The expression "regular assessment" in Section 214 (1) of the Income Tax Act, 1961, includes a revised assessment made by the ITO in compliance with the directions of the higher authorities.

( 1 ) THIS is a reference under Section 256 (1) of the Income-tax Act, 1961. The assessee is a limited company. The assessment year involved is 1964-65.

( 2 ) DURING the financial year 1963-64, the assessee paid Rs. 12,56,466 as advance tax under Section 210 of the I. T. Act, 1961, for the aforesaid assessment year. Its business income was assessed at Rs. 36,05,811 under Section 143 (3) of the Act and the tax claimed was more than the advance tax paid by the assessee. The assessee filed appeal before the AAC against the assessment order. The AAC reduced the income by Rs. 14,98,592 (?) and also included additional income of Rs. 12,637. Thus, the revised business income of the assessee became Rs. 21,20,760.

( 3 ) THE ITO then passed an order dated March 17, 1971, under Section 251 of the Act calculating the tax at Rs. 9,68,567 against which the assessee had already paid advance tax of Rs. 12,56,466 and, after allowing the assessee Rs. 60,899 as interest under Section 214, calculated the total amount refundable at Rs. 3,48,798 to the assessee.

( 4 ) SUBSEQUENTLY, the ITO thought that he had wrongly allowed the aforesaid interest and accordingly passed an order under Section 154 recomputing the amount refundable to the assessee at Rs. 2,87,899 by withdrawing the interest of Rs. 60,899. The appeal filed by the assessee from the rectification order was dismissed by the AAC. The assessee then filed a further appeal. It was urged on its behalf before the Tribunal that the order of the ITO under Section 251 formed part of the regular assessment and that the subsequent order of the ITO under Section 154 was illegal.

( 5 ) THE departmental representative, on the other hand, argued before the Tribunal that there was an apparent mistake in the order of the ITO passed under Section 251 and, therefore, the ITO was justified in passing the aforesaid order under Section 154 of the Act. Reliance was also placed on the case of Sir Shadilal Sugar and General Mills Ltd. v. Union of India in support of the contention that the words "regular assessment" in Section 214 mean the first assessment and not the revised assessment made in terms of any direction or order of the appellate authorities.

( 6 ) IN view of the aforesaid judgment of the Allahabad High Court, the Tribunal held that there was a patent mistake in the order of the ITO passed under Section 251 relating to the computation of the amount refundable to the assessee. Accordingly, the Tribunal also held that the ITO was justified in rectifying the said mistake under Section 154 of the Act. Thereafter, the Tribunal referred the following questions to this court :"1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that there was a patent mistake within the meaning of Section 154 of the I. T. Act, 1961, in the order of the ITO, dated March 17, 1971? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee was not entitled to interest under Section 214 of the I. T. Act, 1961 ?"

( 7 ) MR. Kalyan Ray, learned counsel for the assessee, argues before us that the expression "regular assessment" in Section 214 (1) of the Act includes a revised assessment made by the ITO in compliance with the directions of the higher authorities. He further argues that a revised assessment can only be made under Section 143 of the Act in view of the Division Bench judgment of this court in the case of Kooka Sidhwa and Co. v. CIT [1964] 54 ITR 54 (Cal ).

( 8 ) MR. Ray also cites the case of Chloride India Ltd. v. CIT in support of his contention that the expression "regular assessment" in Section 214 of the Act includes a revised assessment made by the ITO in order to give effect to the directions of the appellate authorities.

( 9 ) MR. Ajit Sengupta, learned counsel for the revenue, submits before us that the Chloride case was wrongly decided. He also cites the case of Lala Laxmipat Singhania v. CIT