in the original order. The omission to levy interest was a clear error that could be rectified under section 154. The Court also found that the non-consideration of the interest levy did not amount to a waiver, as the necessary prior approval was not obtained. The reference was thus answered in favor of the Revenue and against the assessee, with no order as to costs.