1993 (7) TMI 113 - AT - Income Tax

Advance Tax, Interest Payable By Assessee, Late Filing, Original Assessment, Regular Assessment

Summary

Issues:
- Deletion of interests levied under sections 139(8) and 217/215 by the Deputy Commissioner of Income-tax (Appeals).
- Whether assessments should be considered as "regular assessments" or re-assessments under section 250 for the purpose of levy of interests under sections 139(8) and 217/215.

Detailed Analysis:
1. The judgment dealt with the departmental appeals regarding the deletion of interests levied under sections 139(8) and 217/215 by the Deputy Commissioner of Income-tax (Appeals) for four years. The Dy. Commissioner (Appeals) had deleted the interests based on a decision of the Karnataka High Court in a specific case. The departmental representative argued that the assessments were not re-assessments under section 147 but were regular assessments replacing the original assessments set aside by the Appellate Asstt. Commissioner. The representative of the assessee contended that assessments for certain years should be considered re-assessments under section 250. The legal issue revolved around whether these assessments should be categorized as regular assessments or re-assessments for the purpose of levying interests under the mentioned sections.

2. The tribunal analyzed the concept of "regular assessment" under section 2(40) and distinguished between assessments made under section 147 (re-assessments) and regular assessments under sections 143(3) or 144. It was held that assessments under section 147, even if made for the first time, cannot be considered regular assessments as they involve cases of income escapement. However, assessments made by the Assessing Officer after the original assessments were set aside and redone should be treated as regular assessments, maintaining the characteristics of the original assessments. The tribunal emphasized that re-assessments replacing original assessments should be considered regular assessments, contrary to assessments under section 147.

3. The judgment referred to decisions by the Rajasthan High Court and the Full Bench of the Gujarat High Court to support the distinction between regular assessments and re-assessments. The Rajasthan High Court highlighted that fresh assessments under section 263 are limited in scope and do not fall under regular assessments. In contrast, the Full Bench of the Gujarat High Court held that re-assessments following the setting aside of original assessments by the appellate authority should be deemed regular assessments. The tribunal favored the Gujarat High Court's interpretation, stating that re-assessments in the case at hand, similar to those in the Gujarat case, should be treated as regular assessments, leading to the restoration of interests levied in the fresh assessment orders.

4. Ultimately, the tribunal set aside the Deputy Commissioner (Appeals) orders that deleted the interests and directed the restoration of interests under sections 139(8) and 217/215 for the relevant assessment years. It was concluded that the deletion of interests based on the Karnataka High Court decision was unwarranted, and the assessments should be treated as regular assessments, except for the assessment year 1984-85 where interests were correctly levied during the original assessment. The departmental appeals for all four years were allowed, reinstating the levies of interests under the specified sections.