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High Court of Calcutta
Susanta Chatterji, J.
Samnuggar Jute Factory Co. Ltd. – Appellant
Versus
Commissioner of Income-Tax And Ors. – Respondent
C.R. 10317(W) of 1979
Decided on : July 27, 1989
INCOME-TAX - Regular assessment - Meaning - Whether interest should be allowed under Section 214 of the Act on the basis of assessment made subsequently in pursuance of the direction of the court.
Fact of the Case:
The petitioner, Samnuggar Jute Factory Co. Ltd., filed a writ petition challenging the notice issued by the Commissioner of Income-tax under Section 263 of the Income-tax Act, 1961. The petitioner contended that the assessment made by the Income-tax Officer on March 30, 1977, after complying with the directions of the court, was the "regular assessment" within the meaning of Section 214 of the Act and, therefore, the notice under Section 263 was erroneous and without jurisdiction.
Finding of the Court:
The court held that the assessment made by the Income-tax Officer on March 30, 1977, was a "regular assessment" within the meaning of Section 214 of the Act and, therefore, the notice under Section 263 was not erroneous or without jurisdiction. The court also held that the petitioner would have ample opportunity to place on record all relevant facts and materials in support of its contention at the time of adjudicating the same by the proper authority in accordance with law.
Issues: 1. Whether the assessment made by the Income-tax Officer on March 30, 1977, was a "regular assessment" within the meaning of Section 214 of the Income-tax Act, 1961? 2. Whether the notice issued by the Commissioner of Income-tax under Section 263 of the Act was erroneous or without jurisdiction?
Ratio Decidendi: The court relied on the decision of Chloride India Ltd. v. CIT, wherein it was held that the obligation under Section 214 of the Act is to pay interest on the amount by which the advance tax paid exceeds the tax determined on regular assessment. The court also held that an order which is made by the Income-tax Officer to give effect to the order of the Appellate Assistant Commissioner is an order of assessment under Section 143 of the Act and, therefore, the regular assessment as contemplated by Section 214(1) of the Act should be the assessment made by the Income-tax Officer initially or the first assessment made by the Income-tax Officer if there is no appeal therefrom.
Final Decision: The court discharged the rule and vacated all interim orders. The court also granted a stay of operation of the order for a period of a fortnight from the date of the order.
Susanta Chatterji, J.
1. THE present rule was issued on September 17, 1979, at the instance of the writ petitioner, Samnuggar Jute Factory Co. Ltd., praying, inter alia, for the issuance of a writ of mandamus commanding the respondents to cancel and/or withdraw the notice dated September 5, 1979, issued by respondent No. 1 under Section 263 of the Income-tax Act and to forbear from giving any effect to and/or taking any step whatsoever in pursuance of the said notice on the ground that the order alleged to have been made on January 31, 1975, by the Income-tax Officer for the assessment year 1972-73 was itself the subject-matter of the writ proceedings in Civil Rule No. 4281 (W) of 1975 and by reason of the judgment and order made by Sabyasachi Mukharji J. (as his Lordship then was) on March 5, 1976, and March 26, 1976, the said order, if any, had been set aside and the assessment made by respondent No. 2 on March 30, 1977, after complying with and giving effect to the directions of this court as contained in the order dated March 5, 1976, can only be treated as the "regular assessment" within the meaning of Section 214 of the said Act read with Section 2(40) of the said Act and as such there is no error made by respondent No. 2 in his orders made under Section 214 of the Act dated October 4, 1977, and October 15, 1977. Under the circumstances, the conditions precedent for the assumption of jurisdiction under Section 263 of the Act do not exist and respondent No. 1 is acting without and/or in excess of his jurisdiction and/or authority. It is further alleged that the order dated October 4, 1977, and October 15, 1977, which are sought to be revised have been passed by respondent No. 2 in accordance with the principles of law decided by this court in the case of Chloride India Ltd. v. CIT [1977] 106 ITR 38 and the said orders cannot be said to be erroneous within the meaning of Section 263 of the Act. Dr. Pal, appearing for the petitioner, has argued with emphasis that the expression "regular assessment" appearing in Section 214 of the Act is different from the expression "first assessment or provisional assessment". "Regular assessment" means, an assessment made under Section 143 of the Act or under Section 144 of the Act. THE alleged assessment made by respondent No. 2 on March 30, 1977, is an assessment made under Section 143(3) of the Act after complying with and giving effect to the directions of Sabyasachi Mukharji J. as contained in the orders dated March 5, 1976, and March 26, 1976. According to him, the orders made by respondent No. 2 on October 4, 1977, and October 15, 1977, are in accordance with law and the notice under Section 263 of the Act is erroneous, illegal and without jurisdiction. He has drawn the attention of the court that respondent No. 1 is acting illegally, erroneously and in clear contravention of the provisions of the Act by treating the assessment for the assessment year 1972-73 made on January 31, 1975, as the "regular assessment" for the purpose of Section 214 of the Act and the basis on which the purported notice under Section 263 of the Act had been issued is clearly illegal, invalid and without jurisdiction. Dr. Pal submits further that unless the respondents are restrained by an appropriate order of this court from proceeding with and/or taking any steps in pursuance of the impugned notice dated September 5, 1979, issued by respondent No. 1 under Section 263 of the Act, respondent No. 1 is likely to pass an order under Section 263 of the Act withdrawing the amount refunded to the petitioner under the orders dated October 4, 1977, and October 15, 1977, and in that event, respondent No. 1 will proceed with the demand for the recovery of the said amount from the petitioner, the petitioner will suffer substantial loss and irreparable injury.
2. MR. Prasad, appearing for the contesting, respondents, income-tax authorities, has argued that the writ petition is thoroughly misconceived inasmuch as
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