JUDGMENT
M.B. Shah, J.
1. By the order dated January 12, 1981, the Income-tax Officer, Circle II, Ahmedabad, rejected the petitioner’s application for grant of interest under section 214 of the Income-tax Act as it was applicable for the assessment year 1973-74. It was held that under section 2(40) regular assessment would not include the order passed by the appellate authority and section 214 does not provide, for grant of interest in respect of excess advance tax paid as modified from time to time as a result of appeal, rectification, revision, etc. An appellate order cannot be termed as a regular assessment and any refund arising as a result of the appellate order cannot be considered to be a refund of advance tax. In this petition, the petition has challenged the aforesaid order by filing this petition.
2. For deciding the contentions in this petition in would be necessary to refer to the relevant facts. The relevant assessment year in this petition is 1973-74 which corresponds to the calendar year 1972. The petitioner paid advance tax of Rs. 68,69,155. The Income-tax Officer passed the provisional assessment order under section 141A on December 20, 1973. He computed the income at Rs. 66,77,700 and assessed tax thereon at Rs. 38,25,495. After adjusting the tax deducted at source and the advance tax paid by the petitioner he refunded Rs. 22,05,885. Thereafter, the Income-tax Officer passed the regular assessment order on November 1, 1974, which is at annexure “B” to this petition. As per the assessment order, the petitioner was required to pay the tax of Rs. 62,60,172. Against that order, the petitioner petitioner filed an appeal before the Appellate Commissioner of Income-tax, which was partly allowed by the order dated July 16, 1975, and the Income-tax Officer was directed to modify the assessment as per the appellate order. As per the revised assessment order dated March 31, 1976 (annexure “D”), the petitioner was required to pay tax of Rs. 55,11,236. The petitioner thereafter filed an application for grant of interest as per the provisions of section 214 of the Act. That application was rejected as stated above.
3. At the time of hearing of this matter, learned counsel for the petitioner submitted that in view of the Full Bench decision of this court in the case of Bardolia Textile Mills v. ITO [1985] 151 ITR 389, this petition is required to be allowed as this court has held that a regular assessment would include the revised assessment as per the direction given by the first appellate authority.
4. In the case of Bardolia Textile Mills v. ITO [1985] 151 ITR 389 (Guj) [FB], this court interpreted the provisions of section 214(1) of the Income-tax Act, 1961, as it was at relevant time and arrived at the conclusion that interest on the excess of the advance tax refunded under section 214(1) of the Income-tax Act has to be paid up to the date of regular assessment. When the first assessment of the Income-tax Officer is final, that is the regular assessment for the purposes of section 214(1). Where the first assessment is set aside by the Appellate Assistant Commissioner on appeal and a fresh assessment is made, the excess will be determined with reference to such fresh assessment and interest has to be paid up to the date of such revised assessment. The court further held that even when on an appeal from the first assessment, the Appellate Assistant Commissioner does not set aside the assessment, but merely reduces the tax liability and, therefore, only a revised assessment is made recomputing the income and tax to give effect to the appellate decision, the position is the same and the excess of advance tax refundable will be determined with reference to the revised assessment and the interest is payable on such excess up to the date of such revised assessment. The relevant observations of this court are as under (at page 418) :
“Where the original order of assessment has been set aside and a fresh assessment order is passed, such revised assessment order is the only order in force as in this case and reference can be only to that order. When the original assessment order stands modified in appeal, and as a consequence, a revised assessment order is passed, the revised order is also an order under section 143, as held by courts, and the reference in section 214(1) could be either to the first order or the revised order. The context in which the term appears, understood in the background of the scheme of the Act, must determine whether the reference therein is to the first assessment or revised assessment. There is no other approach possible and any pedantic approach which does not keep in view the simple rule we have stated here will fail.”
5. Thereafter, the court referred to various judgments and arrived at the conclusion that when the first assessment is final, that is the regular assessment for the purpose of section 214(1). Where the first assessment happens to be revised, the excess will be determined with reference to such revised assessment. Interest is payable on such excess up to the date of such revised assessment. This is the scheme of section 214(1) of the Income-tax Act.
6. It seems that the Income-tax Officer has rejected the petitioner’s application relying upon the decision of the Bombay High Court in the case of Sarangpur Cotton Manufacturing Co. Ltd. v. CIT [1957] 31 ITR 698 (Bom) and other such decisions. It is to be noted that the aforesaid decisions are distinguished by this court in the case of Bardolia Textile Mills v. ITO [1985] 151 ITR 389 (Guj) [FB]. The aforesaid Full Bench decision is binding on us. In this view of the matter, the order passed by the Income-tax Officer on January 12, 1981, requires to be set aside.
7. The petitioner paid advance tax of Rs. 58,69,155 and Rs. 22,05,885 were refunded as per the provisional assessment order dated December 20, 1973. As per the direction of the Appellant Commissioner and the revised assessment, the petitioner was required to pay tax of Rs. 55,01,236. It is apparent that in pursuance of the provisional assessment order the petitioner was given refund of much more amount than he was entitled to. At this stage it would be worthwhile to reproduce the observations made in the case of Bardolia Textile Mills [1985] 151 ITR 389 by the Full Bench of this court while dealing with a similar situation as under (at page 404) :
“Then again there would be the question of interest on the sum of Rs. 10,000 refunded from the date of refund to the date of the regular assessment. The obligation under section 214(1) being to pay interest on excess advance tax, when such excess is refunded on a date earlier to the regular assessment, viz., by virtue of an order under section 141A(1), it would be natural to make such refund with interest thereon up to the date of the provisional assessment.”
8. Still, however, we inquired from learned counsel for the parties whether there is any specific provision to the aforesaid effect for refunding the amount with interest. No such provision is pointed out. On the contrary, proviso to section 214(1) reads as under :
“Provided that in respect of any amount refunded on a provisional assessment under section 141A, no interest shall be paid for any period after the date of such provisional assessment.”
9. The proviso indicates that no interest shall be paid for the period after the date of provisional assessment. Hence, the petitioner could be entitled to interest till the order of provisional assessment is passed.
10. In the result, the petition is allowed. The impugned order dated January 12, 1981 (annexure “H”), passed by the Income-tax Officer, Circle II, Ahmedabad, is quashed and set aside. The respondent is directed to pass appropriate orders under section 214(1) of the Income-tax Act by considering that regular assessment would include revised assessment as per the order of the Appellate Assistant Commissioner. Rule made absolute to the aforesaid extent with no order as to costs.