1987 (11) TMI 137 - AT - Income Tax

Summary

Issues:
- Appeal against order of CIT(A) allowing appeal against s. 154 order of ITO in regard to levy of interest under s. 215
- Interpretation of 'Regular assessment' in the context of subsequent assessment made under direction of CIT under s. 263
- Disputable issue of whether the amount represented income of the year
- Obligation of assessee to file an estimate of advance tax and pay advance tax
- Legality of levy of interest under s. 215 in subsequent assessment proceedings
- Clarification on 'Regular Assessment' post-amendment w.e.f. 1st April, 1985

Analysis:
The appeal before the Appellate Tribunal ITAT Jaipur pertained to the Revenue contesting the order of the CIT(A) which allowed an appeal against the s. 154 order of the ITO regarding the levy of interest under s. 215, deeming the matter as highly debatable. The case involved the original assessment being set aside by the CIT under s. 263, leading to subsequent assessment by the ITO with the imposition of interest under s. 215, not present in the initial assessment. The dispute arose from the Commissioner's direction under s. 263 regarding an amount representing excess excise duty paid by the assessee, treated as income for the year. The assessee contended that the subsequent assessment was not a 'Regular assessment' as per judicial interpretations, thus justifying rectification under s. 154.

The CIT(A) analyzed the term 'Regular assessment' in light of various court decisions, concluding that the subsequent assessment, prompted by the CIT's directive under s. 263, did not qualify as a 'Regular assessment.' The Revenue challenged this decision, citing conflicting decisions favoring them, while the assessee argued for consistency in judicial pronouncements on the term 'Regular Assessment.' The Tribunal considered the arguments, emphasizing the disputable nature of whether the amount constituted income for the year and the absence of an obligation on the assessee to pay advance tax in the absence of the s. 263 direction.

The Tribunal upheld the CIT(A)'s decision, reasoning that the subsequent assessment, a result of the s. 263 direction, could not be deemed a 'Regular assessment.' It highlighted that amendments post-April 1, 1985, clarified that only assessments made for the first time under specific sections constituted 'Regular Assessment.' Therefore, the Tribunal dismissed the Department's appeal, affirming the correctness of the assessee's claim and the rectification under s. 154.