1982 (12) TMI 54 - AT - Income Tax

Summary

Issues:
1. Claim of interest by the assessee regarding the refund allowed by the ITO.
2. Interpretation of provisions under sections 214 and 244(1A) of the Income Tax Act regarding the entitlement to interest on excess payment of advance tax.

Detailed Analysis:
1. The appeal and cross-objection before the Appellate Tribunal ITAT Amritsar involved the issue of the claim of interest by the assessee concerning the refund allowed by the Income Tax Officer (ITO) for the assessment year 1979-80. The ITO had raised a tax demand despite the assessee having paid advance income tax. The assessee appealed against this assessment, leading to a reduction in total income and a refund entitlement. The ITO rejected the claim for interest under sections 214 and 244(1A) of the Income Tax Act, stating that no refund was allowed due to the assessment order. The Assistant Commissioner (AAC) modified the finding, allowing interest from the date of adjustment of advance tax to the refund payment date but not from the tax payment date to the adjustment date, citing a controversial issue outside the scope of Section 154.

2. The Appellate Tribunal considered the appeal of the assessee and the cross-objection of the revenue. The assessee argued that interest should be granted on the excess advance tax paid over the finally assessed amount from the prescribed date to the refund payment date, relying on provisions under sections 214 and 244(1A). The assessee cited relevant court judgments supporting their claim. The revenue contended that the appellate proceeding could not be considered part of the regular assessment, referencing a Punjab court decision. The Tribunal analyzed the provisions and court precedents, concluding that the appellate effect modifying the assessment constituted part of the regular assessment, entitling the assessee to interest under section 214(2) until the refund payment date.

3. The Tribunal held that the assessee was entitled to claim interest from the prescribed date to the refund payment date based on the provisions of sections 214(2) and 244(1A). Citing judgments from Delhi and Madras High Courts, the Tribunal emphasized that the payment of advance tax merges into the tax demand upon regular assessment, entitling the assessee to interest on the excess payment. The Tribunal rejected the revenue's argument and dismissed their cross-objection, upholding the claim of the assessee for interest. The Tribunal ruled out any controversy in the matter and allowed the appeal of the assessee.