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TMI Blog2001 (11) TMI 75X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 7C could be charged by an order under section 13 of the Surtax Act and so the levy of interest was not in order?" For the assessment year 1982-83, the assessee was assessed under section 6(2) of the Companies (Profits) Surtax Act, 1964 (hereinafter called "the Surtax Act"), on February 25, 1987. While making the assessment, the Assessing Officer did not levy interest payable by the assessee in terms of section 7C of the Surtax Act. There was an appeal at the instance of the assessee against the assessment and that appeal was ultimately disposed of. Thereafter, the Assessing Officer issued a notice to the assessee under section 13 of the Surtax Act proposing to rectify the original order with reference to a reduction of profit under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act in view of the fact that the omission to charge interest in the original order of assessment dated February 25, 1987, was not a mistake which could be rectified under that provision, but that it was really a case of waiver of interest by the Assessing Officer when he completed the regular assessment. The Income-tax Appellate Tribunal is seen to have rendered a finding that the failure to levy interest under section 7C of the Surtax Act was a mistake that could be set right by an order under section 13 of the Surtax Act within a period of four years from the end of the financial year in which the order was passed. Thereafter, the Appellate Tribunal is also seen to have stated that in view of the decision of the High Court of Gujarat in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Act, stood waived by the Assessing Officer not levying interest in the regular order of assessment dated February 25, 1987, and whether in the circumstances of the case, the Assessing Officer could rectify the order dated February 25, 1987, by levying interest chargeable under section 7C of the Surtax Act while exercising the jurisdiction under section 13 of the Surtax Act. In this case, therefore, the question is whether the Assessing Officer had the jurisdiction to invoke section 13 of the Surtax Act. Though the Tribunal originally seems to have taken the view that the power was not exercised within time, subsequently that finding was rectified by the Tribunal which found that the power had been exercised by the Assessing Officer within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment, could not be considered as an act of waiver of interest by the Assessing Officer while completing the assessment. Section 7C of the Surtax Act clearly provides that interest at the rate prescribed in that section, is payable by the assessee-company for default in payment of advance surtax as provided by section 7A of the Act. Thus, the liability to pay interest is a liability imposed by the statute itself. It does not spring from the order of the, Assessing Officer. It has been held by this court in CIT v. R. Ramalingair [2000] 241 ITR 753 that the liability to pay interest under sections 234A and 234B of the Income tax Act is attracted automatically by operation of law and, therefore, no prior notice to show cause is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10 ITR 411, the Gujarat High Court held that it was open to the Income-tax Officer under section 154 of the Income-tax Act to initiate rectification proceedings and levy interest as the omission on his part at the time of the original assessment in that regard was apparent from the record. In a case of a similar omission to levy interest under the Income-tax Act, the Patna High Court in CIT v. Tiwary Bechar and Co. [1987] 165 ITR 78, held that the order could be rectified in exercise of power under section 154 of the Income-tax Act and interest could be levied. The same view was taken by the High Court of Rajasthan in Mulchand Patti Mfg. Co. v. CIT [1995] 215 ITR 746. Learned counsel for the assessee relied on CIT v. Gordhanbhai Jethabhai [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer finding the existence of one of the grounds justifying waiver under rule 13C of the Rules read with section 7C(5) of the Surtax Act, it cannot be postulated that the Assessing Officer has waived the interest while completing the regular assessment under section 6(2) of the Surtax Act. It may also be noted that going by the relevant clause in rule 13C of the Rules, it may not also be possible for the Assessing Officer to waive interest due under section 7C of the Act for one year commencing from the first day of April of the next following financial year concerned. We find that this is how the relevant provision was understood by the High Court of Allahabad also J. K. Jute Mills Co. Ltd. v. ITO [1978] CTR 250. It appears ..... X X X X Extracts X X X X X X X X Extracts X X X X
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