Income Tax Appellate Tribunal - Indore
Executors Of The Will Of Late Sohanlal G. ... vs Income-Tax Officer on 28 June, 1996
Equivalent citations: [1982]2ITD386(INDORE)
ORDER
Shri Egbert Singh, Accountant Member
1. The following two grounds haves been taken by the assessee in the present appeal :
1. The petitioner submits that the learned AAC erred in holding that the point regarding charging of interest under Section 217(1A) is not appealable. It is submitted that as held by the various High Courts, the point regarding wrong charging of interest is appealable. It is, therefore, prayed that the appeal filed by the petitioner is maintainable.
2. Without prejudice to the above, interest once charged can only be reduced as per Section 215(3). Further, interest can be charged for default of advance tax, only at the time of regular assessment and not by an order passed under Section 263. It is therefore, prayed that interest of Rs. 1,925 charged under Section 217(1A) now is illegal and wrong and the same be required to be deleted in full.
2. For the sake of convenience, the second ground is taken up at the first instance. The contention of the assessee is that the ITO could not have charged interest under Section 217(1A) of the Income-tax Act, 1961 ('the Act'), at the time of passing the order giving effect to the directions contained in the order of the Commissioner under Section 263 of the Act. From the order of the ITO, it is seen that the original assessment completed earlier was cancelled by the Commissioner and the ITO was directed to include the refund of annuity deposit of Rs. 6,981 received by the assessee under Section 280D of the Act, as the same was not included in the original assessment order. After the Commissioner canceled the order of assessment, the ITO completed the computation account of the total income of the assessee by including the above sum. While passing the order giving effect to the direction of the Commissioner, as stated above, the ITO charged interest under Section 217(1A). The brief submission made on behalf of the assessee on this point against the action of the ITO. Before the AAC, it is submitted that the ITO erred in direction to charge interest, as mentioned above, and that appeal of the assessee can be taken up before the appellate authority as decided by the Hon'ble Gujarat High Court in Bhikhoobhai N. Shah v. CIT [1978] 114 ITR 197 (Guj.) and also by the Hon'ble Bombay High Court in CIT v. Gannon Dunkerley & Co. Ltd., [1979] 119 ITR 595. The AAC, however, was of the opinion that charging of interest under the above section is not appealable in view of the decisions of the other High Courtsas reported in CIT v. Geeta Ram Kali Ram [1980] 121 ITR 708 (All.) (FB), K. B. Stores v. CIT [1976] 103 ITR 505 (Gauhati) and Mewa Lal v. CIT [1979] 117 ITR 598 (All.) According to the AAC, the appeal was not entertainable. The same was dismissed. The contention before us, as made by the learned counsel for the assessee, is that the ITO cannot charge interest while passing order giving effect to the directions rendered by the Commissioner, as that order of the ITO was not a regular assessment. It is submitted, therefore, that the appeal by the assessee should be allowed. Further more, it is submitted before us that only when interest was charged originally, in the course of regular assessment, the same may be provided under Section 215(3) of the Act. But is it contended that once regular assessment was completed and interest was not charged originally, the same cannot be charged as it was done in the present case.
3. We have heard the revenue as well on this point. We have perused the orders of the authorities below for our consideration. Copy of the order of the Commissioner under Section 263 has not been placed before us. But from the order of the ITO, it is seen that the original assessment was canceled by the Commissioner with specific direction to the ITO to include the refund of annuity deposit which the ITO did. In our opinion, the present order of the ITO giving effect to the direction of the Commissioner, cannot be said to be regular assessment for the purpose of charging interest under the above section. The above section clearly says that 'where, on making a regular assessment, the ITO finds, ...' Admittedly, interest was not charged while making the original assessment. The Commissioner, on the other hand, cancelled the order of the ITO only by the specific direction in respect of the inclusion of the annuity deposit refund. In our opinion, the ITO cannot travel beyond the direction or directions spelled out by the Commissioner in his order under section 263. In this view of the matter, the action of the ITO in this respect cannot be sustained. In this connection, we may refer to the decision of the Madhya Pradesh High Court in the case of Kundanlal Maru v. CIT [1982] 135 ITR 84. In that case, the AAC set aside the order of the ITO as a whole with the direction to the ITO to apply his mind afresh to the problem and process the whole matter after giving a fresh opportunity to the assessee and to frame an assessment order in accordance with law. It was held by the Hon'ble High Court that as per the direction of the AAC, the whole assessment order was open to the ITO and the whole matter, without any limitation, was at large before the ITO and sequel to the order of the AAC, the assessment order of the ITO was non est. The facts of the case before us are distinguishable, inasmuch as the Commissioner had passed a specific direction under section 263, in respect of the inclusion of the entity to deposit only.
4. Having regard to the facts of the case, we are of the opinion that the ITO could not have levied interest under section 217(1A), while giving effect to the order of the Commissioner rendered under section 263. This point of appeal by the assessee is accepted.
5. In view of our decision given above, the first ground of appeal would not survive for consideration.
6. In the result, the appeal by the assessee is allowed.