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TMI Blog2013 (11) TMI 1437X X X X Extracts X X X X X X X X Extracts X X X X ..... ement in the High Court at Allahabad, for speedy disposal of cases. The papers of this reference were received in the High Court on 22.9.1999. The reference remained pending for a period of almost six years, when notices were issued on 22.6.2005, fixing 4.8.2005. After about one year and four months on 27.4.2007 the case was directed to be listed for final hearing and paper books were required to be filed. Since thereafter for the last five years, the case was adjourned either on the illness slips, or on the adjournment of the cases of Shri S.K. Garg. On 3.11.2011 on the request of Shri Ashish Bansal appearing for the respondent-assessee the case was directed to be listed in the next cause list. It, however, appeared in the cause list after a period of eight months and thereafter again adjourned on two dates on the request of counsel of respondent-assessee. The reference was finally heard after a period of 13 years on 10.10.2012. The illness slips sent and adjournment taken by Shri S.K. Garg, could be avoided. 4. Brief facts, giving rise to this reference as stated in the statement of case, are given as below:- "3.1 The assessee, by status a limited company, was required to file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consequence of the C.I.T.'s order uder Section 263, the amount refundable to the assessee was worked out at Rs. 99,235/-. Vide order dated 10.11.1993 under section 154 of the Income-tax Act, the Assessing Officer allowed interest under section 244 amounting to Rs. 32, 240/- from May, 1991 to October, 1993. 3.4 The Appellate Tribunal passed an order dated 11.2.1994 in I.T.A. No. 1987 (Alld)/1993 cancelling the order passed by the C.I.T under Section 263 and restoring the order of the Assessing Officer. The Assessing Officer gave effect to the Tribunal's order on 17.3.1994 in which the assessee was held entitled to refund and interest with effect from May, 1991. Interest under Section 244 (1A) was computed at Rs. 13,87,906/- for which a refund voucher was issued on 29.3.1994. On 5.5.1994, the assessee filed application under section 154 seeking rectification of quantum of interest from Rs. 13,87,906/- to Rs. 82,43,349/-. On 23.9.1994, the Assessing Officer issued a show cause notice under Section 154 of the Income Tax Act proposing to withdraw the amount of interest of Rs.13,87,906/-. Vide order dated 16.1.1995 under section 154 of the Income-tax Act, while rejecting assessee's app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the order of CIT (A). The Tribunal allowed the appeal on the ground that the Assessing Officer could not have passed an order under Section 154 of the Act by way of rectification of a mistake apparent on record. The Tribunal relied on T.S. Balaram vs. Volkart Bros 82 ITR 50 (SC) in holding that the mistake on record was neither obvious nor something which could be established without a long drawn process of reasoning on points on which there may conceivably be two opinions. 6. The Tribunal held that the three conditions for allowance of interest under Section 244 (1A) of the Act were required to be satisfied. The payment of tax under Section 140-A was made for the period January to March, 1975. Prima facie it was not made as a result of any order of assessment or penalty duly passed. The provisions of Section 219 have to be considered according to which payment of advance tax shall be treated as a payment of tax for an assessment. Similarly under Section 140-A (2) after a regular assessment is made, any amount paid under sub-section (1) as self-assessment shall be deemed to have been paid towards such regular assessment. In Modi Industries Ltd v. C.I.T. 216 ITR 759 as far as tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d a further amount of Rs.32,240/- already allowed to the assessee on 29.4.1994 and 17.11.1993 was wrongly allowed. Accordingly the AO correctly issued notices under Section 154 on 23.9.1994 together with the letter dated 29.9.1994 for withdrawing the amount of interest allowed under Section 244 (1A) of the Act. The notice was signed on 28.9.1994. The argument on the scope of Section 244 (1A) being a debatable proposal was made only to confuse the issue. The rectification of mistake was not on debatable point nor did it involve any long drawn process to arrive at a conclusion that such refund could not allowed. The assessee was clearly not entitled to any payment of any interest under Section 244 (1) and Section 244 (1A) and thus the same could not be withdrawn by way of rectification of mistake under Section 154. 9. Shri R.K. Upadhyay submits that the AO rightly rejected the plea of the assessee that the order under Section 254 dated 25.9.1991 got merged with the order dated 10.9.1993 passed by the Commissioner of Income Tax under Section 263 and that the order of the Commissioner of Income Tax got merged in the order dated 11.9.1994 passed by ITAT, Allahabad and consequently the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... file its return under Section 139 (1) by 31.7.1974. It was, however, filed under Section 139 (4) on 6.12.1974. A revised return was filed on 23.2.1977. On 28.1.1978 the assessee was required to get its account audited under Section 142 (2-A) of the Act. The order was stayed by the High Court on a writ petition filed by the respondent-company. The interim order continued upto 3.3.1987 when the writ petition was dismissed on 18.10.1989. The High Court disposed of the misc. application of the department. The assessment order was finally passed in respect of the assessment year 1974-75 on 10.11.1989, under Section 144 computing the total income at Rs.62 lacs. The credit of payment of tax on self assessment under Section 140-A was not given. The assessee made an application under Section 154, which was allowed on 21.11.1989 giving credit of payment of tax under Section 144-A. The interest under Section 139-B was charged at Rs. 1,43,220/- and interest under Section 215/217 was charged at Rs. 11,23,370/-. 13. The CIT (A) set aside the assessment on 26.2.1990 and that the Income Tax Appellate Tribunal by its order dated 22.3.1991 held that the assessment completed by the Assessing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave drawn the proceedings. If such interest was not allowable plainly on the facts and circumstances of the case, the AO could have exercised the powers under Section 154 to correct the mistake apparent on record. 19. In T.S. Balaram, Income Tax Officer vs. Volkart Brothers & ors (1971) 82 ITR 50 (SC) the Supreme Court held in paragraph-4 as follows:- "4. From what has been said above, it is clear that the question whether S. 17(1) of the Indian Income-tax Act, 1922 was applicable to the case of the first respondent is not free from doubt. Therefore the Income-tax Officer was not justified in thinking that on that question there can be no two opinions. It was not open to the Income-tax Officer to go into the true scope of the relevant provisions of the Act in a proceeding under S. 154 of the Income-tax Act, 1961. A mistake apparent on the record must be an obvious and patent mistake and not ,something which can be established by a long drawn process of reasoning on points on which there may conceivably be two opinions. As seen earlier, the High Court of Bombay opined that the original assessments were in accordance with law though in our opinion the High Court was not justified i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er dated 26.2.1990, and got the entire refund of the tax deposited by it and also claimed interest under Section 244 (1A) of Rs. 7,60,504/-. This order was subject to revision under Section 263 and was set aside. 21. In our view the assessee was not entitled to any interest under Section 244 (1A) on the refund inasmuch as the conditions of grant of interest were not satisfied. The assessee-company had not paid the amount after 31st day of March, 1975, in pursuance to any order of assessment or penalty, which is the first and foremost condition of interest on refund under Section 244 (1A). The amount of tax refunded to the assessee was deposited by way of self assessment. The judgment in Modi Industries Ltd vs. Commissioner of Income Tax is on payment of interest to the assessee on the excess of advance tax paid under Section 214 of the Act. It is not an authority under Section 244 (1A) in respect of which a clarification has been given in the judgement at page 806 as follows:- "This sub-section applies only to a case where an assessee has paid tax or penalty after March 31, 1975 in pursuance of any order of assessment or penalty. If as a result of appeal or other proceedings unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income Tax Act. In other words, so far as the amount of advance tax is concerned, it must be understood to have been paid "in pursuance of any order of assessment" only on the date of the original order of assessment - and not on the date of actual payment. The reason is obvious: on the day the advance tax amount is paid there is no assessment and, hence, it cannot be said to have been paid "in pursuance of any order of assessment". This view was also taken by the Punjab High Court in the case of Leader Engineering Works. (1989) 178 ITR 529. Interest under sub-section (1A) of Section 244 is payable when the tax or penalty paid by an assessee pursuant to an order of assessment has been reduced in appeal or any other proceeding. In such a case, an excess amount of tax or penalty paid by the assessee will have to be refunded and the Central Government has to pay interest on the excess amount from the date on which such amount was paid to the date on which the refund was granted. Of course, there can be no question of paying interest both under Section 214(1A) and Section 244(1A) simultaneously. The rate of interest being the same under both the provisions, there would be no differenc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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