Bombay H.C : the petitioner has challenged the validity and legality of the order dated January 30, 1986, passed by the CIT, Bombay City IV, Bombay, under s. 154 of the IT Act, 1961.

High Court Of Bombay

Spaco Carburettors (India) Ltd. vs. M.A. Ajinkya, CIT & Ors.

Sections 154, 216, 264, 246

Asst. Year 1979-80

T.D. Sugla, J.

WP No. 1241 of 1986

21st March, 1990

Counsel Appeared

Dastur with Arvind Sonde, instructed by M/s. Mulla & Mulla, for the Petitioner : Dr. V. Balasubramanian with J.P. Deodhar & Miss. S,G. Shah, for the Respondent

D. SUGLA ,J.:

By this petition under Art. 226 of the Constitution of India, the petitioner has challenged the validity and legality of the order dated January 30, 1986, passed by the CIT, Bombay City IV, Bombay, under s. 154 of the IT Act, 1961.

2. The petitioner is a company. The proceedings relate to its assessment years 1979-80 and 1982-83. The issue involved being common, only the facts pertaining to the asst. yr. 1979-80 are referred to for the sake of brevity. The assessment was completed on September 17, 1982. On the order of assessment itself, the ITO had directed that interest under s. 216 will be charged for deferred payment of advance tax. The petitioner had filed an appeal against the order of assessment. The appeal was disposed of by the CIT (A) on December 30, 1982. It is pertinent to mention that no ground against levy of interest under s. 216 was taken by the petitioner in the appeal. The petitioner filed a revision application before the CIT under s.264 of the IT Act which was disposed of by order dated November 21, 1985. As a result of that order, interest levied under section 216 amounting to Rs. 18,900 was deleted.

Later on, the CIT felt that the order of assessment including the order charging interest under s. 216 was the subject-matter of appeal before the CIT (A) and, therefore, he had no jurisdiction to consider and/or allow the petitioner’s revision application under s. 264. Accordingly, after allowing the petitioner an opportunity of being heard, he passed the impugned order under s. 154 cancelling the order passed by him under s. 264 originally.

The pertinent question in this petition is whether the order passed by the CIT in revision under s. 264 on November 21, 1985, suffered from any apparent mistake from the record so as to give him jurisdiction to withdraw the said order under s. 154 of the IT Act, 1961. There being no dispute that an order which has been the subject-matter of appeal before the CIT (A) cannot be revised by the CIT under s. 264, the question in other words is whether the order of assessment and the order charging interest under s. 216 constitute one order so that the appeal against the order of assessment must necessarily be taken to mean an appeal also against the order charging interest under s. 216. It is worthy of note that under s. 246 of the IT Act, 1961, the assessment order and the order charging interest under s. 216 are separately appealable. While the order of assessment is appealable under s. 246(c), the order under s. 216 is appealable under s. 246(m). That apart, the question whether interest is or is not to be charged under s.

216 arises only after the assessment is completed. This is evident from the opening words of s. 216 which are “where, on making the regular assessment, the ITO finds that any assessee has ; (a) …. (b) …. he may direct that the assessee shall pay simple interest at 12 per cent. per annum and thereafter again ; (i) … (ii) . . . . ” The mere fact that an order under s. 216 charging interest is passed on the same sheet of paper on which the order of assessment is passed or is concluded will not, in my judgment, make the two orders one. Therefore, an appeal filed against the order of assessment will not automatically lead to or justify the conclusion that the appeal was filed both against the order of assessment and against the order under s. 216 or that the order under s. 216 was also the subject-matter of appeal before the CIT (A).

5. A similar question had come up for consideration before the Supreme Court in the case of CIT vs. Amritlal Bhogilal and Co. (1958) 34 ITR 130. The assessee in that case was a partnership firm. The order of assessment and the order granting registration were passed one after the other. The ITO had granted registration to the assessee and, therefore, there was no question of appeal by the assessee against that order. However, appeal was filed against the order of assessment. Subsequently, the CIT sought to cancel the registration under s. 33B of the Indian IT Act, 1922 (corresponding to s. 263 of the IT Act, 1961). There again, one of the conditions was that if an order had been the subject- matter of appeal, the CIT could not revise the order under s. 33B. This Court, inter alia, held in CIT vs. Amritlal Bhogilal and Co. (1953) 23 ITR 420 that the order of registration was also the subject-matter of appeal and, therefore, the CIT could not revise the order. Reversing the judgment of this Court, the Supreme Court, inter alia, held that an order granting registration to a firm was an order separate from and independent of the order of assessment. The registration having been granted to the assessee by the ITO, there was no question of appeal by the assessee against such an order. In any event, no appeal was provided under s. 31 of the old Act from an order granting registration to a firm under s. 26A. The order granting registration was, therefore, not the subject-matter of an appeal before the appellate authority.

6. The moot question, therefore, is whether the order charging interest under s. 216 was or was not the subject- matter of appeal before the CIT (A). On this question, the CIT himself very fairly stated that no appeal was filed by the petitioner against the charging of interest under s. 216 which by implication meant that the petitioner had accepted the levy of interest. There was no mention of levy of interest under s. 216 in the appellate order of the CIT (A) because that question was not raised in the appeal against the order of assessment.

7. Having regard to the above discussion, it is evident that the order of the CIT passed on November 21, 1985, under s. 264 did not suffer from any mistake far less a mistake apparent from the record. The impugned order passed by the CIT under s. 154 withdrawing the relief granted by him under s. 264 was thus without jurisdiction. The impugned order is, accordingly, quashed. The rule is made absolute in terms of prayer cl. (a). The petitioner is entitled to refund of interest, if already paid, in pursuance of the ITO’s order or the impugned order. No order as to costs.

[Citation : 186 ITR 360]

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