1983 (11) TMI 99 - AT - Income Tax

Advance Tax Interest On Refund Interest Payable By Government Mistake Apparent From Record

Summary

Issues:
1. Eligibility of interest under section 214 on excess advance tax refund.
2. Interpretation of the term 'regular assessment' in section 214.
3. Whether failure to grant interest in the consequential order was a mistake apparent from the record.

Detailed Analysis:
1. The judgment dealt with the issue of the assessee claiming interest under section 214 of the Income-tax Act on excess advance tax paid for three years. The assessing authority initially declined the interest claim beyond the date of the original assessment under section 143(3) on the grounds of no provision for interest under section 214 on refunds due to appellate orders. The Commissioner (Appeals) referred to various High Court decisions supporting the view that orders to give effect to appellate orders were in the nature of regular assessments, thus directing the assessing authority to allow interest on the excess advance tax paid up to the date of orders giving effect to the Tribunal order.

2. The revenue appealed against the Commissioner (Appeals) orders, arguing that interest under section 214 on advance tax refunds from the assessment year's beginning till the refund issue date was not appealable, and the controversy existed regarding the eligibility of interest up to the final refund order date. The Tribunal discussed the conflicting High Court decisions on this issue and emphasized that controversial matters like these cannot be addressed under section 154. The revenue contended that the assessing authority's order should be restored, reversing the Commissioner's decision.

3. The assessee cited Bombay High Court decisions to support their claim, emphasizing that an order denying interest under section 244 was appealable and that 'regular assessment' included orders passed by appellate authorities. They also referred to Madras High Court decisions supporting interest eligibility up to the actual refund date. The Tribunal analyzed the term 'regular assessment' based on precedents and held that interest under section 214 should be granted up to the date of the consequential order giving effect to appellate orders. Additionally, the Tribunal referred to the Allahabad High Court decision on rectification under section 154, stating that the failure to grant interest in the consequential order was a mistake apparent from the record, thus upholding the Commissioner's direction to grant interest to the assessee.

In conclusion, the Tribunal dismissed the revenue's appeals, affirming the Commissioner's decision to grant interest under section 214 to the assessee for the excess advance tax paid.