COMMISSIONER OF INCOME TAX Vs. K VENKATESWAR RAO

JUDGEMENT

(1.) This reference arises under section 256(1) of the Income-tax Act, 1961 ("the Act" for short). It relates to the income-tax assessment year 1973-74. At the instance of the Commissioner of Income-tax, the Tribunal referred the following two questions of law for the consideration of this court :

(2.) For the assessment year 1973-74, the assessee paid advance tax of of Rs. 11,380 which included a sum of Rs. 3,794 paid on 27/03/1973. While completing the original assessment, the Income-tax Officer treated the payment of Rs. 3,794 as advance tax payment and allowed interest under section 214 of the Act. Subsequently, the Income-tax Officer held the view that the sum of Rs. 3,794 paid on 27/03/1973, cannot be considered to be advance tax payment inasmuch as it was paid after the due date prescribed, namely, 15/03/1973. The Income-tax Officer, therefore, issued a notice under section 154 of the Act requiring the assessee to show cause why the interest allowed under section 214 in respect of the payment of Rs. 3,79 4/03/1973, should not be withdrawn by rectifying the assessment. The assessee objected to the jurisdiction of the Income-tax Officer to make any such rectification. Rejecting the assessees objection, the Officer passed an order under section 154 of the Act on 30/08/1977, withdrawing the interest allowed under section 214 in the original assessment.

(3.) The assessee filed an appeal before the Appellate Assistant Commissioner of Income-tax against the aforesaid order. The Appellate Assistant Commissioner allowed the appeal holding that interest was properly allowed. Promptly, the Income-tax officer filed an appeal before the Income-tax Appellate Tribunal questioning the correctness of the Appellate Assistant Commissioners view. The Tribunal held that the Income-tax Officer cannot, on the facts and in the circumstances, exercise jurisdiction under section 154 of the Act. In that view, the appeal filed by the Income-tax Officer was dismissed. Aggrieved by the order of the Tribunal, the Revenue applied for and obtained the present reference under section 256(1) of the Act.