PANNA LAL Vs. COMMISSIONER OF INCOME-TAX

JUDGEMENT

(1.) PANNA Lal, the assessee, was one of the partners of Durga Parshad Panna Lal. For the assessment year 1974-75, regular assessment was framed on March 26, 1975, on a total income of Rs. 40,690, which included share income from Durga Parshad Panna Lal, of Rs. 13,305. In appeal, the share income of the assessee from Durga Par-shad Panna Lal was enhanced from Rs. 13,305 to Rs. 86,640. After the appellate order, the Income-tax Officer issued notices to the assessee, one under Section 155 of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), for revision of his share income and the other under Section 154 of the Act for modifying the interest chargeable under Section 139 (8) and Section 215/217 of the Act. In this case, we are only concerned with the notice regarding enhancement of interest under Sections 139 (8) and 215/217 of the Act.

(2.) ON behalf of the assessee, it was pleaded that interest could not be enhanced on the enhanced liability created by the appellate order, but the Income-tax Officer did not agree and by order dated November 21, 1978, directed that interest under Sections 139 (8) and 215/217 would be payable on the revised share income received by the assessee from the firm. He remained unsuccessful both before the Commissioner of Income-tax (Appeals) and the Tribunal, On these facts, the Income-tax Appellate Tribunal, Amritsar Bench, has referred the following questions for the opinion of this court : "1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that an order under Sections 154/155 could be said to be a regular assessment as envisaged under Sections 139 (8) and Section 215 (5) ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the Income-tax Officer was fully empowered by the provisions of Sections 154 and 155 to revise upwards the demand of interest levied under Sections 139 (8) and 215 as a result of an order passed under Section 155 ?

(3.) WHETHER, on the facts and in the circumstances of the case, the Tribunal was right in holding that the controversy was covered under the provisions of Section 154 as a mistake apparent from the record ?" 3. The crucial question to be determined is question No. 2 and the relevant sections for consideration would be Sections 139 (8) and 215 (3) as they stood during the assessment year 1974-75, that is, before the amendment which came into force with effect from April 1, 1985, by the Taxation Laws (Amendment) Act, 1984. The unamended and amended sections are reproduced side by side for better understanding : Sections 139 (8) and 215 (3) as The provisions as they stood on they stood prior to the amendment amendment made with effect from on 1-4-1985. 1-4-1985 "139 (8) (b ). Where as a result of an order under section 154 or section 155 or section 250 or section 254 or section 260 or section 262 or section 264, the amount of tax on which interest was payable under this sub-section has been reduced, the interest shall be reduced accordingly, and the excess interest paid, if any, shall be refunded. 216 (3): Where, as a result of an order under section 154 or section 155 or section 250 or section 254 or section 260 or section 262 or section 264, the amount on which interest was payable under this section has been reduced, interest shall be reduced accordingly and the excess interest paid, if any, shall be refunded. Where, as a result of an order under section 147 or section 154 or section 155 or section 250 or section 254 or section 260 or section 262 or section 263 or section 264, the amount of tax on which interest was payable under this sub-section has been increased or reduced, as the case may be, the interest shall be increased or reduced accordingly, and (i) in a case where the interest is increased, the Income-tax Officer shall serve on the assessee, a notice of demand in the prescribed form specifying the sum payable, and such notice of demand shall be deemed to be a notice under section 156 and the provisions of this Act shall apply accordingly; (ii) in a case where the interest is reduced, the excess interest paid, if any, shall be refunded. Where, as a result of an order under section 147 or section 154 or section 155 or section 250 or section 254 or section 260 or section 262 or section 263 or section 264, the amount on which interest was payable under sub-section (1) has been increased or reduced, as the case may be, the interest shall be-increased or reduced accordingly, and (i) in a case where the interest is increased, the Income-tax Officer shall serve on the assessee, a notice of demand in the prescribed form specifying the sum payable, and such notice of demand shall be deemed to be a notice under section 156 and the provisions of this Act shall apply accordingly; (ii) in a case where the interest is reduced, the excess interest paid, if any, shall be refunded. "