COMMISSIONER OF INCOME TAX Vs. VENKATESWAR RAO K

JUDGEMENT

(1.) THIS reference arises under S. 256(1) of the IT Act, 1961 (" the Act " for short). It relates to the IT asst. year 1973 74. At the instance of the CIT, the Tribunal referred the following two questions of law for the consideration of this Court :

(2.) FOR the asst. year 1973 74, the assessee paid advance tax of Rs. 11,380 which included a sum of Rs. 3,794 paid on March 27, 1973. While completing the original assessment, the ITO treated the payment of Rs. 3,794 as advance tax payment and allowed interest under S. 214 of the Act. Subsequently, the ITO held the view that the sum of Rs. 3,794 paid on March 27, 1973, cannot be considered to be advance tax payment inasmuch as it was paid after the due date prescribed, namely March 15, 1973. The ITO, therefore, issued a notice under S. 154 of the Act requiring the assessee to show cause why the interest allowed under S. 214 in respect of the payment of Rs.

(3.) WE are inclined to uphold the order of the Tribunal. The main argument of learned standing counsel for the IT Department is that this Court in Kangundi Industrial Works (P) Ltd. vs. ITO (1980) 14 CTR (AP) 328 : (1980) 121 ITR 339 (AP), held that any payment made by an assessee subsequent to the due date of instalment cannot be held to be an advance tax payment and, consequently, the assessee would not be entitled to claim interest under S. 214 of the Act. Learned standing counsel points out that the aforesaid decision constitutes a binding authority so far as the State of Andhra Pradesh is concerned and, consequently, the ITO would be justified in rectifying the assessment under S. 154 of the Act. According to learned standing counsel, it is immaterial that other High Courts held a different view in the matter. We have to point out that the decision of this Court in Kangundi Industrial Works (P) Ltd.'s case (supra), was rendered on March 6, 1979, whereas the jurisdiction to rectify the alleged mistake under S. 154 was invoked in the present case on August 30, 1977. It must, therefore, be said that the proceedings initiated by the ITO for rectification of an alleged mistake are not with reference to the judgment of this Court which came much later. Indeed, a perusal of the order passed by the ITO on August 30, 1977, does not even indicate any reason why the ITO thought that the interest should be withdrawn. All that the order says is that: " Interest under S. 214 was excess allowed." It is brought to our notice that at the relevant time, there is a judgment of the Gujarat High Court in Bharat Textile Works vs. ITO (1978) CTR (Guj) 435: (1978)114 ITR 28 (Guj) taking a view contrary to the one taken by this Court in March, 1979.