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Issues Involved:
1. Definition and interpretation of "regular assessment" under the Income Tax Act, 1961. 2. Entitlement of the assessee to interest on excess advance tax paid. 3. Application of Sections 214 and 244(1A) of the Income Tax Act, 1961. Issue-wise Detailed Analysis: 1. Definition and Interpretation of "Regular Assessment": The central issue in this case was whether an order modifying an assessment to give effect to the appellate authority's order can be described as a "regular assessment" under Chapter XVII-C of the Income Tax Act, 1961. The court noted that this issue has led to differing opinions among various High Courts. The historical context of the statutory provisions was examined, starting with the Indian Income Tax Act, 1922, which introduced the concept of advance tax and interest payments. The court referred to several judicial decisions, including those of the Bombay, Madras, and Allahabad High Courts, which generally held that "regular assessment" refers to the initial assessment made by the Income Tax Officer (ITO) and not to subsequent modifications. The court concluded that the expression "regular assessment" should be construed as referring only to the first or initial assessment and not subsequent modifications thereof. 2. Entitlement of the Assessee to Interest on Excess Advance Tax Paid: The court examined the provisions of Section 214, which deals with the payment of interest by the government on excess advance tax paid by the assessee. The court noted that the interest is payable from the 1st of April following the financial year in which the advance tax was paid until the date of the "regular assessment." The court referred to judicial decisions that held that interest on advance tax ceases to run on the date of the initial regular assessment and does not revive upon subsequent modifications of the assessment. However, the court also considered the provisions of Section 214(2), which directs that interest shall be payable up to the date on which the refund is made. The court acknowledged the difficulties in interpreting this provision but ultimately agreed with the interpretation that the assessee is entitled to interest on the excess advance tax refunded up to the date of the refund. 3. Application of Sections 214 and 244(1A) of the Income Tax Act, 1961: The court also considered the provisions of Section 244(1A), which provides for the payment of interest on tax payments made after March 31, 1975, that are found to be in excess of the amount ultimately due. The court noted that this provision enables an assessee to get interest on the tax paid in pursuance of the original assessment from the date of payment up to the date of refund. The court concluded that the assessee in the present case was entitled to interest on the excess advance tax paid from the date of payment up to the date of the revised assessment order, as claimed by the assessee. Conclusion: The court allowed the writ petition, quashed the orders of the ITO, AAC, and Commissioner, and directed the Commissioner to allow the assessee interest on the basis of the claim made. The court emphasized that the ultimate decision was based on the provisions of Sections 214(2) and 244(1A) and not solely on the interpretation of "regular assessment." The court noted the assistance provided by the counsel in presenting the issue comprehensively and made no order as to costs due to the conflict in judicial decisions and the complexity of the issue.
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