Interest on refund from cancellation of a supplementary assessment was upheld, and the rectification-based appeal was maintainable.

A refusal to grant interest raised through rectification proceedings was held maintainable in appeal because the request was treated as one seeking rectification, and the impugned refusal was appealable under the rectification framework. On the merits, an order under section 104 was treated as analogous to a section 23A order and, following the later Supreme Court view, as a supplementary assessment forming part of the assessment process. The refund arising from cancellation of that order therefore qualified for interest under section 244(1A), and the assessee was entitled to the interest claimed.

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Issues: (i) whether the assessee's challenge to the refusal to grant interest was maintainable as an appeal from a rectification-related order; and (ii) whether interest under section 244(1A) was payable on refund arising from cancellation of an order under section 104.

Issue (i): whether the assessee's challenge to the refusal to grant interest was maintainable as an appeal from a rectification-related order.

Analysis: The assessee's request was treated as one seeking rectification and the refusal to grant the claimed interest was regarded as an order appealable under the rectification provisions. The prior authorities cited were distinguished on facts, and the view supporting maintainability of the appeal was preferred.

Conclusion: The appeal before the first appellate authority was maintainable.

Issue (ii): whether interest under section 244(1A) was payable on refund arising from cancellation of an order under section 104.

Analysis: The order under section 104 was treated as analogous to an order under section 23A of the old Act and, following the later Supreme Court view, as a supplementary assessment order forming part of the assessment process. On that footing, the refund resulting from its cancellation qualified for interest under section 244(1A).

Conclusion: The assessee was entitled to interest under section 244(1A).

Final Conclusion: The departmental challenge failed, and the relief granted to the assessee for interest on refund was sustained.

Ratio Decidendi: An order imposing additional tax under section 104 is to be treated as a supplementary assessment order for the purpose of interest on refund, and a refusal to grant such interest can be entertained in appeal when raised through rectification proceedings.

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