2016 (4) TMI 816 - HC - Income Tax

Question for adjudication is whether the Authority failed to exercise its jurisdiction in making the intimation. Submissions are to be made and heard on that question along with on the further question as to what is an order under the Income-tax Act, 1961, whether an intimation under Section 245 proposing to take steps, which steps have been taken thereafter, does or does not amount to an order? List this writ petition on 18.04.2016

Summary

Issues: Challenge to intimation under Section 245 of the Income Tax Act, 1961. Calculation of interest under Section 244A(1)(b) vs. Section 244.

The petitioner, an assessee, challenged an intimation issued under Section 245 of the Income Tax Act, 1961, regarding a net refund for the assessment year 1983-1984. The first ground of challenge was that the Assistant Commissioner failed to exercise jurisdiction in determining that the intimation was not an order under the Act, thus questioning the authority's interference. The second ground of challenge pertained to the calculation of interest under Section 244A(1)(b) instead of Section 244, resulting in the assessee receiving interest at a lower rate of 6% per annum simple instead of the entitled 15% per annum simple. The petitioner argued that this failure prejudiced them and warranted interference.

The respondent, representing the revenue, relied on a judgment by a learned Single Judge of the Calcutta High Court in a previous case. The respondent pointed out that Section 264 of the Act allows the authority to revise orders, clarifying that an order declining to interfere is not prejudicial to the assessee. Referring to the judgment, the respondent argued that the petitioner did not suffer any prejudice and thus lacked cause to approach the Writ Court. Additionally, the respondent cited Supreme Court judgments stating that interest on interest is not payable and suggested that any errors in the intimation could have been rectified under Section 154 of the Act.

The primary question for adjudication was whether the Authority failed to exercise its jurisdiction in issuing the intimation. The Court was set to hear submissions on this matter and further explore the nature of an order under the Income Tax Act, 1961, specifically examining whether an intimation under Section 245, proposing steps subsequently taken, constituted an order. The case was listed for further proceedings on a specified date.