1993 (3) TMI 169 - AT - Income Tax

Appellate Authority, Assessing Officer, Late Filing, Mistake Apparent From Record, Regular Assessment

Issues Involved:

1. Charging of interest under sections 139(8) and 215/217 of the IT Act.
2. Rectification of mistakes under section 154.
3. Authority of the successor IAC (Asst.) to modify or reject the rectification order.

Issue-wise Detailed Analysis:

1. Charging of Interest Under Sections 139(8) and 215/217:

The core issue revolves around the charging of interest under sections 139(8) and 215/217 of the IT Act. The initial assessment order dated 26-2-1983 charged interest under these sections. The assessee challenged this in an appeal before CIT(A), who provided some relief, reducing the income and stating that charging interest was consequential. The Tribunal later restored some additions, leading the Assessing Officer to recompute the income and charge interest again. The assessee contended that interest should only be charged based on the original assessment order dated 26-2-1983, which had already been paid.

2. Rectification of Mistakes Under Section 154:

The assessee filed multiple applications under section 154, seeking rectification of the interest charged. The first application dated 9-6-1986 led the Assessing Officer to acknowledge mistakes in paras 2, 3, and 4, and recompute the income, reducing the interest. However, the calculation sheet (ITNS-150) still showed interest charges, which the assessee claimed was a clerical oversight. The successor IAC (Asst.) later rejected the assessee's subsequent application, stating that the interest was correctly charged as per rules and that the calculation sheet was part of the order.

3. Authority of the Successor IAC (Asst.) to Modify or Reject the Rectification Order:

CIT(A) ruled in favor of the assessee, stating that once the initial IAC (Asst.) had accepted the mistake, the successor IAC (Asst.) could not modify or reject the rectification unless modified by CIT Jaipur in revision. The CIT(A) directed the Assessing Officer not to charge the interest, considering it a mistake apparent from the record.

Analysis and Conclusion:

The Tribunal examined the facts and arguments presented by both parties. The Departmental Representative argued that charging interest under sections 139(8) and 215/217 was automatic and required application of mind for waiver. The assessee's counsel argued that interest could not be increased as a result of rectification or appellate orders, based on the language of the sections and relevant case laws.

The Tribunal found that the initial acceptance of mistakes by the IAC (Asst.) did not explicitly state that interest was not leviable. The reduction in interest was executed through the calculation sheet, indicating that the interest was still chargeable. The Tribunal agreed with the Departmental Representative that the issue was debatable and beyond the scope of section 154, which is meant for rectifying apparent mistakes, not for addressing highly debatable issues.

The Tribunal concluded that the successor IAC (Asst.) was justified in rejecting the subsequent application under section 154, as the assessee's claims were based on incorrect assumptions. The Tribunal also noted that appellate proceedings are a continuation of original proceedings, and the interest could be charged based on the final assessed income after the Tribunal's order.

Final Judgment:

The Tribunal held that the CIT(A) was not justified in directing the Assessing Officer not to charge interest under sections 139(8) and 215/217. The order of the CIT(A) was based on incorrect premises and was directed to be canceled. The appeal filed by the Revenue was allowed.

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