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TMI Blog1977 (4) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... d the tax payable by the petitioner. On November 19, 1973, he rectified his order and found that a sum of Rs. 36,058 was refundable to the petitioner. The petitioner made an application under section 154 of the Income-tax Act, 1961 (hereinafter called "the Act"), claiming interest under section 214 on the excess amount of advance tax paid by it. That application was dismissed by the Income-tax Officer. The petitioner preferred an appeal to the Appellate Assistant Commissioner who took the view that though the petitioner's claim was very just, disallowance of interest by the Income-tax Officer did not constitute an obvious or patent mistake which could be rectified under section 154 of the Act. The petitioner then filed a revision to the Commissioner of Income-tax (hereinafter referred to as "the Commissioner") who dismissed the revision holding that interest under section 214 of the Act was payable only where the amount of tax determined on the original or first assessment was less than the amount of advance tax deposited by the assessee and that such interest could not be allowed where the amount of tax finally determined as a result of the appellate order of the Appellat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the financial year foregoing provisions of this section interest during which it is payable by reason shall be payable only up to the date on of the provisions of section 213, which the refund was made. interest as aforesaid shall also be payable on that instalment from the date of its payment to the date of regular assessment :..... (the proviso is omitted) (1A) Where on completion of the regular assessment the amount on which interest was paid under sub- section (1) has been reduced the interest shall be reduced accordingly and the excess, if any, paid shall be deemed to be tax payable by the assessee and the provisions of this Act shall apply accordingly. (2) On any portion of such amount which is refunded under this Chapter, interest shall be payable only up to the date on which the refund was made." Though there was no definition of the expression "regular assessment" in the old Act, the language of sub-section (5) of section 18A of the old Act is in pari materia with that of section 214 of the Act. Hence, the decisions rendered with reference to section 18A of the old Act can usefully be looked into. In Saran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which there is no liability to pay upon the assessee. But once the order of assessment is made, the liability to pay arises, and even though the order may be subsequently set aside, there is no obligation upon the department to pay any interest in respect of the amounts which they recovered as tax under the original assessment order. The view taken by the Bombay High Court in Sarangpur Cotton Manufacturing Co.'s case [1957] 31 ITR 698 (Bom) was followed by a Division Bench of this court in Sir Shadilal Sugar and General Mills Ltd. v. Union of India [1972] 85 ITR 363 (All). There also the assessee had paid advance tax under section 18A of the old Act. In the original order of assessment the amount of tax determined was more than what the assessee had deposited as advance tax. In appeal, the Appellate Assistant Commissioner reduced the amount of assessable income considerably and directed the Income-tax Officer to give effect to such reduction and to modify the assessment accordingly. On such modification of the assessment a sum of Rs. 2,92,902 was found refundable after taking into account the advance tax deposited. The assessee claimed interest on such excess amount of advance t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erest in respect of the excess amount of advance tax paid by it must be determined by reference to the date of the first or original assessment order for the year and not the date of the order passed consequent to the appellate order." As section 214 of the Act is in pari materia with sub-section (5) of section 18A of the old Act, the rulings of the Bombay High Court in Sarangpur Cotton Manufacturing Co.'s case [1957] 31 ITR 698 (Bom) and of this court in Sir Shadilal Sugar Mills' case [1972] 85 ITR 363 (All) are equally applicable to the present case. But, Shri Upadhya contended that the above rulings were under the old Act and that we should prefer the ruling of the Calcutta High Court in Chloride India Ltd. v. Commissioner of Income-tax [1977] 106 ITR 38 (Cal) in which section 214 of the Act has been considered. There the Income-tax Officer had made an assessment in which the amount of tax assessed was more than the amount of advance tax deposited and an additional demand for Rs. 2,62,239 was made. The assessee's appeal to the Appellate Assistant Commissioner was successful. While giving effect to the appellate order, the Income-tax Officer recomputed the income and determine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f regular assessment, the Income-tax Officer may after first April in the financial year, by an order in writing, require him to pay advance tax determined in accordance with the provisions of sections 207 to 209 of the Act. His Lordship said that if the expression "regular assessment" meant the first assessment only, then the result would be that in a case where, after the first assessment, there was in appeal and in the appeal the assessment had been modified or reduced and the Income-tax Officer had passed an order giving effect to such modification or reduction, the Income-tax Officer would still be obliged to make demand for advance tax not on the basis of the amount reduced by the direction of the appellate authority, but on the basis of the first assessment order made by him. This, according to big Lordship, would result in an anomalous situation. His Lordship concluded ([1977] 106 ITR 38, 42 (Cal)): "Regular assessment is certainly different from the first assessment or provisional assessment. But regular assessment is not confined to first assessment. When an assessment is modified pursuant to the order of the appellate authority or direction, the subsequent order will b ..... 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