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TMI Blog1986 (4) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. The refund was withheld under section 241 of the Income-tax Act, 1961. The matter was finally disposed of by the Tribunal on an appeal of the Revenue on May 26, 1977. A refund of Rs. 22,01,545 has finally been directed to be made to the assessee. The Income-tax Officer awarded interest under section 244(1A) while allowing the refund by his order passed under section 244. Later, the Income-tax Officer sought to rectify the said order on the ground that excess interest has been granted to the assessee and the mistake was apparent on the face of the record. Proceedings were initiated under section 154 of the Income-tax Act, 1961. By an order passed on August 18, 1978, it was held that excess interest amounting to Rs. 1,48,150 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lculation of interest had been specifically laid down. The Tribunal came to the conclusion that the case of the assessee was governed by section 244(1A) and, in any event, it was a debatable issue on two grounds, viz., (a) whether section 244(1A) applied to the assessee instead of section 244(2), and (b) whether section 244(2) curtailed the operation of section 244(1A) when an order was passed by the Commissioner of Income-tax under section 241. The issue being debatable, the Tribunal held that the provisions of section 154 should not be invoked in the case. On an application by the Revenue under section 256(1) of the Income-tax Act, 1961, the following questions have been referred as questions of law arising out of the order of the Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : " (1) Where a refund is due to the assessee in pursuance of an order referred to in section 240 and the Income-tax Officer does not grant the refund within a period of three months from the end of the month in which such order is passed, the Central Government shall pay to the assessee simple interest at twelve per cent. per annum on the amount of refund due from the date immediately following the expiry of the period of three months aforesaid to the date on which the refund is granted. (1A) Where the whole or any part of the refund referred to in subsection (1) is due to the assessee as a result of any amount having been paid by him after the 31st day of March, 1975, in pursuance of any order of assessment or penalty and such amount o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the refund is granted. " Construing the said sections, learned advocate for the Revenue contended that two distinct situations were envisaged in cases of refund. One case was where no order has been made under section 241 withholding the refund and the other case was where such an order has been made directing withholding of the refund. If there was no order for withholding, it was conceded that the case would be governed by section 244(1A). But if an order withholding refund had been made under section 244, it was contended that the provisions of section 244(2) would come into play. It was submitted that section 244(2) dealt with a particular class of cases whereas section 244(1A) dealt with general class of cases of refund and if the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the section was not free from doubt in view of the fact that section 244(1A) was a new section which had been introduced in the Act subsequently giving special benefits to the assessee. If there were two possible views, then the Income-tax Officer was not justified in invoking the provisions of section 154. He submitted that even the Commissioner of Income-tax (Appeals) had noted that there was some substance in the contentions of the assessee. In support of his contentions, learned advocate for the assessee cited: (a) T. S. Balaram, ITO v. Volkart Brothers [1971] 82 ITR 50 (SC). This decision was cited for the following observations (at page 53) : " It was not open to the Income-tax Officer to go into the true scope of the releva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , but will only permit the Income-tax Officer to withhold refund. It is a matter of debate whether the special benefit granted under the new section was intended to be curtailed by the existing sections 241 and 244(2). Two views are certainly conceivable. For the above reasons, we agree with the conclusion of the Tribunal that the question was a debatable one and it was not open to the Income-tax Officer to invoke the provisions of section 154 of the Income-tax Act, 1961. It cannot be said that only one view of the sections was conceivable and the other view could be taken only by misreading the sections. We make it clear that we do not intend to lay down a final conclusion on the construction of the said sections in this case. As observe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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