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TMI Blog2002 (11) TMI 255X X X X Extracts X X X X X X X X Extracts X X X X ..... est under section 139(8) and 215/217 by passing order under sections 154/155 after considering it to be a mistake apparent from records. 2. That the action of the learned Commissioner of Income-tax (Appeals) while confirming the order under section 154/155 is unwarranted and against the provisions of law. While passing the order, learned Commissioner of Income-tax (Appeals) has not considered the following facts- (i) That there is no mistake apparent from records. (ii) That where there is controversial issue and two different opinions are involved, no mistake can be rectified under section 154/155 of the Income-tax Act, 1961. (iii) That the intt. charged under section 154/155 is against the provisions of law. 3. That no interest under sections 139(8) and 215/217 can be charged in re-assessment proceedings. The interest can only be charged in regular assessment proceedings. Regular assessment has been defined in sections 2(4) and 215(6) of the Income-tax Act, 1961. 4. That the learned Commissioner of Income-tax (Appeals) has not passed a speaking order, which is illegal and against the natural justice. 5. That the Assessing Officer is not definite as to under which sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be charged at the time of completing the re-assessments, as the same were not 'regular assessments' as defined under section 2(40) of the Income-tax Act. It also appears that the assessees were represented through their counsel before the CIT(A) but the CIT(A) has dismissed these appeals in a summary manner without passing speaking orders. She has not at all discussed the various submissions made before her and has not recorded separate findings in regard to each ground of appeals. The identical findings of ld. CIT(A), recorded in para 2 of her appellate order, are reproduced as under: "2. I have carefully examined the contentions raised by the appellant and the facts on record. This issue was specifically discussed with the ld. Counsel also and it is seen that this is a mistake apparent from records and the Assessing Officer was justified in passing orders under section 154/155. Hence all the appeals filed by the appellant are dismissed." Both the assessees are aggrieved with the orders of the CIT(A) and have now preferred the present appeals before us. 4. The ld. Counsel for the assessees submitted that in these cases, original assessments were completed under section 143(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld that interest under sections 139(8) and 217 can be levied only in the case of regular assessment. Regular assessment means an assessment under section 143(3) or section 144. It does not include an assessment or re-assessment under section 147. Even SLP filed against the order of Karnataka High Court was dismissed by the Hon'ble Supreme Court. (ii) Smt. Kamlawati v. CIT [1978] 111 ITR 248 (Punj. Har.) - Where the High Court has held that 'regular assessment', as defined in clause (40) of section 2 means the assessment completed under section 143(3) or section 144. An assessment or re-assessment made under section 147 cannot, therefore, consider as 'regular assessment'. (iii) Modi Industries v. CIT [1995] 216 ITR 759 (SC) - Where the Apex Court has held that 'regular assessment' has been defined in section 2(4) to mean the assessment made under section 143 or 144. (iv) CIT v. Haripada Khatua [1998] 230 ITR 560 (Cal.) - Where it has been held that if interest under section 215 had not been charged at the time of regular assessment, interest under section 215 could not be levied on the basis of any subsequent assessments. Besides, the ld. Counsel relied on the following deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of each ground. The ld. D.R. further submitted that refunds were granted to the assessees at the time of completing the assessments / processing the returns under section 143(1)/143(l)(a). Since there was no liability to charge interest under section 139(8)/215/217/234A/234B, no such interest was charged. However, subsequent to the search and seizure action, the assessments had been reopened under section 147. At the time of completing the reassessments, the Assessing Officer did not charge interest under the above-mentioned sections. However, he detected such mistake and thereafter rectified the order under section 154 and charged interest under the above-mentioned sections. Referring to Explanation 2 to section 139(8) introduced w.e.f. 1-4-1985 and the provisions of sub-section (6) of section 215, the ld. D.R. submitted that the assessments made for the first time under section 147 are to be regarded as regular assessments for the purpose of charging interest under the above mentioned sections. Relying on the judgment of Kerala High Court in the case of CIT v. K. Govindan Sons [1999] 238 ITR 1005, the ld. D.R. submitted that Explanation 2 to section 139(8) is only expla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heard both the parties at some length and given our thoughtful consideration to the rival submissions with reference to the facts, evidence and material on record. The undisputed facts of the case are that original assessments were completed under section 143(1)/143(l)(a) resulting in refunds. There was no question of charging any interest under section 139(8)/215/217/234A/234B. These assessments were subsequently reopened under section 147 after search and seizure action. Even at the time of completing the re-assessments, the Assessing Officer did not charge interest under the above-mentioned sections. It was only after issue of notices under section 154 that the Assessing Officer charged interest under the above-mentioned sections for the various assessment years. We are in complete agreement with the ld. D.R. that the CIT(A) has disposed of these appeals in a casual manner without passing speaking orders to say the least. The assessee has taken as many as seven grounds of appeals before the CIT(A). She has not recorded any finding in regard to merits of the grounds and also whether the Assessing Officer had rightly rectified the orders under section 154 or not. Be that as it ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... creasing or reducing the interest as a result of an order under sections 147, 154, 155, 250, 254, 260, 262, 263, 264, or sub-section (4) of section 245D. Now the issues whether the assessments completed under section 147 are regular assessments as assessments were earlier completed under section 143(1)/143(1)(a) or not, whether failure to charge interest at the time of completing the first assessment made under section 143(1)/143(1)(a), was not relevant for the purpose of charging interest under the above-mentioned sections and also whether the Assessing Officer could charge interest under the above-mentioned sections by resorting to provisions of section 154 in a case where he did not charge such interest even at the time of completing reassessments under section 147, were highly debatable and contentious involving long drawn process of reasoning as two conceivable views are possible. This is further evident from a number of judgments mentioned in the preceding paragraphs, which show that these issues were highly contentious. Therefore, the same fell outside the scope of provisions of section 154 of the Income-tax Act. Reliance in this regard is placed on the judgment of Hon'ble S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment or re-assessment. Therefore, these judgments support the case of the assessees. 9. The ld. D.R. has submitted that levy of interest is statutory and mere omission on the part of the Assessing Officer to charge interest at the time of completing the re-assessment does not mean that such mistake could not be rectified under section 154. She has relied on the judgment of Supreme Court in the case of Central Provinces Manganese Ore Co. Ltd., and the judgment of Patna High Court in the case of Bishwanath Tubyan. We have carefully gone through the aforesaid judgments but we are of the opinion that the same are clearly distinguishable on facts. The issue before the Hon'ble Supreme Court in the case of Central Provinces Manganese Ore Co. Ltd., was whether liability in regard to charge of interest under section 139(8) and section 215 could be raised in appeal as there are no specific provisions in the Act that these were appealable orders. The Hon'ble Supreme Court, in this context, has held that charging of interest under section 139(8) and section 215 was part of the processing the tax liability of the assessee and, therefore, the same could also be disputed in appeal provide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e High Court has held that levy of interest under section 139(8)/215 was part of the assessment process and mere failure to include in the terms of settlement would not mean that Assessing Officer could not levy interest under these sections. This was altogether a different issue. Similarly, the ld. D.R. has relied on the judgment of Delhi High Court in the case of Mahanagar Telephone Nigam Ltd., where, in the context of reopening of the assessment, the High Court has held that intimation under section 143(1)(a) does not amount to assessment. As mentioned, the judgment of Delhi High Court was delivered in the context of reopening of assessment, where proviso to section 147 itself required different conditions and time-limit for reopening the assessment where the original assessment was completed under section 143(1)/143(1)(a) and in a case where the assessment was completed under section 143(3). Therefore, the ratio of the same would not be applicable to the facts of the present cases. Further, the ld. D.R. has relied on the judgment of Kerala High Court in the case of K. Govindan Sons, where the High Court has held that interest under section 139(8) could be charged in a case wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. Now, when we see the present cases, in the light of such legal position, we find sections 139(8), 215 and 217 only refer to charging of interest at the time of completion of regular assessment. If the intention of the Legislature was to provide for levy of interest under these sections at the time of completing any assessments under the Act, this could have been specifically provided in the relevant sections. Therefore, the mere fact levy of interest is statutory does not mean that interest could be charged at the time of completing any assessments which do not fall in the definition of regular assessment. No doubt, Explanation 2 to section 139(8) and sub-section (6), of section 215 have extended the meaning of regular assessment so as to cover the assessment made for the first time under section 147. But here also, the distinction has been drawn between a case where the assessee has filed the original return under section 139 and the Assessing Officer has completed the original assessment and the case where the assessee has not filed the return and the first assessment has not been made. While in the first case, interest under sections 139(8), 215, 217 could be charged only up ..... X X X X Extracts X X X X X X X X Extracts X X X X
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