ORDER–Enhancement of interest under s. 214–Initial assessment set aside by court–Fresh assessment made in compliance with court directions–Interest enhanced onthe basis of subsequent assessment–Initial assessment was regular assessment–Issue of notChloride India Ltd. v. CIT (1977) 106 ITR 38 (Cal) applied.
Income Tax Act 1961 s.263
JUDGMENT
Susanta Chatterji, J.
1. The present rule was issued on September 17, 1979, at the instance of the writ petitioner, Samnuggar Jute Factory Co. Ltd., praying, inter alia, for the issuance of a writ of mandamus commanding the respondents to cancel and/or withdraw the notice dated September 5, 1979, issued by respondent No. 1 under Section 263 of the Income-tax Act and to forbear from giving any effect to and/or taking any step whatsoever in pursuance of the said notice on the ground that the order alleged to have been made on January 31, 1975, by the Income-tax Officer for the assessment year 1972-73 was itself the subject-matter of the writ proceedings in Civil Rule No. 4281 (W) of 1975 and by reason of the judgment and order made by Sabyasachi Mukharji J. (as his Lordship then was) on March 5, 1976, and March 26, 1976, the said order, if any, had been set aside and the assessment made by respondent No. 2 on March 30, 1977, after complying with and giving effect to the directions of this court as contained in the order dated March 5, 1976, can only be treated as the “regular assessment” within the meaning of Section 214 of the said Act read with Section 2(40) of the said Act and as such there is no error made by respondent No. 2 in his orders made under Section 214 of the Act dated October 4, 1977, and October 15, 1977. Under the circumstances, the conditions precedent for the assumption of jurisdiction under Section 263 of the Act do not exist and respondent No. 1 is acting without and/or in excess of his jurisdiction and/or authority. It is further alleged that the order dated October 4, 1977, and October 15, 1977, which are sought to be revised have been passed by respondent No. 2 in accordance with the principles of law decided by this court in the case of Chloride India Ltd. v. CIT [ 1977] 106 ITR 38 and the said orders cannot be said to be erroneous within the meaning of Section 263 of the Act. Dr. Pal, appearing for the petitioner, has argued with emphasis that the expression “regular assessment” appearing in Section 214 of the Act is different from the expression “first assessment or provisional assessment”. “Regular assessment” means, an assessment made under Section 143 of the Act or under Section 144 of the Act. The alleged assessment made by respondent No. 2 on March 30, 1977, is an assessment made under Section 143(3) of the Act after complying with and giving effect to the directions of Sabyasachi Mukharji J. as contained in the orders dated March 5, 1976, and March 26, 1976. According to him, the orders made by respondent No. 2 on October 4, 1977, and October 15, 1977, are in accordance with law and the notice under Section 263 of the Act is erroneous, illegal and without jurisdiction. He has drawn the attention of the court that respondent No. 1 is acting illegally, erroneously and in clear contravention of the provisions of the Act by treating the assessment for the assessment year 1972-73 made on January 31, 1975, as the “regular assessment” for the purpose of Section 214 of the Act and the basis on which the purported notice under Section 263 of the Act had been issued is clearly illegal, invalid and without jurisdiction. Dr. Pal submits further that unless the respondents are restrained by an appropriate order of this court from proceeding with and/or taking any steps in pursuance of the impugned notice dated September 5, 1979, issued by respondent No. 1 under Section 263 of the Act, respondent No. 1 is likely to pass an order under Section 263 of the Act withdrawing the amount refunded to the petitioner under the orders dated October 4, 1977, and October 15, 1977, and in that event, respondent No. 1 will proceed with the demand for the recovery of the said amount from the petitioner, the petitioner will suffer substantial loss and irreparable injury.
2. Mr. Prasad, appearing for the contesting, respondents, income-tax authorities, has argued that the writ petition is thoroughly misconceived inasmuch as the steps taken by the respondents are neither contrary to nor inconsistent with the provisions of law nor has any attempt been made to circumvent the order of Sabyasachi Mukharji J, as contained in the petition. He has referred to the case reported in Shree Sajjan Mills Ltd. v. CIT .
3. Having heard the learned lawyers of both sides, it appears that the Income-tax Officer originally made the assessment on January 31, 1975. The said assessment was set aside by an order of this court in a writ petition filed by the petitioner on the question of the liability of the petitioner. Subsequently, the Income-tax Officer passed an order of assessment on March 30, 1977. The said assessment was rectified by the Income-tax Officer under Section 154 of the Act on June 3, 1977, October 4, 1977, and October 15, 1977. The Income-tax Officer, in the order dated October 4, 1977, allowed interest under Section 214 of the Act amounting to Rs. 9,39,008. Later on, he revised the order and enhanced the interest payable under Section 214 of the Act to Rs, 11,36,847 by an order dated October 15, 1977. It further appears that the Commissioner of Income-tax has issued the present notice for revising the orders dated October 4, 1977, and October 15, 1977, for the assessment year 1972-73 on the ground that interest which is payable under Section 214 of the Act has to be allowed to the assessee with reference to the excess amount of advance tax paid after adjusting the payment made under Sections 207 to 213 of the Act against the tax determined on regular assessment. The dispute has come to the court as to the interpretation of “regular assessment”. The original assessment made by the Income-tax Officer raised a question as to whether interest should be allowed under Section 214 of the Act on the basis of assessment made subsequently in pursuance of the direction of the court and whether such question does arise and whether the Income-tax Officer’s order is erroneous in law. The reason for which the Commissioner of Income-tax has issued the notice under Section 263 of the Act O’c). In the case of Chloride India Ltd. v. CIT , it has been observed by Sabyasachi Mukharji J. (as his Lordship then was) that the obligation under Section 214 of the Act is to pay interest on the amount by which the advance tax paid exceeds the tax determined on regular assessment. An order which is made by the Income-tax Officer to give effect to the order of the Appellate Assistant Commissioner is an order of assessment under Section 143. If that is the position, then, in view of Section 2(40) of the Act, the regular assessment as contemplated by Section 214(1) of the Act should be the assessment made by the Income-tax Officer initially or the first assessment made by the Income-tax Officer if there is no appeal therefrom. Dr. Pal’s argument is that the order passed by the Income-tax Officer to give effect to the direction, if any, of the appellate authority has to be viewed in the proper perspective. Regard being had to the scheme of the Act and the context in which the expression has been used, “regular assessment” under Section 214 of the Act would include in the particular facts and circumstances of the case, an assessment made by the Income-tax Officer, This court has looked into the various facts of the case and also looked into the assessment made in the instant case which is under challenge in the writ petition. After going through the impugned order, this court does not find that the impugned notice suffers from any infirmity and any step taken by the respondent is contrary to the submissions and provisions of law as enunciated in the reported decision. This court does not find that, in issuing the impugned order, there is any infringement of the right of the petitioner. The petitioner will have ample opportunity to place on record all relevant facts and materials in support of its contention at the time of adjudicating the same by the proper authority in accordance with law. Unless there is lack of jurisdiction to issue the impugned order and to initiate the proceeding, aid from the writ court is not called for. After perusing the materials on record, this court does not find that the proceeding should be quashed as prayed for. Finding no merit in the writ petition, the rule is discharged and all interim orders are vacated.
4. There will be no order as to costs.
5. There will be stay of operation of this order for a period of a fortnight from date as prayed.