1989 (5) TMI 79 - AT - Income Tax

Advance Tax, Appellate Assistant Commissioner, Assessment Year, Interest Payable By Government, Regular Assessment

Summary

Issues:
1. Appealability of rejection of interest under section 214
2. Allowance of interest under section 214 up to a specific date

Analysis:
1. The Revenue's appeal challenged the maintainability of the appeal against the rejection of interest under section 214. The Departmental Representative argued that the initial rejection by the Income Tax Officer (ITO) was not an appealable order. However, the assessee contended that the rejection constituted an order under section 154 and was appealable. The CIT(A) directed the ITO to re-consider the claim for interest based on a High Court decision. The Tribunal upheld the CIT(A)'s decision, stating that the rejection letter was an appealable order under section 154.

2. Regarding the allowance of interest under section 214, the Revenue argued that the CIT(A) wrongly allowed interest up to the date of the ITO's order implementing the appellate order. The Tribunal clarified that the CIT(A) did not make a decision on the merits but directed a re-consideration. The Tribunal confirmed the CIT(A)'s order, stating that the matter was left open for further consideration.

3. In the assessee's appeal, the issue was the rejection of the claim for interest under section 214 by the ITO. The ITO rejected the claim based on differences in the facts compared to a previous High Court case. The CIT(A) upheld the rejection, stating that the cancellation of the original assessment did not constitute a regular assessment as required for interest under section 214. The Tribunal noted the arguments of both sides and examined the legal precedents cited.

4. The Tribunal found the assessee's appeal maintainable based on legal authorities cited. It concluded that the assessee should succeed in its claim for interest under section 214. The refund granted by the CIT(A) resulted in the assessee becoming entitled to interest. The Tribunal held that even the subsequent order by the ITO giving effect to the CIT(A)'s order was part of the regular assessment process. It directed the ITO to allow interest to the assessee up to the date of the CIT(A)'s order canceling the assessment.

5. In conclusion, the Revenue's appeal was dismissed, and the assessee's appeal was partly allowed, with the Tribunal directing the ITO to grant interest under section 214 up to a specific date as per the amended claim made during the hearing.