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TMI Blog1982 (10) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... nt order dated 3-9-1977 for the assessment year 1975-76 and towards the end the following observations were made : "Assessed under section 143(3). Tax shall be worked out on the above income. Notice of demand together with the challan shall be issued after giving credit for taxes paid under section 210. Interest under section 139(8) shall be charged. Notice under section 274 read with section 271 shall also be issued, also issue notice under section 274 read with section 273." In consequence of this assessment order after calculation of tax, a notice of demand was issued to the assessee demanding payment of Rs. 16,804. On the back side of the demand notice the details of the working of the amount demanded were given. It is seen from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ords, it is rectified under section 154." The ITO in the next sentence in the same para referred to the assessee's objection about the refusal of interest charged under section 139(8), in view of revised total income consequent upon the withdrawal of excess rebate allowed under section 80G of the Act. In other words, the ITO started dealing with the second item of his notice about recalculation of interest chargeable under sections 139(8) and 217. In para 3, the ITO observed that interest under sections 139(8) and 217(1) shall be revised in view of his observations above. In that order he also referred to the total income assessed as per order dated 7-2-1979. Shri K.C. Patel, the assessee's counsel, submitted that the assessee had no idea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he demand of interest under section 217 and not proceeded further. (iii) In respect of order under section 155 dated 7-2-1979, it was submitted that so far as the reduction part of the income of the assessee was concerned no notice was required but as the ITO had added one sentence in hand for charging of interest under section 217, this could not be done, being a substantive order to levy interest, without giving a notice to the assessee. It was also stated that the AAC was not right in observing that there was no appeal provided in the circumstances of the assessee's case and attention was invited to the fact that the appeals in this case were filed against rectification orders under sections 154 and 155 and not simply against charg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 154 of the Act, dated 8-3-1979 that the mistake which the ITO accepted in that order was merely of not mentioning the fact of charging of interest under section 217 in the body of the assessment order and that mistake only is sought to be made good in his order and not that he ordered for the levy of interest under section 217 itself for the first time since interest had in fact been levied at the assessment stage itself. It was also submitted that the ITO thereafter dealt with his own notice of rectification of the assessee and disposed of both the assessee's application and his notice together after hearing the assessee and also directed for recalculation of both the interests under sections 139(8) and 217(1) on account of upwa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITO could make the rectification without notice. The only dispute raised by the assessee is in respect of last sentence added in hand by the ITO about charging of interest under sections 139 and 217. The assessee's interpretation is that the ITO was seeking to impose interest under section 217 by adding this sentence. In the facts of the case such an interpretation is cleary unwarranted. The ITO undisputedly had raised the demand of interest under section 217 by issuing the demand notice to the assessee and this he did after making calculation in a form used for the purpose in the Income-tax Office. Again, if the ITO was purporting to levy interest under section 217 by writing the sentence in the order under section 155, one fails to unders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment order, his task under section 143(3) is still incomplete and it is completed only when he also signs the tax calculation sheet in use in the Income-tax Office. In the tax calculation sheet, not only the taxes are calculated but also other sums payable like the interest, if any, are worked out. The ITO signs both the assessment order and the tax calculation sheet and thereafter a demand is created against the assessee by issuing a demand notice. Taking note of these facts and the Allahabad High Court decision relied upon by the revenue, we feel that the ITO's action in demanding interest under section 217 by giving details on the demand notice was in order. The Allahabad High Court in Ram Kishan at page 370 in para 6, has clearly obser ..... X X X X Extracts X X X X X X X X Extracts X X X X
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