TMI Blog2002 (4) TMI 221X X X X Extracts X X X X X X X X Extracts X X X X ..... come-tax Act till the date of actual payment of refund. 04. The learned CIT (A) has erred in holding that the Assessing Officer's assessment order dated18-3-1991is an order under section 143(3) of the Income-tax Act read with the section 148. 05. The learned CIT (A) has erred in holding that the claim of the assessee for grant of interest is unjustified. 06. The learned CIT (A) has erred in holding that the assessee's application under section 154 was without jurisdiction. 07. The learned CIT (A) has erred in holding that the assessee's appeal is not maintainable. 08. The learned CIT (A) has erred in holding that the appeal of the assessee is without jurisdiction and is required to be dismissed." 2. At the outset, it may be mentioned that the present appeal pertains to the order passed by the Commissioner of Income-tax (Appeals) whereby he has upheld the action of the Assessing Officer in rejecting the assessee's application under section 154. The other relevant facts are that for the assessment year under consideration i.e., 1986-87 the assessee filed the original return of income on20-6-1986declaring a loss of Rs.4,151. It was mentioned in the return that there was a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . CIT confirmed 13. Second appeal under section 154 6. The assessee in the meantime i.e. on17-8-1987addressed a letter to the Commissioner of Income-tax, Delhi-III, wherein it admitted the commission income of Rs.1.61 crores and odd and offered to pay the tax thereon. The Assessing Officer, however, had already completed the assessment under section 143(1) on 29-7-1987 and the information which came to his possession about the commission paid to the assessee did not feature either in the return of income or in the books of account. He issued a notice under section 148 on31-8-1987seeking to reassess the assessee's income including the commission income. The assessee on the same date i.e., 31-8-1987 filed an application with reference to the assessment order made under section 143(1) submitting that its total income assessed on the basis of its profit and loss account, balance sheet and return was not correct as it did not take into account the subsequent disclosure made to the Commissioner of Income-tax, Delhi-III, in letter dated 17-8-1987 wherein the assessee had offered an amount of Rs.1.61 crores for taxation. It was also submitted in the said communication that taxes had be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer held that the assessee would be entitled for interest only from the date of the regular assessment. This was the assessment made on18-3-1991under section 143(3) read with section 148. In the light of the aforesaid view of the Assessing Officer the interest granted to the assessee was in a sum of Rs.14,00,025. 10. Being aggrieved the assessee filed an application under section 154 before the Assessing Officer wherein it was stated that there was a mistake apparent from the record inasmuch as the interest should have been granted from 19-8-1987 to 31-3-1992 instead of from 18-3-1991 to 31-3-1992. This plea was rejected by the Assessing Officer vide order dated 15-5-1998 and on further appeal the Commissioner of Income-tax (Appeals) confirmed the action of the Assessing Officer and held that grant of interest of Rs.14,00,025 was justified. The assessee moved another application under section 154 before the Assessing Officer contending that the regular assessment had been made on 2-9-1987 when the Assessing Officer rejected the assessee's application under section 143(2)(a) without dealing with the objections on merits. For the aforesaid submission the assessee sought to deriv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he record that the Assessing Officer while giving effect to the order of the appellate authorities holding that the amount in question is not taxable in assessment year 1986-87 allowed interest only from the date of the assessment order made on 18-3-1991 i.e. the date of the regular assessment. The amount paid on ad hoc basis on19-8-1987and29-8-1987got converted into payments towards regular assessment on the date of assessment i.e.18-3-1991and not earlier. The same issue had travelled to the Commissioner of Income-tax (Appeals) earlier and vide order dated30-6-1998it was held by the first appellate authority that the action of the Assessing Officer was justified and the assessee's appeal consequently was dismissed. In other words, the order of the Assessing Officer merged with the order of the first appellate authority dated 30-6-1998 and the Assessing Officer did not have any jurisdiction to consider again the issue of interest and nor did the assessee have any right to move an application under section 154 before the Assessing Officer claiming interest under section 244(1A) from a date prior to 18-3-1991. 12. In view of the aforesaid the Commissioner of Income-tax (Appeals) in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15. The further submissions of the learned counsel were to the effect that taxes paid under section 140A(2) were deemed to have been paid towards regular assessment and further all ingredients of section 244(1A) were present and after the order of the Tribunal dated 10-12-1991 in the assessee's own case as also the subsequent judgment of the Hon'ble Delhi High Court rejecting the reference application filed by the Revenue there remained no controversy as to which was the assessment order. It was emphasized that the communication of the Assessing Officer dated2-9-1987was to be treated as an assessment order under section 143(3). 16. Coming to the reported decisions on the subject, the learned counsel, at the outset, stated that the judgment of the Hon'ble Supreme Court in the case of CITv. Chittoor Electric Supply Corpn. [1995] 212 ITR 404 if presumed to be against the assessee was not applicable since it pertained to a period when section 244(1A) was not on the statute book. Reliance was also placed on the judgment of the Delhi Bench of the Tribunal in the case of ITO v. Delhi Cloth Mill Ltd. [1990] 33 ITD 44 and a reference was also made to the judgment of the Hon'ble Delhi Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A reference was made to the judgment of the Hon'ble Supreme Court in the case of Modi Industries Ltd. v. CIT[1995] 216 ITR 759. 19. We have examined the rival submissions and also perused the orders of the tax authorities. The decisions cited at the bar by the parties have also been taken into account. At the outset, we would like to extract certain provisions of the Income-tax Act, 1961 which are relevant to decide the point at issue. 20. Section 244 (1A) reads as under: "244. (1A) Where the whole or any part of the refund referred to in sub-section (1) is due to the assessee, as a result of any amount having been paid by him after the 31st day of March, 1975, in pursuance of any order of assessment or penalty and such amount or any part thereof having been found in appeal or other proceeding under this Act to be in excess of the amount which such assessee is liable to pay as tax or penalty, as the case may be, under this Act, the Central Government shall pay to such assessee simple interest at the rate specified in sub-section (1) on the amount so found to be in excess from the date on which such amount was paid to the date on which the refund is granted;" 21. Section 140 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o account yet in the return filed in response to the notice under section 148 the assessee did not include the commission income, but mentioned in part III of the return that a petition had been filed to the CIT offering further income of Rs.1.61 crores and odd. 27. What is noteworthy is that the taxes in question were paid on19-8-1987and27-8-1987respectively when the assessment under section 143(1) was made earlier on29-7-1987. It is not the assessee's case that these payments were made with reference to the revised return filed on23-6-1987and which culminated in section 143(1) order on29-7-1987. 28. The application filed under section 143(2)(a) came to be rejected vide letter order dated 2-9-1987 but which came to set aside on appeal to the Commissioner of Income-tax (Appeals) for purposes of allowing an opportunity of being heard to the assessee. The order of the CIT (Appeals) is dated12-1-1989and appended at pages 22 to 26 of the paper book. This order of the CIT (Appeals) was confirmed by the ITAT on10-12-1991. No doubt both the CIT (Appeals) and the Tribunal held that the letter dated 2-9-1987 sent by the Assessing Officer to the assessee was to be construed as an order u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ic scheme is the same. As already stated, in the assessee's case the assessment under section 143(3)/148 came to be made much later i.e. on 18-3-1991 and considering the relevant provisions of law it would have to be held that the taxes paid in August, 1987 could be treated as paid towards the regular assessment within the meaning of section 140A(2) only on the said date. 30. Coming to some of the other decisions relied upon by the parties during the course of the hearing in the case of Sag Construction Associates. Their Lordships of the Hon'ble Delhi High Court were dealing with a situation where an assessee filed a return and order of assessment was made on22-2-1983. An amount of Rs.7,235 was deducted as TDS from the said assessee. On an appeal the Appellate Assistant Commissioner vide order dated13-12-1985set aside the order of assessment and thereafter a fresh order of assessment was made on6-3-1988. The assessee moved an application on31-3-1988before the Income-tax Officer asking for interest on the amount of Rs.7,235 which became payable to the assessee consequent upon the order of assessment. The prayer was rejected and the assessee preferred an appeal, which was held to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hearing the assessee filing the application itself. In other words, the assessee cannot draw any support from the observations of the Tribunal and we have already noted that the Hon'ble High Court declined to answer the reference taking note of the events, which had taken place in the assessee's case. 32. The only other decision relied upon on behalf of the assessee was the one of the Delhi Benches of the Tribunal in the case of Delhi Cloth Mill Ltd. The ground of appeal raised before the Tribunal on the part of the Revenue was as under:-- "The CIT(A) was not correct in law and on facts in holding that tax paid on self-assessment amounts to payment of tax in pursuance of an order of assessment and thereby allowing interest under section 244(1A) in respect of payment under section 140A of the Income-tax Act." 33. The issue is different in the appeal before us, but even considering the aforesaid decision it would not help the assessee since the view taken is that payment made under section 140A would retain the character of self-assessment tax only upto the date of initial regular assessment and thereafter it would be converted into a payment towards regular assessment on the d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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