Bombay High Court
International General Electric Co. ... vs Commissioner Of Income-Tax on 16 February, 1993
Equivalent citations: [1993]202ITR960(BOM)
Author: Sujata Manohar
Bench: Sujata V. Manohar
JUDGMENT Mrs. Sujata Manohar, J.
1. This reference pertains to the assessment year 1966-67. The assessee at all material times to the reference was engaged in the work of erection of the Tarapur Atomic Power Project, apart from its normal trading activities. The work of erection continued over the accounting years 1964 to 1968. In view of the dimension of the project and the difficulty in ascertaining profits accruing to the assessee from year to year in respect of this project, there was an agreement between the assessee and the Central Board Of Direct Taxes under which a special arrangement was approved. Basically a provisional profits or loss on the Project for each year was to be estimated and recorded in the books of the assessee. The assessee was to make an on-account tax payment annually in relation to the receipt of station rupee payments under the Tarapur Project and tax demands were to be based on the assumption of provisional rate of profit at 6.04 per cent.
2. In respect of the assessment year 1966-67, the Income-tax Officer had issued a demand notice for payment of advance tax under section 210 of the Income-tax Act, 1961, on May 27, 1965. Subsequently, a revised notice for payment of tax under section 210 was issued on January 18, 1966, demanding a sum of Rs. 6,28,232 based on the total income of the assessee for the year 1965-66 which included income from the Tarapur Project for that year calculated on the basis of the agreement. Pursuant to this demand notice, which the assessee accepted in so far as it was based on the Income assessed for the year 1965-66 other than profit from the Tarapur Project, the assessee made a total payment of Rs. 6,21,762 on that account. The assessee also made a further tax payment of Rs. 15,94,105 on the estimated income of the Tarapur Project which was shown at Rs. 31,88,209. The assessee stated in his letter dated February 28, 1966, to the Income-tax Officer that they were excluding the Tarapur profits from the total income as per the notice of demand and that they were making a separate on account payments in respect of the income from the Tarapur Project on the basis of the agreement with the Central Board of direct Taxes. Thus, the assess paid in all, during the relevant financial year, a total sum of Rs. 22,15,867 on which a sum of Rs. 6,21,762 was as per the demand notice.
3. The final assessment for the assessment year 1966-67 was made on the assessee on September 30, 1972 (sic), in which the total income was determined at Rs. 6,51,012. The assessment order stated that interest was granted on the refund of tax paid under section 210 only. The assessment form set out that the net amount refundable to the assessee was Rs. 19,10,111.
4. The assessee preferred an appeal against the assessment order on certain points did not involve the question of correctness of the amount of refund or the question of payment of interest under section 214 of the Income-tax Act, 1961. The appeal which was on other grounds was disposed of by the Appellate Assistant Commissioner by his order dated May 14, 1973.
5. In the meanwhile, in view of the assessment order dated May 30, 1972, the assessee received a notice of demand dated February 5, 1972 (sic), in which a sum of Rs. 22,64,002 was shown as refundable to the assessee for the concerned assessment year. The assessee, however, actually received a refund only of a sum of Rs. 19,10,111 party by adjustment against the demand for other assessment year, and the balance by refund orders. In view of the discrepancy between the actual receipt of refund and that shown in the notice of demand dated July 5, 1972, the assessee took up the matter before the Income-tax Officer and requested for a refund of the balance. The Income-tax Officer, by his letter dated December 17, 1973, informed the assessee that as per the assessment order dated September 30, 1972, a refund of only a sum of Rs. 19,10,111 was due to the assessee. The amount was wrongly mentioned as Rs. 22,64,002 in demand notice. The letter stated that advance tax paid in respect of the Tarapur Project was not eligible for interest under section 214. Hence, the demand notice on July 5, 1972, was to be treated as corrected to that extent.
6. The assessee thereupon filed an appeal before the Appellate Assistant Commissioner contending that the assessee was entitled to interest on the excess payment of advance tax even though it related to the Tarapur Power Project under section 214 of the Income-tax Act, 1961. The assessee also prayed for condonation of delay in filing the appeal. the Appellate Assistant Commissioner condoned the delay in filing the Appeal. He, however rejected, the claim of the assessee on merits, holding that under sub-section (2) of section 212 (as then in force), there was a provision for filing of an estimate by the assessee of total Income for the purpose of advance payment of tax which estimate was for an income less than the income on the basis of which advance tax had been demanded by the Income-tax Officer. Section 212(3A) which provides for filing an estimate when the income envisaged was higher than the income on the basis demand notice was issued by the Income-tax Officer, was introduced only on April 1, 1969. Hence, the assessee could not be considered as having paid the extra advance tax under section 212. Hence, under section 214 of the Income-tax Act, 1961, in the present case the assessee was not entitled to claim interest on the tax paid in advance on the basis of a higher income envisaged by the assessee.
7. From the dismissal of the appeal by the Appellate Assistant Commissioner, the assessee preferred an appeal before the Tribunal. The Departmental Representative raised a preliminary objection before the Tribunal to the effect that the appeal preferred by the assessee, not only before the Tribunal but also before the Appellate Assistant Commissioner, was incompetent. It was contented that the original appeal filed by the assessee against the order dated September 30, 1972, did not raise any dispute on the question of interest on advance payment of tax in respect of the Tarapur project. This appeal was already disposed of by the appellate Assistant Commissioner by his order dated May 14, 1973. Hence there was no question of any further appeal being preferred against the same assessment order again. It was pointed out by the Department Representative that the law did not contemplate piecemeal appeals against the same order. This contention has been upheld by the Tribunal.
8. It was contended by the assessee before the Tribunal that the supplementary appeal filed by the assessee before the Appellate Assistant Commissioner should be treated as, in reality and substance, an appeal against the order of rectification under section 154 of the Income-tax Act. The assessee contended that the letter of the Income-tax Officer dated December 17, 1973, was in reality and substance an order of rectification under section 154 of the Act. Hence an appeal would lie against such an order. This contention was also negatived by the Tribunal. The Tribunal held that the letter dated December 17, 1973, issued by the Income-tax Officer was not an order of rectification under section 154 and that the assessee himself did not consider the appeal which was preferred before the Appellate Assistant Commissioner as one directed against such as order.
9. The Tribunal further held that even if the appeal by the assessee were to be considered as competent, the assessee was not entitled to dispute the determination of interest under the provisions of section 214 of the Income-tax Act. In view of these findings of the Tribunal, the following two questions have been referred to us under section 256(1) of the Income-tax, 1961 :
"1. Whether, on the facts and in circumstances of the case, the Tribunal was right in holding that the supplementary appeal preferred by the assessee against the original assessment in this case after the original appeal has been disposed of by the Appellate Assistant Commissioner was not competent either before the Appellate Assistant Commissioner or before the Tribunal ?
2. If the answer to question No. 1 is in the negative and the appeal was competent, whether the Tribunal was justified in law in holding that no appeal is available in regard to determination of interest under section 214 of the Act ?"
10. In respect of the first question, it is necessary to note that under section 246 of the Income-tax Act, 1961, an appeal is provided to the Appellate Assistant Commissioner from the orders of the Income-tax Officer which are set out in that section. These orders include an order of assessment under section 143(3). Section 253 provides for an appeal to the Appellate Tribunal from an order passed by Appellate Assistant Commissioner, inter alia, under section 250. There is no provision for any supplementary appeal being filed before the Appellate Assistant Commissioner from an order of assessment under section 143(3) when one appeal from such an order is already disposed of.
11. The contention of the assessee that the letter dated December 17, 1973, issued by the Income-tax Officer should be construed as an order of rectification under section 154 is, in our view, rightly rejected by the Tribunal. In the first place, the assessee had not produced before us any letter addressed by it to the Income-tax Officer applying for any rectification of the assessment order of September 30, 1972. The Only document which is before us is the letter dated December 17, 1973. This letter clarifies that as per the assessment form dated September 30, 1972. the assessee was entitled for a refund only of Rs. 19,10,111. In the demand notice, the figure was wrongly mentioned as Rs. 22,64,002. Hence, the demand notice, dated July 5, 1972, may be treated as corrected to that extent. Thus, a mistake in the demand notice is corrected by this letter, to bring it in line with the correct figure in the order of assessment. The fact that interest under section 214 of the Act was not granted on the tax paid on the Tarapur Project income, is clear from the assessment form itself dated September 30, 1972, where an interest of Rs. 50,409 is granted to the assessee under section 214 of the Act. This does not include any interest on the tax paid by the Assessee in respect of the Tarapur Project. There was no application for rectification of the assessment order nor any rejection thereof by the letter of December 17, 1973. Therefore, in our view, the Tribunal has rightly come to the conclusion that there was no application for rectification made by the assessee. Nor can the letter dated December 17, 1973, be construed as a rectification order under section 154 of the Income-tax, 1961.
12. Even the supplementary appeal which is filed by the assessee shows that it is appeal from the order of assessment under section 143(3) of the Income-tax Act, 1961, i.e. the assessment of September 30, 1972. This is clearly set out in annexure "B" to the appeal paper book which is annexed to the order of the Appellate Assistant Commissioner. In fact, the assessee had applied for condonation of delay in filing the appeal since the appeal was from the order dated September 30, 1972, while the appeal was filed on February 15, 1974.
13. In these circumstances in our view, the supplementary appeal which was filed by the assessee cannot be considered as an appeal from the order of rectification under section 154. It was clearly an appeal from the order of assessment under section 143(3). Since the assessee had already filed an appeal from the assessment order under section 143(3), which was disposed of separately by the Appellate Assistant Commissioner on May 14, 1973, long prior to the filing of the supplementary appeal, in our view, this supplementary appeal is not maintainable looking to the provisions of the Income-tax Act, 1961.
14. Hence, question No. 1 which is referred to us is answered in the affirmative and in favour of the Revenue.
15. In view of our answer to question No. 1, question No. 2 does not arise and it is necessary for us to answer the same.
16. No order as to costs.