ORDER
G. Santhanam, Accountant Member
1. These four appeals by the revenue involve an identical issue and hence they are disposed of in a common order for the sake of convenience.
2. All these assessees are assessed in the status of their respective Hindu undivided families. Except in ITA No. 658/Hyd./1985 where the assessment was made under Section 143(3), in all other cases the assessment was made under Section 143(1). In all these cases, interest under Section 139(8) and Section 215 was levied. The interest under Section 139(8) was levied for late filing of the return. The interest under Section 215 was levied because the advance tax paid was less than 75% of the assessed tax. The assessees through their Auditor filed petition under Section 154 on 19-4-1983 for rectification of the assessment deleting the levy of interest. In that petition, they drew the attention of the Income-tax Officer to the communication dated 11-7-1979 addressed by the respective assessees specifically requesting the Income-tax Officer to make a provisional assessment under Section 141A in view of the substantial payment of advance tax for the earlier assessment year 1979-80. It was also requested that the refund that might result under Section 141(1) be adjusted towards part payment of advance tax due for the assessment year 1980-81. The Income-tax Officer rejected the petition of the assessees under Section 154 holding that there was no mistake apparent from record.
3. Appeals were preferred before the Appellate Assistant Commissioner of Income-tax. He held that if the Income-tax Officer had passed an order under Section 141A as requested by the assessees, it would have resulted in refunds to them and such refunds would have been adjusted against the advance tax payable by the assessees, in which case, there would not be any default on the part of the assessees giving rise to levy of interest under Section 139(8) and under Section 215 and in this view of the matter, he directed the Income-tax Officer to rectify the assessment under Section 154. The revenue is in appeal before us.
4. Sri B. Kailasnath, learned departmental representative, submitted that in the absence of a provisional assessment under Section 141A, it cannot be said that any amount was found refundable to the assessees and, therefore, no adjustment of such contingent refunds could be made against the advance tax payable. Only the tax deductible at source and the instalments of advance tax paid already in the financial year are liable to be adjusted against the advance tax payable but not the refunds that are contingent upon the passing of an order under Section 141A. As a matter of fact, he submitted, the Income-tax Officer had granted interest under Section 214 and Section 243 on the amounts due to the assessees in the regular assessment itself in relation to the earlier year. Having thus received interest, the assessees should not agitate further for cancelling the interest levied under different sections viz. 139(8) and 215, for the default committed by them. It was his further submission that the assessments have been completed under Section 143(1) except in the case of the assessee in ITA No. 658/Hyd./ 1985, if the assessees had really objected to the assessments, the proper course would have been to have recourse to the proviso to Section 143(2) and not to Section 154. There was delay in the submission of the returns and the advance tax paid fell short of 75% of assessed tax and, therefore, in the absence of any reasonable cause, the assessees were liable to pay interest to the Government. It is only when the entire liability to pay interest is denied or does not arise at all, that appeal would lie against levy of interest and the Appellate Assistant Commissioner erred in entertaining the appeals.
5. Sri G. Rajagopala Rao, learned counsel for the assessees, adverted to the circumstances in which the advance tax was not paid and also emphasized that the assessees were under the bona fide belief that their request for adjustment of refund under Section 141A would be complied with and, in this view of the matter, he submitted that the levy of interest was not justified. It is his plea that an assessee aggrieved over an order of assessment, whether under Section 143(1) or under Section 143(3), can certainly file a petition under Section 154 for rectification of mistake apparent from record and if the rectification was not done, the assessee can certainly prefer appeal against the order of refusal.
6. Having regard to rival submissions and the materials on record, we allow the appeals of the revenue. The assessees had certainly paid more taxes than what were due from them in relation to the respective tax returns for the preceding assessment year 1979-80. It is also a fact that the assessees had requested the Income-tax Officer to make a provisional assessment for refund under Section 141 A. For reasons not known, no order was passed in the case of the assessees under Section 141A. If the provisional assessment for refund under Section 141A had been made, the assessees would be entitled to certain refunds. But, it is also a fact that unless and until an order under Section 141A is passed, no refund is due to the assessees, because such a refund is contingent upon passing of an order under Section 141A. Therefore, when the assessees were bound to pay advance tax for the assessment year 1980-81, nothing was due to the assessees from the Government and they cannot be under a belief, however bona fide that the excess tax paid in the earlier years would get adjusted against the advance tax payments. This is so notwithstanding the fact that a specific request had been made to the Income-tax Officer inviting him to pass an order under Section 141A and adjust the excess tax paid against advance tax due. On going through the provisions of advance tax payment, it is crystal clear that only the taxes deductible under the provisions of the Income-tax Act and the instalments of advance tax already paid and any other ad hoc payments made already in the financial year could be deducted from the total advance tax payable leaving the balance to be paid. The refund which is contingent upon passing of an order under Section 141A does not fall under any of the above categories. So, the assessees are liable to pay advance tax in accordance with their statement of advance tax or in accordance with their estimate. In this view of the matter, we hold that the assessees were liable to pay advance tax and once this is established, no appeal can be entertained by the Appellate Assistant Commissioner against the levy of interest under Section 215 as there is no denial of liability.
7. The levy of interest under Section 139(8) is not objected to by the assessees by showing any reasonable cause for the late filing of the respective returns. The objection is mainly on the ground that if the Income-tax Officer had passed an order under Section 141A and if the refunds hereunder had been adjusted against the advance tax payable, no amount would be found payable upon assessment and, in that event, no interest would be leviable under Section 139(8). We have already held that there was no refund due to the assessees in the absence of provisional assessment under Section 141A in respect of the earlier assessment year. Once this legal position is taken into account, the conclusion is inescapable that the Income-tax Officer was justified in levying interest under Section 139(8) in the absence of any reasonable cause for the late submission of the returns. As the assessees were liable to pay interest under Section 139(8), there could be no denial of such liability and, therefore, the appeal against the levy of interest under Section 139(8) should not have been entertained by the Appellate Assistant Commissioner.
8. In the case of assessments under Section 143(1), it is not permissible for the assessees to plead for rectification under Section 154 on grounds of mistake apparent from record. This is because in the ratio of the decision of the Tribunal in Sixth ITO v. Pithva Engg. Works [1983] 6 ITD 413 (Bom.), the provisions of Section 143(1) and other provisions relevant thereto in Section 143 constitute a complete code in themselves being special provisions relating to assessments made under Section 143(1). These special provisions could not be ignored by resorting to the general provisions of Section 154 for the reason that the rule that ‘the special excludes the general’ is well settled. For this reason also, the Appellate Assistant Commissioner should not have entertained the appeals in the case of the three assessees whose assessments were completed under Section 143(1).
9. For the above reasons, we set aside the orders of the Appellate Assistant Commissioner. In the result, the appeals of the department are allowed.