COMMISSIONER OF INCOME TAX Vs. SURESH GOKULDAS

JUDGEMENT

(1.) IN pursuance of the directions given by this Court in TCP Nos. 487 to 493 of 1980, dt. 23rd February, 1981, the Tribunal referred the following three questions for the asst. yrs. 1952-53 to 1958-59 for the opinion of this Court, under s. 256(2) of the IT Act, 1961 :

(2.) THE assessee is an HUF represented by the Karta, Sri Suresh Gokuldas, after the death of the previous Karta, Gokuldas Thulasidas. By an order of the CIT dt. 29th August, 1963, the assessee-family got its assessments for the asst. yrs. 1952-53 to 1958-59 settled out and a scheme fixing the income for each of the years and for payment of taxes and penalties was also agreed to between the Department and the assessee. According to the settlement, the assessee was permitted to pay the taxes in instalments as stipulated in the settlement order. It was also stipulated therein that the assessee should pay interest at 4 per cent on the deferred payment of taxes. THE taxes due as per the settlement order, dt. 29th August, 1963 were paid in instalments spread over the period commencing from 4th January, 1964 and ending with 19th April, 1972. THEreafter, the ITO on 21st December, 1972 caused the computation of interest payable under s. 220(2) of the IT Act, 1961, hereinafter referred to as the 'Act' to be made and later served a demand notice for Rs. 68,954 being the interest payable by the assessee under s. 220(2) of the Act on 31st January, 1973. THE interest was computed on the rate of 4 per cent as stipulated in the settlement order. Subsequently, the ITO found that the provisions of s. 220(2) of the Act were amended from time to time, varying the rate of interest from 4 per cent to 6 per cent, 9 per cent, later on 12 per cent also. THE ITO, therefore, felt that there was a mistake apparent from records in the computation of interest at Rs. 68,954. He, therefore, passed an order of rectification under s. 154 of the Act after giving the assessee an opportunity of being heard and made a fresh demand of Rs. 96,895 in the place of Rs. 68,954 originally demanded.

(3.) ON the other hand, the learned counsel appearing for the assessee submitted that the assessee by way of an agreement with the Department, agreed to pay the tax for the asst. yr. 1952-53, which is a time-barred assessment and, therefore, the Department agreed to permit the assessee to pay the arrears of tax under a time schedule along with the interest at 4 per cent per annum as per the provisions prevalent at the time of entering into the settlement. In as much as the entire matter was settled as a package deal, it is not now open to the Department to claim enhanced interest simply because by way of amendment to s. 220(2) of the Act, the rate of interest was enhanced to 6 per cent, 9 per cent and 12 per cent etc. The learned counsel for the assessee further submitted that the order passed under s. 154 of the Act is not sustainable because there is no earlier order in existence so as to enable the AO to correct the mistake. According to the learned counsel, issuance of notice under s. 220(2) of the Act would not amount to an order so as to enable the AO to rectify any mistake occurred in the notice. According to the learned counsel, since no reference would lie against an order passed under s. 154 of the Act, there is no need to make any decision with regard to Question Nos. 1 and 3 referred by the Department.