Calcutta H.C : Whether, on the facts and in the circumstances of the case, particularly in view of the fact that in the original assessment no interest under s. 215(1) of the IT Act, 1961 was levied as the advance tax paid was in excess of the “assessed tax”, the Tribunal was justified in law in holding that interestunder sub-s. (3) of s. 215 of the said Act cannot be levied on the reassessment made under s. 147 of the said Act ?

BY THE COURT :

On an application under s. 256(1) of the IT Act, 1961, the Tribunal has referred the following question set out in para. 2 of the application for our opinion : “Whether, on the facts and in the circumstances of the case, particularly in view of the fact that in the original assessment no interest under s. 215(1) of the IT Act, 1961 was levied as the advance tax paid was in excess of the “assessed tax”, the Tribunal was justified in law in holding that interestunder sub-s. (3) of s. 215 of the said Act cannot be levied on the reassessment made under s. 147 of the said Act ?”

2. The assessee is M/s Mahalaxmi Rice Mills. The assessment years are 1987-88 and 1988-89. The previous year ended on relates both the assessment years as on 1393 B.S. and 1394 B.S. respectively. Thereafter there was a search under s. 132 of the Act, by the Department at the office and business premises of the assessee including the godown of the assessee. The assessment, therefore, was reopened invoking the provisions of s. 147 r/w s. 148 of the Act, 1961, and assessee also filed the revised return of income on 9th Feb., 1990. After assessing the income on the basis of materials seized during the search, the income was enhanced and interest was also charged under s. 215 of the Act on the basis of enhanced income which was made under s. 143(3) r/w s. 147 of the Act.

The assessee has challenged the levy of interest on the basis of enhanced income which was enhanced in the reassessment. The case of the assessee was that the interest under s. 215 can be charged only for the period from 1st day of April, next following the said financial year up to the date of regular assessment and reassessment is not a regular assessment.

The limited controversy, therefore, is whether the reassessment is a regular assessment as provided under s. 215 of the Act.

The learned counsel for the Revenue fairly admits that the apex Court has considered the meaning of the “regular assessment” as referred under s. 214 of the Act. The provisions of s. 215 and 214 are para materia so far as the interests for period is concerned. That is up to the date of regular assessment. The expression, “regular assessment” has been used in both the sections, i.e., under s. 214 and under s. 215 of the Act. He fairly admits that the view taken by the apex Court in the case of Modi Industries Ltd. & Ors. vs. CIT (1995) 128 CTR (SC) 361 : (1995) 216 ITR 759 (SC) : TC S4.369 covers the issue, in question referred. While considering the meaning of expression “regular assessment”, Their Lordships have observed at pp. 800-801 (of 216 ITR) as under : “For all the above reasons particularly having regard to the scheme of the Act and use of the phrase “regular assessment” in various sections of the Act we are of the view that in s. 214, “regular assessment” has been used in no other sense than the first order of assessment passed under s. 143 or s. 144. If any consequential order has to be passed by the ITO to give effect to an order passed by the higher authority, that consequential order cannot be treated as the “regular assessment” nor can the date of the consequential order be treated as the date of the regular assessment.” Following the view taken by the apex Court regarding the meaning of “regular assessment”, we answer the question referred to us in affirmative, i.e., in favour of the assessee and against the Revenue.

[Citation : 249 ITR 456]