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Issues:
- Appeal against rejection of application under s. 154 of the IT Act for levying interest under s. 217. - Interpretation of regular assessment under s. 2(40) of the Act. - Mistake apparent from the record for rectification under s. 154. Analysis: The case involved an appeal by the assessee against the rejection of their application under section 154 of the Income Tax Act for the levy of interest under section 217. The original assessment for the assessment year 1979-80 was completed by clubbing income for two periods due to a change in the firm's constitution. The AAC directed two separate assessments based on a High Court decision. The issue arose when interest under section 217 was levied by the ITO while giving effect to the AAC's order, which the assessee contended was not valid as it was not part of a regular assessment under sections 143(3) or 144 of the Act. The assessee argued that interest under section 217 could only be levied during a regular assessment as defined in section 2(40) of the Act. The ITO's action of levying interest while implementing the AAC's order was deemed a mistake apparent from the record, warranting rectification under section 154. The AAC and ITO rejected the application, citing ambiguity in the law's interpretation regarding the levy of interest under section 217. However, the tribunal disagreed, emphasizing that interest under section 217 should only be charged during a regular assessment, not during other proceedings like giving effect to an order. The tribunal held that the ITO's levy of interest under section 217 while implementing the AAC's order was incorrect and constituted a clear mistake apparent from the records. The tribunal concluded that the assessee's case fell within the scope of section 154 of the Act, and the authorities were unjustified in rejecting the application. Consequently, the tribunal allowed the appeal, reversed the AAC's order, and directed the ITO to cancel the interest levied under section 217 of the Income Tax Act, 1961.
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