9911796707
TMI Blog1997 (9) TMI 84X X X X Extracts X X X X X X X X Extracts X X X X ..... y and without jurisdiction in levying the interest under section 215(l) of the Act on the basis of the tax redetermined on revision of the assessment order and the Commissioner of Income-tax was not justified in law in confirming the same. The material facts are as follows : In the financial year relevant to the assessment year 1978-79, the assessee paid a sum of Rs. 10,50,000 by way of advance tax (including the tax deducted at source). The assessee submitted its return of income for the above assessment year on June 26, 1978, declaring a total income of Rs. 17,82,820. Later, the Income-tax Officer by his order of assessment dated November 28, 1980, assessed the total income of the assessee at Rs. 18,05,450 and determined the tax payable on the basis thereof at Rs. 10,42,647. As the amount of advance tax paid by the assessee was not less than seventy-five per cent. of the assessed tax, no interest was levied under section 215(1) of the Act. On the other hand, the amount of advance tax being in excess of the assessed tax, the assessee was granted interest under section 214 of the Act to the tune of Rs. 9,858. Later, the Commissioner of Income-tax initiated proceedings under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntial orders necessary for giving effect to the revisional order under section 263 of the Act including recalculation of interest and/or levy of interest under section 215 of the Act on the basis of such revised order of assessment passed with a view to giving effect to the order of the higher authority. Aggrieved by the order of the Commissioner, the assessee has approached this court by filing this writ petition. We have heard Mr. S. J. Mehta, learned counsel for the assessee, who submits that though at the time the writ petition was filed, there was a conflict of opinion in different High Courts as to whether interest can be enhanced or reduced under section 215 of the Act while giving effect to the orders of higher authorities, this controversy now stands concluded by the decision of the Supreme Court in Modi Industries Ltd. v. CIT [1995] 216 ITR 759 wherein it has been held that under the law as it stood prior to April 1, 1985, the amount on which interest was payable under section 215 of the Act could not vary due to enhancement of tax as a result of any subsequent proceedings. We have considered the above submission and perused the decision of the Supreme Court referred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r under section 147 or section 154 or section 155 or section 250 or section 254 or section 260 or section 262 or section 263 or section 264, the amount on which interest was payable under sub-section (1) has been increased or reduced, as the case may be, the interest shall be increased or reduced accordingly, and--- (i) in a case where the interest is increased, the Income-tax Officer shall serve on the assessee, a notice of demand in the prescribed form specifying the sum payable, and such notice of demand shall be deemed to be a notice under section 156 and the provisions of this Act shall apply accordingly; (ii) in a case where the interest is reduced, the excess interest paid, if any, shall be refunded. " It is clear from a reading of section 215 of the Act, as it stood at the material time, that prior to the substitution of sub-section (3) thereof with effect from April 1, 1985, there was no provision for enhancement of the amount of interest payable by the assessee as a result of subsequent orders of the higher authorities. Provision was made to that effect for the first time only with effect from April 1, 1985. Sub-section (3) of section 215 of the Act as it stood prior ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd on the assessee, calling upon him to pay the tax due, to be paid by him. Thereafter, the tax will be recovered in accordance with the provisions of Chapter XVII-D, Collection and Recovery (sections 220 to 231). If there is any delay in payment of the tax, the assessee may be liable to pay interest under sub-section (2) of section 220. These provisions go to show that once an assessment order is made, liability to pay interest on the amount of the shortfall in payment of advance tax ceases under section 215. (E) The provisions of sub-section (3) of section 215 are also of great significance in this connection. If the amount of advance tax, which was found deficient and on which interest was payable under section 215(1) by the assessee is reduced as a result of an order of rectification, appeal or revision, etc., the interest shall be reduced accordingly and the excess interest paid, if any, shall be refunded to the assessee. This provision is significant in two ways : (1) It was necessary to introduce the provisions of sub-section (3), because 'regular assessment' in sub-section (1) of section 215 only meant the first assessment made in the regular course by the Income-tax Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave to pay a higher amount of interest over a longer period of time. That is not the implication of the provisions of sub-section (1) of section 215 and that has not been specifically provided by sub-section (3). " (emphasis supplied) The Supreme Court summed up its judgment by saying that the expression " regular assessment " has been used in no other sense than the first order of assessment passed under section 143 or section 144. If any consequential order has to be passed by the Income-tax Officer to give effect to an order passed by the higher authority, that consequential order cannot be treated as the regular assessment. This position, however, has been changed with effect from April 1, 1985, by substitution of sub-section (3) of section 215 as a result of which the quantum of interest payable under section 215 would depend upon the quantum of tax payable on final determination in appeal, revision or any other proceedings. It is clear from the above decision of the Supreme Court that interest can be levied under sub-section (1) of section 215 only on the basis of the amount of tax payable as per the regular assessment and for the period prior to April 1, 1985, the interest ..... X X X X Extracts X X X X X X X X Extracts X X X X
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