1982-VIL-496-MP-DT

Equivalent Citation: [1983] 144 ITR 871, 27 CTR 337, 10 TAXMANN 307

MADHYA PRADESH HIGH COURT

Date: 16.01.1982

COMMISSIONER OF INCOME-TAX, MP -II, BHOPAL

Vs

PARMANAND BHAI PATEL AND SMT. JYOTSNADEVI PATEL

BENCH

Judge(s)  : G. P. SINGH., K. K. DUBE

JUDGMENT

The judgment of the court was delivered by

G. P. SINGH C.J.-This is a reference made by the Income-tax Appellate Tribunal referring for our answer the following questions of law :

" (1) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was correct in law in holding that the rectification order under section 154 of the Income-tax Act, 1961, was invalid and without jurisdiction ?

(2) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was correct in law in holding that interest under section 214 of the Income-tax Act, 1961, was also payable to the assessee on the last two instalments amounting to Rs. 5,90,000 even though they were paid after 1st March, 1969, i.e., after the last date prescribed under section 211 of the Income-tax Act, 1961, but within the financial year-ending 31st March, 1969 ? "

The reference relates to the assessment year 1969-70. The assessee paid advance tax in accordance with s. 211 of the I.T. Act, 1961, on different dates as mentioned in paragraph 2 of the statement of case. The last two instalments were respectively paid on 3rd March, 1969, and 23rd March, 1969. The due date for payment of last instalment under s. 211, as then in force, was 1st March, 1969. The assessment order by the ITO was passed on 2nd March, 1972. The assessee was allowed interest amounting to Rs. 23,462 under s. 214. Thereafter, proceedings for reassessment were taken on the ground that income in respect of self-occupied property had escaped assessment. The reassessment order was passed on 1st February, 1975. The ITO then rectified the assessment under s. 154, by his order dated 29th November, 1976, by deleting the interest allowed under s. 214. The assessee contended before the AAC that the rectification order was passed beyond limitation, as it was passed beyond four years from 2nd March, 1972, when the initial order of assessment was passed by the ITO. It was also contended that there was no apparent mistake on the record, Both these contentions were negatived by the AAC. In further appeal, the Tribunal accepted both these contentions of the assessee. The Tribunal further held that on merits also the assessee was entitled to interest under s. 214.

According to the Tribunal's finding, the ITO had no jurisdiction under s. 154 to pass the order dated 29th November, 1976, for two reasons: First,that the order was passed beyond the period of limitation of four years from the date of the original order of assessment, i.e., 2nd March, 1972, and, secondly, that the question, whether in the facts and circumstances of the case, the assessee was entitled to interest under s. 214, was a debatable question of law and it could not constitute a mistake apparent on the record. The Tribunal's view was that even after reassessment the original order of assessment continues to exist in respect of matters which are not touched by the reassessment order. This view of the Tribunal does not appear to be correct in view of the rulings of the Supreme Court in Deputy Commr. of Comml. Taxes v. Sri Ramulu (H. R.) [1977] 39 STC 177 and V. Jaganmohan Rao v. CIT [1970] 75 ITR 373. It is, however, not necessary to go into this question because, in our opinion, the Tribunal was clearly right in holding that there was no mistake apparent on the record to justify a rectification under s. 154. The question whether an assessee, who has deposited advance tax in the financial year, but not on the due dates mentioned in s. 211, is entitled to interest under s. 214 is a debatable question of law. Different views have been expressed by different High Courts. The Gujarat, the Punjab & Haryana and the Madras High Courts are of the view that even though advance tax is not paid on the due dates mentioned in s. 211, yet if it is paid in the financial year before lst April, the assessee is entitled to interest under s. 214: [See Chandrakant Damodardas v. ITO [1980] 123 ITR 748 (Guj), CIT v. Rohtak Delhi Transport P. Ltd. [1981] 130 ITR 777 (P & H) and Addl. CIT v. Chitra Sagar [1980] 121 ITR 699 (Mad)]. Contrary view has been taken by the Andhra Pradesh and the Kerala High Courts: [See Kangundi Industrial Works (P.) Ltd. v. ITO [1980] 121 ITR 339 (AP) and A. Sethumadhavan v. CIT [1980] 122 ITR 587 (Ker).] In view of this sharp divergence of opinion, it is clear that there could be no mistake apparent on the record on such a question. The ITO, therefore, had no jurisdiction to take proceedings under s. 154 of the Act.

For the reasons given above, we answer the questions referred as follows:

(1) The Appellate Tribunal was correct in law in holding that the rectification order was without jurisdiction.

(2) In view of our answer to question No. 1, question No. 2 does not arise.

There will be no order as to costs of this reference.

 

 

 

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