Income Tax Appellate Tribunal - Kolkata
Income-Tax Officer vs Park Hotel (P.) Ltd. on 24 July, 1987
Equivalent citations: [1988]24ITD22(KOL)
ORDER
S.K. Jain, Judicial Member
1. The ITO while giving effect to the order dated 3-10-1985 of the Tribunal charged interest under Section 217(1A) of the Income-tax Act, 1961 in the sum of Rs. 2,69,769 which on appeal by the assessee has been deleted by the CIT(A) on the reasoning that interest under Section 217(1A) could not be charged while giving effect to the order of the Tribunal. The revenue is, therefore, in appeal.
2. It is patent from the plain reading of Section 217(1A) that interest can be charged during making the regular assessment and not afterwards. However, learned departmental representative has attempted to persuade us to hold that making of an assessment in compliance with the appeal order is nonetheless the regular assessment. In support he placed reliance upon Ramswarup Bhawsinka v. CIT [1975] 101 ITR 827 (Ori.), Chloride India Ltd. v. CIT [1977] 106 ITR 38 (Cal.) and Addl. CIT v. Saraya Distillery [1978] 115 ITR 34 (AIL). None of these decisions is in point. The case of Ramswarup Bhawsinka (supra) was based on the terms and the settlement entered into by the assessee with the Commissioner. In that case the Hon'ble High Court held that non-mention of charging of interest in the settlement could not be construed as an agreement on the part of the income-tax authorities not to raise a demand for interest. It is also significant to note that in that case interest was charged on making regular assessment. In the case of Chloride India Ltd. (supra) the Hon'ble Calcutta High Court made these observations :
In all the sections similar meaning should be given to that expression unless the context otherwise demands. Having regard to the scheme of the sections, I am of the opinion that the context does not require otherwise. Regular assessment is certainly different from the first assessment or provisional assessment. But regular assessment is not confined to first assessment. When an assessment is modified pursuant to the order of the appellate authority or direction, the subsequent order will be regular assessment and must supersede and replace the earlier assessment order. Having regard to the scheme of the Act and the context in which the expression has been used, in my opinion, regular assessment under Section 214 would include in the particular facts and circumstances of the case an assessment made by the order of the Income-tax Officer pursuant to the direction of the Appellate Assistant Commissioner.
These observations were made by the Hon'ble High Court while construing the meaning of the words "regular assessment" appearing in Section 2(14}. It has been made clear that the said expression has been construed in the context in which it has been used. The context in which said expression has been used in Section 217 is quite different. It is fundamental that while making compliance of the appeal order the original authority cannot add or subtract anything to or from the appeal order and furthermore cannot fill in any lacuna left in the original order. The ITO when failed to levy interest in the original order he cannot levy interest while making compliance of the appeal order and, therefore, in that context the expression "regular assessment" must be strictly limited to the original assessment. In this connection learned counsel for the assessee rightly referred to the judgment of the Hon'ble Calcutta High Court in the case of Monohar Gidwany v. CIT [1983] 139 ITR 498 in which it has been held by the Hon'ble High Court that levy of interest must be made in the assessment order itself and cannot be made on reassessment under Section 147. The case of Saraya Distillery (supra) is altogether on different point. In that case non-charging of interest under Section 215 by the ITO was taken as erroneous by the Commissioner and he by virtue of his power under Section 263 revised the said assessment order.
3. Next it is contended by learned counsel for the assesses that Section 2J.7QA) is not applicable to the case of the assessee since the assessee was not the person who was required to send an estimate under Section 209A(4) or a person referred to in Section 212(3A). We do not enter into this point since no facts are available for making investigation on this point. Suffice it to say that the order of the ITO charging interest under Section 217(1A) suffers from non-disclosure of the grounds for charging such interest. Naturally the assessee could not get any opportunity to defend against making such levy. The order of the ITO is, therefore, not sustainable even on this score.
4. In the result, the appeal is dismissed.