1991 (7) TMI 116 - AT - Income Tax

Summary

Issues Involved:
The issue involves the grant of interest under section 214 of the Income-tax Act, 1961 based on conflicting decisions of different High Courts.

Comprehensive Details:

Issue 1:
For the assessment year 1978-79, the Income-tax Officer (ITO) did not grant interest under section 214 despite a refund being payable to the assessee as per the order of CIT(Appeals). The ITO cited conflicting decisions of different High Courts as the reason for not granting interest. The AAC held that the ITO should have granted interest as per the Gujarat High Court decision. The Department appealed to the Tribunal.

Issue 2:
The Departmental Representative argued that the mistake in not granting interest was not apparent from the record due to conflicting High Court decisions. Citing various cases, it was contended that relief under section 154 could not be granted in a debatable scenario.

Issue 3:
The counsel for the assessee argued that the ITO's omission to grant interest as per the Gujarat High Court decision constituted a mistake apparent from the record. Referring to relevant case law, it was asserted that the ITO was bound by the jurisdictional High Court's decision.

Judgment:
The Tribunal considered the submissions and facts, noting that the ITO was obligated to follow the Gujarat High Court decision at the time of giving effect to the CIT(A) order. The failure to grant interest was deemed a mistake apparent on record. The Tribunal highlighted that subsequent Supreme Court decisions do not erase prior conflicts of opinions. Referring to a Departmental Circular, it was established that mistakes arising from later legal interpretations could be rectified under section 154. The Tribunal emphasized the importance of following the jurisdictional High Court's decisions. Consequently, the Tribunal upheld the CIT(A)'s direction to grant interest in line with the Gujarat High Court decision, dismissing the Department's appeal.