1. The Income-tax Appellate, Delhi Bench-B (hereafter 'the Tribunal'), has made this reference under Section 256(1) of the I.T. Act, 1961. The question referred is :
'Whether, on the facts and in the circumstances of the case, the Tribunal was correct in upholding the cancellation of the Income-tax Officer's order under Section 154 of the Income-tax Act, 1961, on the ground that there was no prior order passed by the Income-tax Officer for levy of interest under Section 139(1)(b)(iii) ?'
The brief facts are these; The respondent-assessee, M/s. Himalaya Drug Company, Dehradun, is a partnership firm. For the assessment year 1970-71, it filed its return on January 27, 1971, that is, after a delay of 27 days. The ITO made the assessment and while preparing ITNS-150 a sum of Rs. 382 was charged as interest under Section 139(1) of the Act, taking the status of the assessee as that of a registered firm. Subsequently, the ITO found that interest had been wrongly charged treating the assessee as a registered-firm. On the other hand interest under Section 139 should have been charged treating the assessee as an unregistered firm which came to Rs. 17,708. In his opinion, it was a mistake apparent from the record and hence he took action under Section 154 of the Act. Pursuant to the notice the assessee appeared before the ITO and contended that there was no mistake apparent from the record which could be rectified. The ITO did not agree and, by an order dated December 27, 1972, charged interest at Rs. 17,708 under Section 139(8)(a).
2. On appeal, the AAC cancelled this order, the reasons being that there was no order passed by the ITO in the first instance to show how the amount of Rs. 382 as interest had been calculated. If calculation had proceeded on the basis of the tax payable by a registered firm, then the amount of interest charged should have been Rs. 463 from which fact it could be inferred that the ITO had in his discretion reduced the amount of interest chargeable. Another reason given was that the previous approval of the IAC was required to be obtained since the amount of interest chargeable exceeded Rs. 1,000 on the tax payable by the assessee if treated as an unregistered firm. No such prior approval had been taken and hence it could not be said that there was any mistake apparent from the record. Lastly, in the opinion of the AAC, a decision on a debatable point of law or failure to apply the law to a set of facts which remained to be investigated cannot be corrected by an order under Section 154.
3. Aggrieved, the department filed an appeal before the Tribunal. The Tribunal repelled the contention of the revenue that the tax calculation form known as ITNS-150 could be treated as an order charging interestwhich could be corrected under Section 154 of the Act. As observed by the Tribunal: 'In our view this is a tax calculation form meant purely for departmental purposes and hence cannot be equated with an order of the ITO, such as an assessment order or any other order, by which the assessee is made liable to pay a sum by way of interest, penalty or tax.' The Tribunal has also taken the view that even the levy of interest at Rs. 382 on the basis of the tax payable by the assessee as a registered firm was not correct. The correct amount should have been Rs. 463 and from this fact it could be inferred that there was no ascertainable basis or an order for charging interest at Rs. 382. In the result, the department's appeal was dismissed.
4. It was submitted before us by the learned standing counsel that ITNS-150 is a part of the assessment order and, therefore, if there was any apparent mistake therein it could be rectified under Section 154, and, secondly, that charging of interest under Section 139(8)(a) is automatic. We do not find any merit in either of these two submissions. ITNS-150 is certainly not a part of the assessment order. It is only meant for a calculation of the tax payable by an assessee. Section 154(1)(a) empowers the ITO to 'amend any order of assessment or of refund or any other order passed by him with a view to rectifying any mistake apparent from the record. The section has a limited application. The main limitation is that it is only a mistake apparent from the record which can be rectified. Secondly, in the case of an ITO it should be a mistake in an order of assessment or an order of refund or any other order passed by him. As noted above, ITNS-150 is not an order passed by the ITO. It only contains calculation of the tax and other dues payable. The ITO, therefore, was not competent to rectify ITNS-150 by resort to Section 154(1)(a).
5. Coming to the other contention, it would be seen that the charging of interest under Section 139(8)(a) is not automatic. Under this provision where the return under Sub-section (1) or Sub-section (2) or Sub-section (4) for an assessment year is furnished after the specified date or is not furnished then whether or not the ITO has extended the date for furnishing the return under Sub-section (1) or Sub-section (2), the assessee shall be liable to pay simple interest at twelve per cent. per annum. There is a proviso to this Sub-section which says that the ITO may, in such cases and in such circumstances as may be prescribed, reduce or waive the interest payable by any assessee under this sub-section. In other words, the ITO is expected to apply his mind to the facts and circumstances of the case and if the assessee is able to satisfy him, he may reduce or waive the interest payable under this Sub-section. In the present case, the ITO had not passed any order charging interest under this provision. As noted above, it was only a sum of Rs. 382 which was mentioned as payable by way of interest inForm ITNS-150. If it be assumed that interest was charged on the basis of the tax payable by a registered firm, the amount of interest should have been Rs. 463. Thus, even the basis for charging interest was not indicated in the aforesaid form.
6. We, therefore, agree with the view taken by the Tribunal and answer the question referred in the affirmative, in favour of the assessee and against the department. However, in the circumstances, we make no order as to costs.