1977 (12) TMI 7 - HC - Income Tax

AAC And Tribunal, Advance Tax, Application For Rectification, Interest On Refund, Refund Of Tax, Writ Petition

Issues Involved:
1. Entitlement to interest under Section 214(1) of the Income Tax Act, 1961.
2. Maintainability of the writ petition under Article 226 of the Constitution.
3. Availability of alternative remedies under the Income Tax Act.
4. Delay in filing the application.

Detailed Analysis:

1. Entitlement to Interest under Section 214(1) of the Income Tax Act, 1961:
The primary issue was whether the petitioner was entitled to interest on the difference between the advance tax paid and the tax finally determined under Section 214(1) of the Income Tax Act, 1961. The petitioner argued that the interest should be calculated based on the tax determined after the appellate authority's order. The court referred to its previous decision in Chloride India Ltd. v. CIT [1977] 106 ITR 38 (Cal), where it was held that "regular assessment" under Section 214 includes the assessment made by the ITO pursuant to the appellate authority's direction. The court maintained its previous view, despite the contrary opinion of the Allahabad High Court in Laxmipat Singhania v. CIT [1977] 110 ITR 289, and concluded that the order of the ITO was erroneous.

2. Maintainability of the Writ Petition under Article 226 of the Constitution:
The court examined whether the writ petition was maintainable under Article 226 of the Constitution, as amended by the 42nd Amendment Act. The petitioner contended that deprivation of the right to obtain interest amounted to deprivation of property, thus violating fundamental rights. The court assumed, for the sake of argument, that the right to interest under Section 214 could be considered property. However, it concluded that the deprivation was not without authority of law, as the ITO had the jurisdiction to interpret Section 214. The court cited several Supreme Court cases, including Smt. Ujjam Bai v. State of U.P., AIR 1962 SC 1621, to support its view that errors within jurisdiction do not constitute deprivation of property without authority of law.

3. Availability of Alternative Remedies under the Income Tax Act:
The court considered whether the petitioner had other remedies for redress under the Income Tax Act. It noted that the petitioner could have applied for revision under Section 264 or moved the High Court for a reference on questions of law. The court referred to the Full Bench decisions of the Gujarat High Court in Ahmedabad Cotton Manufacturing Co. v. Union of India, AIR 1977 Guj 113 [FB], and the Andhra Pradesh High Court in Government of India v. National Tobacco Co. of India Ltd., AIR 1977 AP 250 [FB], which emphasized that alternative remedies must be equally adequate and efficacious. The court concluded that the petitioner had other remedies and that the application under Article 226 was not maintainable due to the existence of these remedies.

4. Delay in Filing the Application:
The court addressed the issue of delay, noting that the order of the Tribunal was passed on December 17, 1975, and the application was filed on May 6, 1977. The petitioner argued that the delay was due to awaiting the decision in Chloride India's case. The court acknowledged this explanation but stated that the question of delay would only be relevant if the application were otherwise maintainable.

Conclusion:
The court discharged the rule nisi and dismissed the application, holding that the writ petition was not maintainable under Article 226 of the Constitution due to the availability of alternative remedies under the Income Tax Act. The court also noted the delay in filing the application but did not base its decision solely on this ground. There was no order as to costs, and interim orders, if any, were vacated.

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