COMMISSIONER OF INCOME TAX Vs. PANKAJ GUPTA

JUDGEMENT

(1.) Under Section 256(2) of the Income-tax Act, 1961, the Tribunal has referred the following two identical questions in all the six references before us :

(2.) The assessee was a partner in a firm, Messrs. Auto Sales, Allahabad. For the assessment year 1970-71, the Income-tax Officer completed the assessment of the assessee before the assessment of the firm for that year was completed. The assessee's share of profit in the firm was taken at Rs. 86,000 subject to rectification under Section 154/155, after the assessment of the firm was completed. For this purpose, the firm was taken as an unregistered firm. This order of assessment was made on January 29, 1973, and since it was found that the advance tax paid by the assessee was far higher than the tax determined payable, the assessee was held entitled to interest on excess payment of tax under Section 214 of the Act.

(3.) The assessment of the firm was completed later, Though it was treated as an unregistered firm by the Income-tax Officer, the Appellate Assistant Commissioner in appeal treated it as a registered firm. The order of the Appellate Assistant Commissioner became final. The assessment order dated January 29, 1973, in the case of the assessee, was rectified in the light of, and in accordance with, the assessment order of the firm. This rectification order is dated February 25, 1974. In this order, the Income-tax Officer held that the tax payable by the assessee is higher than the advance tax paid by him. On this ground, he withdrew the interest which was granted to the assessee under his order dated January 29, 1973. Further, the assessee was made liable to pay interest under Section 217 of the Act. Against this order, the assessee filed an appeal which was rejected as incompetent on the ground that no appeal is provided against an order under Section 156(?). A few days after passing the rectification order, the Income-tax Officer communicated a "calculation chart" to the assessee letting out the particulars of the tax which was determined as payable in the rectification order. Against this calculation memo also, the assessee preferred an appeal. Both the said appeals were dealt with together by the Appellate Assistant Commissioner and dismissed against which the assessee preferred two appeals to the Tribunal. The Tribunal held in the first instance that the rectification order is itself illegal inasmuch as no notice under Sub-section (3) of Section 154 was issued before passing the rectification order. The Tribunal also found that the Income-tax Officer had no power to withdraw the interest allowed to the assessee under Section 214 by his order dated January 29, 1973. The Tribunal held further that the Income-tax Officer was equally, incompetent to charge interest under Section 217 in the circumstances of the case. It is thereupon that the Revenue applied for and obtained the present references.