COMMISSIONER OF INCOME TAX Vs. K S GOPALAKRISHNAN

JUDGEMENT

(1.) AT the instance of the Department, the Tribunal referred the following two questions of law for our opinion under section 256(1) of the Income-tax Act, 1961."Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that no interest under section 139(8) and section 215 of the Income-tax Act, 1961, could be levied in the assessee's case in the assessment completed on September 27, 1979 ?.2. Whether the Appellate Tribunal's view that the assessment made on September 27, 1979, consequent to the setting aside of the assessment originally made under section 144 of the Act by the Commissioner of Income-tax under section 263 was not a regular assessment and, therefore, the Income-tax Officer was not justified in charging interest under section 139(8) and section 215 of the Income-tax Act, 1961, is sustainable in law ?"

(2.) THE assessee is an individual. In the assessment year 1973-74, the assessee had paid advance tax. THE assessment was completed on the basis of best judgment under section 144 of the Income-tax Act on January 24, 1976. THEn, the Commissioner of Income-tax, acting under section 263 of the Act, set aside the assessment and directed the Income-tax Officer to make a fresh assessment in accordance with law. THE fresh assessment was completed on September 27, 1979. This assessment was considered as a regular assessment by the Income-tax Officer, and accordingly, he levied interest under section 139(8) and section 215. On appeal, the Commissioner of Income-tax (Appeals) held that the ex parte assessment earlier made is a regular assessment and the fresh assessment made in pursuance of the order passed by the Commissioner under section 263 of the Act is not a regular assessment and, therefore, the Commissioner of Income-tax (Appeals) held that interest under section 139(8) and section 215 cannot be levied. On appeal, the Tribunal also accepted the view taken by the Commissioner of Income-tax (Appeals)THE point for consideration in this reference is whether the fresh assessment made by the Income-tax Officer in pursuance of the order passed by the Commissioner of Income-tax under section 263 of the Act is a regular assessment. A similar question came up for consideration before this court in the case of Rayon Traders P. Ltd. v. ITO 1980 (126) ITR 135, 1980 (19) CTR 204, 1980 (3) TAXMAN 443, 1980 (19) CTR(Mad) 204. According to the facts arising in that case, on the basis of the assessment made on the petitioner on January 31, 1975, a demand of Rs. 12, 803 as balance of tax was made after adjustment of the tax deducted at source and the advance tax paid.