(1.) THE following two questions have been referred by the Division Bench for adjudication before the Larger Bench :-
(2.) THE facts which are essential to be stated in both the cases are as under:- (A) Income Tax Reference No. 35/1994 : (Commissioner of Income Tax, Jabalpur v. Udhoji Shri Krishandas, Satna) In this reference assessment years involved are 1972-73 to 1976-77. M/s Udhoji Shri Krishna Das Agarwal is a registered partnership firm in which following were partners in the relevant year : Ranjana Agarwal, Jagannath Prasad Agrawal, Ramdulari Agrawal, Narsinghdas Agrawal, Udhoji Agrawal, Dwarkadas Agrawal, Hari Om Agrawal, Asha Shanti Agrawal, Balmukund Agrawal and Arun Kumar Agrawal. For the assessment years 1972-73,1973-74 and 1974-75 the Income Tax Officer completed assessment in the cases of all the partners under Section 141-A of Income Tax Act, 1961 (hereinafter referred to as the 'act') and excess advance tax was refunded together with interest under Section 214 of the Act. On completion of regular assessment of these three years under Section 143 (3), taking share income subject to rectification under Section 155, no refund was due to the assessee. For the assessment years 1975-76 and 1976-77 on completion of regular assessment under Section 143 (3) no refund was due to the assessee and demands raised as per assessment were paid. For the assessment years 1972-73 and 1974-75 assessments were completed in the case of firm on 5-10-1978 and 25-10-1979. These assessments were annulled by the Commissioner of Income Tax (Appeals) as barred by time. The aforesaid order of Commissioner was upheld by the Tribunal by order dated 19-3-1980 and the same attained finality. The assessees approached the Income Tax Officer to pass consequential order under Section 154 of the Act for revising the computation of total income, so as to reduce the share of profit from the said firm for both the years to no profit and further to refund the excess of tax paid. The Income Tax Officer rejected the application of assessees holding that after retaining the advance tax demand from the gross amount refundable, no amount became refundable, and therefore no amount was to be refunded for any of those two years. Aggrieved by the said order of Income Tax Officer the assessees went in appeal before the Appellate Assistant Commissioner of Income Tax, why by order dated 19-4-1982 held that the assessment orders were required to be rectified under Sections 154 and 155 (1) of the Act in view of annulment of assessment in the case of firm. The Assistant Income Tax Commissioner accordingly directed the Income Tax Officer to exclude the share of profit from said firm from the computation of total income in the case of partners and to refund the amount of tax, which could be attributed to have been paid are recoverable by the Department in respect of such share of profit of the firm, whether by way of advance tax, self-assessment tax, T. D. S. paid after the completion of regular assessment. No appeal was filed by the Department against the said order of Assistant Income Tax Commissioner before the Tribunal.
(3.) AS per the direction of Assistant Income Tax Commissioner dated 19-4-1982 the share income was excluded from the computation of total income and the entire tax was refunded. So far as the assessment years 1973-74, 1975-76 and 1976-77 are concerned, assessments were completed in the case of firm and share income was included in the income of partner assessees. In the assessment year 1975-76, the share income of partners was reduced as a result of appellate order and because of reduction in the share income, the assessed income in the cases of partners came below the returned income. . Thereafter the assessees filed applications for all the five years under Section 154 before the Income Tax Officer to allow interest under Sections 214 (1), 214 (2), 244/244 (1-A) of the Act. The Income Tax Officer rejected the applications on the ground that there was no mistake apparent on the face of the record. Thereafter assessees preferred appeal before the Appellate Assistant Income Tax Commissioner. The Appellate Assistant Commissioner held that the assessees were entitled for payment of interest on excess paid tax under Sections 214 and 244 (1-A) of the Act, which has not been allowed by the Income Tax Officer. Accordingly he directed the Income Tax Officer to examine the claims of assessees and to calculate the interest as per Sections 214 and 244 (1-A) and to make payment of same accordingly. The Department challenged the order of Appellate Assistant Income Tax Commissioner before the Tribunal. The Tribunal upheld the orders of Appellate Assistant Income Tax Commissioner and dismissed the Department's appeal. Thereafter the Department filed applications under Section 256 (1) of the Act for reference to the High Court for opinion. This application was allowed by the Tribunal and two questions were referred to this Court for opinion. (B) Income Tax Reference No. 57/1994 : (Commissioner of Income Tax, Jabalpur v. Shri Narayandas Agrawal, Satna) In this case the assessment years involved are 1972-73 to 1976-77. Other facts are similar to the facts of the case in Income Tax Reference No. 37/1994 (Commissioner of Income Tax, Jabalpur v. Udhoji Shri Krishandas, Satna ).