TMI Blog1989 (5) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... n an income of Rs. 1,03,254 in the status of A.O.P. and on a protective basis. (3) This assessment order was subsequently cancelled by the CIT (Appeals) vide order dated 25-9-84. (4) The I.T.O. gave appeal effects to the order of the CIT(A) vide order dated 10-10-85 and allowed a refund of Rs. 60,124 comprising of Rs. 53,449 as tax and Rs. 6,675 as interest under section 244. (5) The assessee thereafter moved an application under section 154 to the ITO on 7-11-85 requesting him to allow interest under section 214. (6) The I.T.O. vide letter dt. 11-3-86 rejected the assessee's application for grant of interest under section 214. (7) The assessee filed an appeal before the CIT(A) against the rejection order of the ITO dt. 11-3-86. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was further stated that the levy of interest under section 214 was not an appealable matter and even if it was presumed that the letter dt. 11-3-86 did constitute a formal order the same was not appealable. On merits it was submitted that the CIT(A) erred in directing the ITO to allow interest to the assessee vis-a-vis the decision of the Hon'ble Gujarat High Court supra. According to the D.R. the aforesaid decision was not applicable to the facts of the assessee's case. 4. The learned counsel for the assessee on the other hand submitted that what was sought to be challenged before the CIT(A) was the rejection of the claim for interest under section 214. According to him the letter dt. 11-3-86 addressed by the ITO to the assessee was in r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that he has done is to direct the ITO to "reconsider the appellant's claim of interest in view of the Gujarat High Court decision". According to us this is not a decision on merits and as the subsequent events would show the matter was left wide open. 7. In the final analysis we confirm the order of the CIT(A) dt. 2-9-86 and which is the subject matter of the Revenue's appeal. 8. We now take up for consideration the assessee's appeal which arises out of the order of the CIT(A) dated 10-6-87. As a result of the order of the CIT(A) dated 2-9-86 directing the ITO to consider the assessee's claim for interest under section 214 vis-a-vis the decision of the Gujarat High Court supra, the ITO vide order dated 10-2-87 once again rejected the cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not of assessment, but of non-assessment. It is certainly not "regular assessment" as envisaged in section 2(40). It has been decided by the Madras High Court in the case of T.U.S.C. Ltd. v. CIT 126 ITR 125 that when as a result of the A.A.C's order of appeal, the assessment is reduced and the ITO passes an order giving effect to the decision of the A.A.C., the I.T.O.'s order has to be treated as one passed under section 143 and, therefore, a regular assessment for the purpose of section 214. In the present case, the assessment is not revised or reduced but it is annulled. Therefore, the assessment is honest in law. This material difference of facts stand in the way of equating the present case with the facts of the case of Madras High C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e proposition that the appeal was maintainable. It was further submitted that although the first assessment did not result in any refund to the assessee the same arose as a result of the subsequent order of the CIT(A) whereby the assessment itself was cancelled and the assessee became entitled to the refund of Rs. 53,449. According to the learned counsel the order of the ITO dt. 10-10-85 giving appeal effects to the order of the CIT(A) was an assessment order itself in view of the ratio laid down by the Full Bench of the Hon'ble Gujarat High Court in the case of Bardolia Textile Mills. It was further submitted that the assessee would not press for the payment of interest under section 214 up to the date 10-10-85 viz. the date on which appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to a refund of Rs. 53,449 as a result of the order of the CIT(A) dated 25-9-84 although no such refund was due to it when the ITO framed the assessment on 12-3-1984. The ITO framed the assessment on a protective basis in the hands of the assessee although he was of the view that the income was assessable in the hands of the bigger HUF of Navnitlal Gordhandas. This was the view which the ITO had taken in the assessee's case in A.Y. 1980-81 as well. Taking these facts into account in case the ITO had finalised the assessment in the hands of the assessee at nil income and brought the income to tax in the main case, then a refund would have resulted at the time of the original assessment itself. In such a situation the ITO would have been ob ..... X X X X Extracts X X X X X X X X Extracts X X X X
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