1977 (2) TMI 18 - HC - Income Tax

Tax Deduction Error Rectified Under Section 154: Court Upholds Income-tax Officer Decision

The court held that the deduction of tax paid under provisional assessment as 'advance tax' was a mistake in the original assessment order, justifying ... Delay In Submission, Provisional Assessment Issues:1. Whether there was a mistake apparent in the original assessment order warranting rectification under section 154 of the Income-tax Act, 1961Rs.2. Whether the levy of interest under proviso (iii)(b) to section 139(1) was valid in the given circumstancesRs.Analysis:The case involved an assessment year 1962-63 where the assessee filed the return on April 30, 1964, and the assessment was completed on March 31, 1967. The Income-tax Officer initially deducted the tax paid pursuant to a provisional assessment under section 141 when calculating interest under section 139(1)(iii) of the Act. Subsequently, realizing the error, a notice was issued on March 18, 1968, to rectify the mistake under section 154. The Income-tax Officer rectified the assessment order on March 30, 1968, by adding the tax paid pursuant to the provisional assessment for interest calculation. The assessee appealed, contending that the tax paid under provisional assessment was deductible, and the original order did not contain an apparent error. The Appellate Assistant Commissioner and the Income-tax Appellate Tribunal upheld the Income-tax Officer's decision.The first issue revolved around whether the deduction of tax paid under provisional assessment as 'advance tax' was a mistake apparent in the original assessment order. The court analyzed the statutory provision in section 139(1)(iii) and held that 'advance tax' referred to tax paid before final assessment, not pursuant to any assessment order. The court rejected the contention that the term 'advance tax' had different meanings in various sections of the Act, emphasizing that it uniformly referred to tax paid before assessment as required by the Act. Therefore, the deduction of tax paid under provisional assessment was indeed a mistake in the original assessment order, justifying rectification under section 154.The second issue pertained to the validity of interest levy under proviso (iii)(b) to section 139(1) in the given circumstances. The court reiterated that the term 'advance tax' in the context of interest calculation meant tax paid before final assessment as mandated by the Act. As the tax paid under provisional assessment did not fall under this definition, the Income-tax Officer's rectification to include it for interest calculation was valid. The court dismissed the argument that the inclusion of tax paid under provisional assessment was debatable, emphasizing that the statutory language left no room for interpretation regarding what constituted 'advance tax.'In conclusion, the court answered both questions in the affirmative, ruling in favor of the Income-tax Officer and against the assessee. No costs were awarded in the case.