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income-tax Officer Vs. Bangalore Animal Food - Court Judgment

LegalCrystal Citation
CourtIncome Tax Appellate Tribunal ITAT Nagpur
Decided On
Judge
Reported in(1984)10ITD329(Nag.)
Appellantincome-tax Officer
RespondentBangalore Animal Food
Excerpt:
.....very much later than the due date for the submission of such an estimate, and, therefore, the tax paid in pursuance of the same should not have been treated as advance tax and credit given in respect thereof, while charging interest under section 139(8). as, according to the ito, the advance tax estimate filed on 24-8-1979 was an invalid estimate, interest under section 139(8) should have been calculated without taking into account the tax paid in pursuance of the said estimate and he, therefore, rectified his earlier order under section 154 with a view to enhancing the interest under section 139(8) to rs. 64,240. according to him, interest under section 139(8) levied originally in the sum of rs. 18,032 was a mistake apparent from the record and, therefore, the same was rectifiable.....
Judgment:
1. In this appeal by the revenue the correctness of the decision of the Commissioner (Appeals) in cancelling the order under Section 154 of the Income-tax Act, 1961 ('the Act') passed by the ITO has been questioned.

2. The facts in this regard are briefly the following : In the assessment for this year, completed on 27-11-1981, interest under Section 139(8) of the Act for late submission of the return of income, was charged in the sum of Rs. 18,032 after giving due credit for advance tax paid. Later, the ITO noticed that the assessee had filed the advance tax estimate on 24-8-1979, that is, very much later than the due date for the submission of such an estimate, and, therefore, the tax paid in pursuance of the same should not have been treated as advance tax and credit given in respect thereof, while charging interest under Section 139(8). As, according to the ITO, the advance tax estimate filed on 24-8-1979 was an invalid estimate, interest under Section 139(8) should have been calculated without taking into account the tax paid in pursuance of the said estimate and he, therefore, rectified his earlier order under Section 154 with a view to enhancing the interest under Section 139(8) to Rs. 64,240. According to him, interest under Section 139(8) levied originally in the sum of Rs. 18,032 was a mistake apparent from the record and, therefore, the same was rectifiable under Section 154.

3. On appeal, the Commissioner (Appeals) cancelled the order holding that the ITO was 'not legally justified in resorting to Section 154 to cover up his earlier omission to levy interest under Section 139(8) in the original assessment'. He derived support for this view from the decision in Chandra Metal Co. v. CIT [1979] 119 ITR 279 (All.). Being aggrieved with this order, the department is in appeal before us.

4. The department's contention is based on the proposition that the original levy of interest under Section 139(8) by the ITO, treating the tax paid by the assessee as advance tax, amounted to a short levy in this behalf, inasmuch as the tax paid by the assessee in pursuance of an invalid estimate should not have been treated as advance tax and credit given therefor while calculating interest chargeable under Section 139(8) and since this was a mistake apparent from the record, the ITO was well within his rights to rectify such a mistake under Section 154, as soon as the same came to his notice. In fact, in the grounds of appeal also and particularly so in ground No. 3 the department's contention is that the Commissioner (Appeals) had failed to appreciate that interest under Section 139(8) was in fact levied by the ITO in the original assessment and, therefore, the subsequent order of the ITO under Section 154 charging a higher amount of interest was passed only with a view to rectifying the mistake in the calculation of the said interest under Section 139(8) in the original order, which was apparent from the record. It was submitted on behalf of the department, that tax paid in pursuance of an invalid estimate should not have been treated as advance tax and by treating the same as advance tax in the original assessment, the ITO had wrongly given credit for it while calculating the interest under Section 139(8). It was urged that this being a mistake apparent from the record, there was no bar against its rectification under Section 154 when the ITO actually found out the mistake. The cancellation of the order of the ITO by the Commissioner (Appeals) was supported on behalf of the assessee.

5. We are in agreement with the Commissioner (Appeals) on the cancellation of the ITO's order passed under Section 154, though for different reasons. The Commissioner (Appeals) appears to have proceeded on the basis that originally, the ITO had failed to charge interest under Section 139(8) and, therefore, he was precluded from charging the same, by having recourse to the provisions of Section 154 following the decision in S.A.L. Narayan Row v. Ishwarlal Bhagwandas [1965] 57 ITR 149 (SC). In fact, he seems to have relied on the decision in Chandra Metal Co.'s case (supra), in which the facts were entirely different.

In that case, interest was charged originally in a wrong sum due to a mistake in calculation and the same was sought to be rectified under Section 154 with a view to charging the correct amount of interest. The High Court held, that the original mistake was due to a computational error and, therefore, it could not be held that the ITO had earlier exercised his power to waive or reduce interest conferred under the rules. It is not clear how the Commissioner (Appeals) has referred to this decision, while, however, cancelling the order under Section 154, though rightly. In the present case interest had been charged under Section 139(8) after treating certain taxes paid by the assessee as advance tax in pursuance of an estimate filed by it. Later, however, the ITO came to the conclusion that the estimate filed by the assessee was an invalid estimate, since it was not filed within time, and, therefore, the tax paid in pursuance of the same, did not amount to advance tax and, accordingly, the same should not have been taken into account while calculating the interest leviable under Section 139(8) as per the provisions of the section. It is not as if that the tax paid in pursuance of the estimate filed on 24-8-1979 had been refunded to the assessee treating it as something other than advance tax. To all intents and purposes the same has been adjusted against the tax due from the assessee on completion of the assessment, according it the same treatment as would have been accorded to any normal payment of advance tax. Since there can be more than one opinion as to whether tax paid in pursuance of an estimate filed beyond the due date should be treated as advance tax or otherwise, we are of the opinion that a decision on such a debatable issue of law would not be available for rectification under Section 154-T.S. Balaram, ITO v. Volkart Bros.

[1971] 82 ITR 50 (SC). In the present case, it is not a simple matter of correcting an earlier arithmetical calculation error. Originally, certain amount paid by the assessee was treated as advance tax and, therefore, correspondingly the interest chargeable under Section 139(8) was levied at a lower figure after taking the tax paid into account.

However, subsequently the ITO changed his mind and came to the conclusion that the tax paid in pursuance of the estimate filed beyond the due date should not have been treated as an advance tax payment and, therefore, the interest leviable under Section 139(8) should be charged at a higher figure without giving credit for such tax paid. The question whether the tax paid in pursuance of the estimate filed on 24-8-1979 should have been accorded the treatment of advance tax or otherwise, is debatable and therefore, it is not available to the ITO to rectify an earlier mistake made in this regard as if it was apparent from the record. We are also fortified in coming to this decision with reference to the order of this Bench in IT Appeal Nos. 595 and 596 (Bang.) of 1982 dated 14-2-1984 in which it was held that interest allowed to the assessee under Section 214 of the Act in a higher sum could not be later rectified so as to reduce the same, treating the same, as if it was a mistake apparent from the record in view of the difference of opinion amongst Courts as to the date up to which such interest could be granted.

6. Having due regard to the above considerations, we uphold the order of the Commissioner (Appeals) cancelling the ITO's order passed under Section 154, though for different reasons.


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