1997 (6) TMI 39 - AT - Income Tax

Advance Tax Assessing Officer Assessment Order Assessment Year Interest Payable To Assessee Mistake Apparent From Record Orders Passed Original Assessment

Summary

Issues:
1. Whether the order passed under section 154 is barred by limitation.
2. Whether interest under section 244(1A) should be allowed on the excess interest paid by the assessee under section 215.

Analysis:

Issue 1:
The case involved cross appeals by the assessee and the revenue regarding the assessment year 1975-76. The main issue was whether the order passed under section 154 was barred by limitation. The Assessing Officer rectified a mistake in the original assessment order, which was challenged by the assessee on the grounds of being beyond the limitation period. The CIT(Appeals) upheld the rectification order based on a decision of the Patna High Court. The tribunal analyzed the timeline of assessment orders and subsequent rectifications. The tribunal held that the rectification order passed on 19-12-1989 was indeed barred by limitation as it exceeded four years from the date of the original assessment order dated 7-2-1978. Citing relevant case laws, the tribunal concluded that the rectification order was invalid due to being time-barred, and subsequently cancelled the order.

Issue 2:
The second issue revolved around whether interest under section 244(1A) should be allowed on the excess interest paid by the assessee under section 215. The CIT(Appeals) directed the ITO to re-calculate the interest on the excess refund, which was contested by the revenue. The revenue argued that interest is not admissible on the excess amount of interest paid under section 215. However, the assessee contended that they were entitled to interest under section 244(1A) on the excess payment of interest under section 215, citing relevant provisions of the Income-tax Act and a decision of the Bombay High Court. The tribunal upheld the CIT(Appeals) decision, stating that the assessee was entitled to interest on the excess refund, and directed the ITO to re-calculate the interest. The appeal of the revenue on this issue was dismissed.

In conclusion, the tribunal allowed the appeal of the assessee regarding the time-barred rectification order under section 154 and dismissed the appeal of the revenue regarding the allowance of interest under section 244(1A) on the excess interest paid by the assessee under section 215.