JUDGMENT
V.K. Singhal, J.
1. The Income-tax Appellate Tribunal has referred the following two questions of law arising out of its order dated November 14, 1985, in respect of the assessment year 1978-79 under Section 256(1) of the Income-tax Act, 1961 :
“1. Whether the Tribunal was right in law in holding that the assessee was not entitled to receive interest under Section 214 of the Income-tax Act in respect of the advance tax of Rs. 86,355 paid during the financial year ended March 31, 1978 ?
2. Whether the Tribunal was right in holding that the Inspecting Assistant Commissioner (Assessment) was not competent to pass an order under Section 154 of the Income-tax Act when his attention was drawn to the fact that he had omitted to give interest under Section 214 on the above amount due to the assessee ?”
2. The brief facts of the case are that the assessee submitted the returns of its income and claimed a refund of Rs. 1,82,000 on the ground that the advance tax paid was Rs. 15.62 lakhs which was deposited without taking into consideration the tax deducted at source. In the assessment which was framed by the Inspecting Assistant Commissioner (Assessment), a demand of Rs. 1.4 lakhs was raised as per order dated November 1, 1980. The assessee deposited a sum of Rs. 75,000 against this demand. Against the order of assessment, an appeal was preferred before the Commissioner of Income-tax (Appeals) and as a result of the appellate order, the tax payable was reduced to Rs. 14.51 lakhs. The Inspecting Assistant Commissioner (Assessment) while giving effect to the order of the Commissioner of Income-tax (Appeals), found that a sum of Rs. 1.56 lakhs was refundable to the assessee which included Rs. 75,000 deposited on January 19, 1981. The interest under Section 214(1A) on the amount of Rs. 75,000 alone was allowed to the extent of Rs. 3,750. The assessee thereafter moved an application under Section 154 praying that the amount which was deposited as advance tax is liable to be refunded along with interest and the interest alone comes to Rs. 44,320. It was claimed by the assessee that besides the amount of Rs. 75,000 which was deposited by the assessee on January 19, 1981, on which interest for five months has been given, the balance amount of refund Rs. 1,85,806-75,000 = 1,10,806, is due on account of advance tax which has been paid in excess of the demand of the above year and interest should be allowed for the period from April 1, 1978, to August 19, 1981, for 40 months. The application submitted by the assessee was rejected by the Inspecting Assistant Commissioner on June 24, 1982.
3. An appeal was preferred against the said order. Before the Commissioner of Income-tax (Appeals), it was submitted that the original demand notice for advance tax sent by the Income-tax Officer under Section 210 was for a sum of Rs. 14,75,530. This notice was received in May, 1977, and the amount was deposited in three instalments. This demand was revised by an order dated September 30, 1977, and a sum of Rs. 15,61,885 was demanded. According to the Department, the interest under Section 214 is not payable where there is delay in making the payment of the amount due on the last instalment, while according to the assessee, if the amount of advance tax instalments have been paid, in the financial year, interest under Section 214 is allowable to the appellant. The Commissioner of Income-tax accepted the contention of the assessee and allowed the claim of the assessee and interest on the refund. The Revenue preferred a second appeal before the Income-tax Appellate Tribunal where it was found that the Inspecting Assistant Commissioner in his letter dated January 28, 1983, has found that the assessee is entitled to the interest of Rs. 7,564 on the amount of Rs. 24,451 and in respect of the balance amount of Rs. 86,355 which is said to have been paid beyond the statutory period, i.e., December 15, 1977, as it has been paid on February 20, 1978, the contention of the Revenue was that the assessee is not entitled to any interest. It was submitted that it is not a matter which could be rectified under Section 154 as it requires elaborate arguments and there is a dispute amongst various High Courts as to whether interest under Section 214 could be paid even in respect of advance tax which has been paid beyond the time-limit provided under the statute. So far as the question of interest of Rs. 7,564 is concerned, it was found that the assessee is entitled for the said amount and it was liable to be rectified in the proceedings under Section 154. In respect of the interest due on the balance amount of advance tax of Rs. 86,355, it was observed that the said amount represents the advance tax paid on February 20, 1978, and several High Courts have taken divergent views some of which are in favour of the Department while others are against the Department and, therefore, it cannot be considered to be a mistake apparent from the record as a long-drawn process of arguments is required to justify the claim of the assessee.
4. Learned counsel for the assessee has submitted that no arguments are required in the matter and the law is clear that if the amount is paid within the financial year, the assessee is entitled for the interest on the amount of advance tax.
5. We have considered over the matter. The amount of Rs. 75,000 was deposited beyond the period prescribed under Section 210, but was deposited within the financial year. The belated payment, if it has been paid during the financial year has been held to be eligible for interest under Section 214 by a majority of the High Courts in the cases of CIT v. Traub (India) Pvt. Ltd. [1979] 118 ITR 525 (Bom) ; Chandrakant Damodardas v. ITO [1980] 123 ITR 748 (Guj) ; Santha S. Shenoy v. Union of India [1982] 135 ITR 39 (Ker) and CIT v. Jagannath Narayan Kutumbik Trust [1983] 144 ITR 526 (MP).
6. The Andhra Pradesh High Court in the case of Kangundi Industrial Works (P.) Ltd. v. ITO [1980] 121 ITR 339 and the Kerala High Court in A Sethumadhavan v. CIT [1980] 122 ITR 587 have held that the assessee is not entitled to interest on advance payment if such payment is not made on the due dates, The point, therefore, could be said to be an arguable point which requires elaborate discussion. In CIT v. Jagannath Narayan Kutumbik Trust [1983] 144 ITR 526 (MP), while deciding the issue that where the advance tax is paid before the end of the financial year, the assessee is entitled to interest on the excess over the assessed tax, it was held by the Madhya Pradesh High Court that the issue cannot be considered non-controversial or free from debate and, therefore, could not be rectified under Section 154. In CIT v. Parmanand Bhai Patel and Smt. Jyotsnadevi Patel [1983] 144 ITR 871, the Madhya Pradesh High Court have again considered this one as a debatable issue and not rectifiable under Section 154. The law on this point is settled by the decision of the apex court in the case of T. S. Balaram, ITO v. Volkart Brothers [1971] 82 ITR 50 and Satyanarayan Laxminarayan Hegde v. Mallikarjun Bhavanappa Tirumale, AIR 1960 SC 137, wherein the apex court has considered that the mistake must be self-evident, and it must be an obvious and patent mistake and not one which can be established by a long-drawn process of reasonings. In view of the law propounded by the apex court, since there could have been two opinions, we are of the opinion that the Tribunal was justified in rejecting the claim of the assessee that in the proceedings under Section 154, the claim of interest in respect of instalments is an arguable point and cannot be allowed. In these circumstances, we do not feel that question No. 1 should be decided on the merits. The assessing authority cannot be said to have committed an error of law in not allowing refund in the proceedings under Section 154. The decision in CIT v. Sunil Kumar [1995] 212 ITR 238 (Raj) holding that interest is payable under Section 214 even in Section 154 proceedings is not applicable since it was not a dispute in that case, that the advance tax was paid late but within the financial year.
7. Consequently, the reference is answered in favour of the Revenue and against the assessee. No order as to costs.