TMI Blog1985 (7) TMI 150X X X X Extracts X X X X X X X X Extracts X X X X ..... O heard the representative of the assessee under sections 143(2) and 142(1) of the Act. He prepared a draft assessment order dated 22-3-1982 and invited the assessee's objections. The objections received from the assessee were forwarded to the IAC and his directions were obtained. Thereafter, the assessment was completed by the ITO under section 143(3)/144B of the Act on 25-9-1982. 3. Subsequently, the Commissioner scrutinised the records and came to hold the view that the assessment order passed by the ITO was erroneous and prejudicial to the interests of the revenue. Hence, he issued a show-cause notice on 26-7-1984 to the assessee in the following terms : "Scrutiny of the assessment records for the assessment year 1979-80 reveals tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut prejudice to the above, it was contended that the first instalment of advance tax amounting to Rs. 4,05,355 was paid on 15-9-1978 under section 209 of the Act. A notice under section 210 of the Act was subsequently, served on the assessee on 16-11-1978 demanding advance tax of Rs. 8,18,983 and earlier payment of Rs. 4,05,355 made on 15-9-1978 was rightly appropriated towards the said demand of Rs. 8,18,983 raised under section 210 subsequently. Hence, it was urged that there was no error in the order of the ITO or the subsequent ministerial calculations following the assessment when the aforesaid payment made on 15-9-1978 was taken as advance tax for the purpose of calculating interest under section 214 of the Act. Under these circumstan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applied. The Commissioner rejected this contention on the ground that calculation of interest is a part of the assessment order and the demand notice issued by the ITO was erroneous and so, the matter clearly came within the ambit of section 263. In this view of the matter, he passed the impugned order under section 263 and directed the ITO to revise the assessment by enhancing the income by a sum of Rs. 1,31,885 and by reducing the interest on Rs. 4,05,355 amounting to Rs. 1,66,196 from the total interest allowed to the assessee. 6. Shri B.K. Mohanti, the learned representative for the assessee, urged before us that the Commissioner, erred in his decision. Regarding the first point he stated that the ITO had the order dated 7-10-1980 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of CIT v. Traub (India) (P.) Ltd. [1979] 118 ITR 525 (Bom.) wherein it has been held that even when there is a default in adhering to the schedule prescribed for the payment of advance tax, interest under section 214 is payable to the assessee if the demand has been accepted by the department as payment of the instalment of advance tax. Hence, he urged that the order under section 263 deserved to be cancelled. 7. Shri S. Dasgupta, the learned representative for the department, on the other hand, supported the order of the Commissioner, He stated that the ITO should not have followed the order of the Tribunal which was under reference before the High Court because the said order had not yet become final. Secondly, he pointed ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailable to the department to safeguard their interests in case the reference pending before the Hon'ble High Court is decided in favour of the revenue. But that fact alone did not confer jurisdiction under section 263 to revise the order passed in accordance with the direction of a superior authority which held the field at the relevant time. 9. We have considered the contentions of both the parties as well as the facts on record. We find that the ITO had made the assessment under section 143(3), read with section 144B after discussing the matter with the representative of the assessee. The IAC also had an occasion to review the assessment made by the ITO. It is true that the order of the ITO does not refer to the taxability of the sum of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of the Orissa High Court in the case of Orissa Forest Corpn. 10. We now come to the second point relating to allowing of interest under section 214. Here too, we do not find any mistake committed by the ITO or his ministerial staff. The sum of Rs. 4,05,355 paid on 15-9-1978 has been treated by the department itself as advance tax and credit for the same has been given while calculating the tax payable on regular assessments. That amount was taken as advance tax just as the subsequent instalments paid after the service of a notice under section 210 on the assessee. Hence, it cannot be said that the said amount did not represent advance tax only for the purpose of section 214. This conclusion gets strengthened if it is remembered that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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