RAYON TRADERS PRIVATE LIMITED Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) THIS is a writ petition for the issue of a writ certioraris and to quash the order of the Commissioner of Income-tax dated July 15, 1976, under the following circumstances :

(2.) THE only question that arises for consideration is whether the assessee is eligible for any interest on the amount refunded by the order dated January 21, 1976.

(3.) THE expression "regular assessment" came up for interpretation by this court in Natarajan Chettiar v. ITO [1961] 42 ITR 29. In that case the assessee was assessed for the assessment years 1947-48 to 1952-53 under s. 23(3) of the Indian I.T. Act. Subsequently, the ITO reopened the assessment under s. 34 of that Act and recomputed the assessee's total income for the different years at figures which were in excess of the original figures. Further tax demands as a result of the reassessments came to be made. THE ITO included a certain sum as interest payable by the assessee under s. 18A(6) of the 1922 Act. THE assessee took exception to this charge of interest and also applied to the IAC, Madurai Range, for reduction or waiver of the interest paid by the assessee. This application was rejected, and thereupon the matter was brought before this court under art. 226 of the Constitution of India. Panchapakesa Iyer J., who came to consider the matter in the first instance, observed that he failed to see how a "assessment" would not be a "regular assessment" and that "surely, it was not an irregular assessment" and that, therefore, the assessee was obliged to pay interest right up to the date of the assessment made under s. 34. THE assessee appealed and in the judgment of the Division Bench it was pointed out that the amount ascertained on the basis of the regular assessment under s. 23 as originally made brought about a finality, subject only to the provision contained in the second proviso to s. 18A(6) which related to the reduction of the amount on which interest was payable as a result of an appeal, revision or a reference. It was held that there was no provision to meet the contingency where the amount of tax payable by the assessee was increased by proceedings taken under s. 34 of the Act. THE result was that the assessee was held as not being liable to pay any interest on the amount subsequently demanded under s. 34, even though the said amount was in excess of the advance tax paid by the assessee.