Tribunal: Assessment under 143(3)/263 not 'regular,' interest under 215 falls under 154. Merger doctrine rejected.

The Tribunal held that the assessment order passed under sections 143(3)/263 was not considered a "regular assessment" as defined in the Income-tax Act, limited to sections 143 or 144. Regarding the chargeability of interest under section 215, the court found it fell within section 154 and could only be levied in a "regular assessment." The doctrine of merger was rejected, stating that the appeal dismissal was on jurisdictional grounds. The court concluded that the fresh assessment under section 263 differed from a regular assessment under sections 143 or 144, rejecting the application under section 256(2) of the Income-tax Act.

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Issues Involved:
1. Whether the assessment order passed u/s 143(3)/263 is included in the definition of regular assessment.
2. Whether the issue of chargeability of interest u/s 215 falls within the purview of section 154.

Summary:

Issue 1: Definition of Regular Assessment
The Tribunal held that the assessment order passed u/s 143(3)/263 on July 22, 1982, was not included in the definition of "regular assessment." The court examined the definitions provided in section 2(8) and section 2(40) of the Income-tax Act, 1961. It was concluded that "regular assessment" is limited to assessments made u/s 143 or 144. The term "fresh assessment" used in section 263 does not fall within the purview of "regular assessment" as defined in section 2(40). The court stated, "Assessment made under section 263 has been termed 'fresh assessment'. This fresh assessment is limited only to the extent of directions given by the Commissioner under section 263."

Issue 2: Chargeability of Interest u/s 215
The Tribunal held that the issue of chargeability of interest u/s 215 was not debatable and fell within the purview of section 154. The court noted that the original assessment order did not include directions for charging interest u/s 215. The Commissioner of Income-tax, in his order u/s 263, did not address the issue of interest. The court observed, "Section 215 was inserted in its present form by the Taxation Laws (Amendment) Act, 1984, w.e.f. April 1, 1985. This section is prospective in nature and it cannot be applied in its present form to the cases of Assessment year 1977-78." The Tribunal upheld the Commissioner's decision that interest u/s 215 was wrongly charged and could only be levied in a "regular assessment."

Doctrine of Merger
The Revenue argued that the doctrine of merger should apply, and no application lies before the Inspecting Assistant Commissioner u/s 154. The court rejected this argument, stating that the appeal was dismissed on jurisdictional grounds and not on merits. Therefore, the doctrine of merger does not apply. The court stated, "On this ground, it will not be proper to say that the petition under section 154 for rectification of the mistake apparent on the face of the record does not lie before the Inspecting Assistant Commissioner."

Conclusion
The court concluded that the fresh assessment made u/s 263 cannot be equated with a regular assessment u/s 143 or 144. The application u/s 256(2) of the Income-tax Act was rejected, and it was held that the Tribunal was justified in its findings. The court stated, "In the result, the application under section 256(2) of the Income-tax Act is rejected."

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