N DEVAKI AMMA Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) IN these writ petitions the facts are simple and are not in dispute ; what assumes importance is the question of law, as raised by the parties, whether the petitioners-assessees are entitled under s. 214 of the IT Act, 1961 (Act XLIII of 1961), hereinafter referred to as "the Act", to interest on the advance tax refunded to them as a result of the decision of the AAC reducing the total income determined by the ITO. The contention of the petitioners is that the Central Government in terms of s. 214 of the Act is bound to pay interest on the advance tax eventually refunded to them ; the stand of the Revenue, however, is that the petitioners are entitled to claim interest under the section only on advance tax ordered to be refunded to them by the ITO on regular assessment made at the first instance under s. 143 of the Act (s. 144 not being applicable to the facts of the present case), unaffected by the refund, if any, that might be subsequently ordered as a result of the recomputation of the tax liability in pursuance of the direction given by a higher authority. For the sake of convenience, we would hereinafter refer to "regular assessment" made by the ITO at the first instance under s. 143 of the Act as the "original regular assessment" and the subsequent order passed by the ITO for giving effect to the directions of the higher authority as the "revised regular assessment".

(2.) TO appreciate the background in which the writ petitions happened to be filed, we would narrate briefly the facts as stated in O.P. No. 3120 of 1976. On the AAC allowing deduction of a sum of Rs. 62,374 claimed by the petitioner, the total income in his hands found liable to be assessed for the asst. yr. 1970- 71 was reduced to Rs. 11,551 resulting in the refund of Rs. 29,492 paid by way of advance tax in compliance with the provisions of the Act in that regard ; the ITO, however, did not allow interest on the amount refunded. The petitioner took up the question of interest on advance tax refunded in revision under s. 264 of the Act before the CITs, Ex. P-1 being the copy of the revision petition. The CIT by his order dated March 6, 1976, a copy of which is Ex. P-2, rejected Ex. P-1 revision petition. It is on being aggrieved by the orders of the ITO and the CIT on the question of interest on advance tax refunded, that this writ petition has been filed. Two reliefs are sought : : (1) the issue of a writ of certiorari quashing Ex. P-2 order ; and (2) the issue of a writ of mandamus directing the respondents to pay the petitioner interest on the amount of advance tax refunded in accordance with the provisions contained in s. 214 of the Act. The prayer for the issue of a writ of mandamus, it may be noticed, is couched in such language as to suggest that the question of granting that relief would arise only if Ex. P-2 is quashed on the ground that it is violative of s. 214 of the Act.

(3.) UNDER s. 214 of the Act interest is payable "on the amount by which the aggregate sum of any instalments of advance tax paid ...... exceeds the amount of the tax determined on regular assessment, from the 1st day of April next following the said financial year to the date of the regular assessment". The section contemplates the payment of interest if the advance tax paid exceeds the amount of tax determined on regular assessment. The questions, therefore, are what the amount of tax determined on regular assessment is, and by what amount the advance tax paid exceeds it. The answers to these questions, would take us to a further question as to the particular regular assessment under which the refund is ordered-- whether it is under the "original regular assessment" or under the "revised regular assessment". Sri P. K. Ravindranatha Menon, the standing counsel for the Revenue, submitted that the expression "regular assessment", wherever it occurs in the Act, no doubt, carries the same meaning as defined under s. 2(40) of the Act "unless the context otherwise requires". According to him, even when it is conceded that the "revised regular assessment "also should be deemed to be passed under s. 143 or 144 of the Act, as the case may be, in conformity with the requirements of s. 2(40) of the Act, it is certainly open to the Court to consider whether, in the particular context in which it occurs, the expression connotes of original regular assessment "or" revised regular assessment". When s. 214(1) of the Act speaks of "regular assessment", without anything more, in our opinion, it is difficult to construe that the legislature had in mind not only the plain meaning of "original regular assessment" as understood in the normal or popular sense, but also a restricted meaning in a qualified sense that it could also be "revised regular assessment" where, on a recomputation in pursuance of the direction of a superior authority, reduction of tax has been ordered. Sri Ravindranatha Menon has a case that the safeguards provided in s. 212 of the Act are adequate to remove the difficulty, if any, that might be experienced in the working of ss. 209 and 210 on account of the anomalous situation apprehended by Sri Radhakrishna Menon ; however, our view being that the expression "regular assessment" occurring in the Act has to be read and understood, in the particular context in which it is used, we only propose to notice this submission made by Sri Ravindranatha Menon without considering the merits of the point in depth.