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income-tax Officer Vs. Setty Pharmaceuticals and - Court Judgment

LegalCrystal Citation
CourtIncome Tax Appellate Tribunal ITAT Hyderabad
Decided On
Judge
Reported in(1985)14ITD275(Hyd.)
Appellantincome-tax Officer
RespondentSetty Pharmaceuticals and
Excerpt:
.....by withdrawing the interest allowed under section 214. in doing so, he followed a decision of the andhra pradesh high court in the case of kangundi industrial works (p.) ltd. v. ito [1980] 121 itr 339. against the said order, the assessee appealed to the commissioner (appeals). he cancelled the order dated 24-1-1984 made under section 154 on the ground that the issue is a debatable one and there is no mistake apparent from the record which could be rectified under section 154.against the said order, the revenue has preferred this appeal.2. the learned departmental representative strongly urged that as the advance tax has been paid after the due dates for payment of instalment, no interest under section 214 could be allowed in view of the decision of the andhra prdesh high court in.....
Judgment:
1. The assessee had made advance tax payments of Rs. 10,000 on 16-3-1978 and Rs. 60 on 31-3-1978 after the statutory due date for payment of the instalment. The ITO by his order dated 19-11-1982 had allowed the interest of Rs. 28,345 under Section 214 of the Income-tax Act, 1961 ('the Act'). Subsequently, he passed an order dated 24-1-1984 under Section 154 of the Act rectifying his earlier order by withdrawing the interest allowed under Section 214. In doing so, he followed a decision of the Andhra Pradesh High Court in the case of Kangundi Industrial Works (P.) Ltd. v. ITO [1980] 121 ITR 339. Against the said order, the assessee appealed to the Commissioner (Appeals). He cancelled the order dated 24-1-1984 made under Section 154 on the ground that the issue is a debatable one and there is no mistake apparent from the record which could be rectified under Section 154.

Against the said order, the revenue has preferred this appeal.

2. The learned departmental representative strongly urged that as the advance tax has been paid after the due dates for payment of instalment, no interest under Section 214 could be allowed in view of the decision of the Andhra Prdesh High Court in Kangundi Industrial Works (P.) Ltd.'s case (supra). In view of the above decision, the ITO had jurisdiction to pass the order under Section 154 and he was bound to do so.

3. We have considered the submissions of the learned departmental representative. The question for consideration is whether the provisions of Section 154 could be invoked in the instant case. The assessee has made the advance tax payments after the due dates but within the financial year. The Andhra Pradesh High Court in the case of Kangundi Industrial Works (P.) Ltd. (supra) has held that if the advance tax is paid after the due dates but within the financial year, the assessee is not entitled to interest under Section 214. Contrary view has been taken by the Gujarat High Court in the case of Chandrakant Damodardas v. ITO [1980] 123 ITR 748 and also by the Madras High Court, Madhya Pradesh High Court and Punjab and Haryana High Court. In view of the conflict between the various High Courts, the issue whether the assessee is entitled to interest under Section 214 when the advance tax was paid after the due dates is a debatable issue as there are two views. As held by the Supreme Court in T.S. Balaram, ITO v. Volkart Bros. [1971] 82 ITR 50, a mistake apparent on the record must be an obvious and patent mistake and a decision on a debatable point of law is not a mistake apparent from the record.

4. The contention urged by the learned departmental representative is that since the decision of the Andhra Pradesh High Court in the case of Kangundi Industrial Works (P.) Ltd. (supra) is binding on the revenue authorities within the State of Andhra Pradesh, the ITO was justified in invoking the provisions of Section 154. No doubt, this contention is supported by the decision of the Allahabad High Court in Omega Sports & Radio Works v. CIT [1982] 134 ITR 28, the Punjab and Haryana High Court in CIT v. Mohan Lal Kansal [1978] 114 ITR 583 and the Gujarat High Court in CIT v. Ramjibhai Hirjibhai & Sons [1977] 110 ITR 411. But contrary view has been taken by the Calcutta High Court in V.R. Sonti v. CIT [1979]-117 ITR 838 wherein it was held as under : ...It is also not the law that the ITO or the appellate authorities under the Income-tax Act for the purposes of a rectification application should only look at the decisions of a particular High Court under whose advisory jurisdiction it acts in order to find out whether that High Court has taken different views on the question of law involved before it. They must consider the decisions of all the High Courts and if there is a divergence of judicial opinion on the question of law or two conceivable opinions are possible on it, they must hold that the mistake is not apparent from the record.... (p.

841) There is no decision of the Andhra Pradesh High Court on this aspect.

When two views are possible, the view favourable to the assessee should be adopted as held by the Supreme Court in CIT v. Vegetable Products Ltd. [1973] 88 ITR 192.

5. In view of the conflicting decisions, we are of the view that the issue involved in this case is a debatable one and there is no mistake apparent which could be rectified by invoking Section 154. Thus, the Commissioner (Appeals) was justified in cancelling the order dated 24-1-1984 made by the ITO under Section 154.


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