TaxTMI 
TaxTMI 
2014 (8) TMI 906
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....n of income on 30th July, 1988 declaring loss of Rs. 38,590/-. In the statement of assessable income attached with the return, the assessee had computed loss after deducting /reducing Rs. 1,82,69,610/-, which it claimed, had been declared as income in the assessment years 1986-87 and 1987-88. During the course of assessment proceedings, the assessee filed a letter that the entire amount Rs. 1,82,69,610/- might be taxed in the assessment year 1988-89 and no portion of the said income be assessed in the assessment years 1986-87 and 1987-88. Taxes paid on 17th August, 1987, amounting to Rs. 1,14,44,069/- be treated as payment of advance tax for the assessment year 1988-89. The Assessing Officer, however, referred to the assessment orders for the assessment years 1986-87 and 1987-88 and held that the consultancy fee/commission was taxable in the said years, but Rs. 1,82,69,610/- was treated as assessee's income in the assessment year 1988-89 on protective basis. Some other additions were also made and after including the protective figure, total income was assessed at Rs. 2,04,75,710/-. The Assessing Officer in the assessment order 22nd March, 1991, specifically directed that interest ....
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....9,610/- and requested the entire taxes paid on 17.8.87 be treated as advance tax." 7. The Assessing Officer rejected the contention that the tax paid on 17th August, 1987, was in the nature of advance tax for the assessment year 1988-89. He observed that the assessee had made voluntary disclosure of commission of Rs. 1,61,52,480/- received from M/s Sumitomo Corporation, Japan in the assessment year 1986-87 and Rs. 21,17,130/- in the assessment year 1987-88. The amount was received in India on 12th August, 1987 and taxes were paid on 19th August, 1987. In the challan of self assessment, it was specifically mentioned that the tax had been paid in the assessment years 1886-87 and 1987-88. As noticed above, the aforesaid amount Rs. 1,82,69,610/- was held to be taxable or assessable in the assessment year 1988-89. The Assessing Officer after referring to the provisions of Sections 207 and 208 to 219 observed that the tax paid on 19th August, 1987 cannot be treated as tax paid for the assessment year 1988-89. The Assessing Officer observed that no statement under Section 209-A(1)(a) or estimate under Section 209-A(1)(b) were filed. Similarly, no estimate under Section 209-A (4) or 212....
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....rge interest under Section 217 but the sub-section was not mentioned. In the computation form also, it was simply shown that interest was chargeable under Section 217 and was accordingly computed. Further, Commissioner of Income Tax (Appeals) vide his order dated 24th July, 1992 had directed the Assessing Officer to pass a speaking order in respect of levy of interest under Section 217 without specifying the sub-section. Thus argument of the Revenue that the interest should have been charged under Section 215 or Section 217(1A) should not be accepted. 10. The Tribunal in the order dated 16th August, 1996 held that interest under Section 217(1)(b) could be charged if the assessee had failed to file the estimate. Since it was now accepted that estimate had been filed, no interest was chargeable under the said Section. The Tribunal, therefore, directed deletion of interest. At the same time in the penultimate paragraph, the Tribunal has observed as under:- "However, in view of the fact that the asses-see had not made the claim of filing the estimate in Form No.29 before the Assessing Officer and the learned C.I.T.(Appeals) during the course of proceedings before them, the Assess....
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.... in the impugned order has come to the conclusion that the observation had not or cannot be constituted the finding or direction and was only an observation. This to our mind is completely irrelevant as it made/makes no difference whether it was a finding, direction or an observation, because the tribunal has left it open to the Assessing Officer to consider levy and imposition of interest, if permissible and could have been imposed under the statute. It is clear and apparent that the tribunal had not barred or prohibited the Assessing Officer from imposing interest under Section 215 or 217(1A), as per law. The above quoted portion of the order dated 16th August, 1996, as noticed above attained finality. The assessee had filed an application under Section 254(2) of the Act which was rejected and then moved an application under Section 256(1) which too was rejected. It is, therefore, impermissible and wrong for the assessee to claim that the tribunal had barred or prohibited the Assessing Officer from examining the question of interest under other provisions of Section 217. The said liberty and discretion was granted and it was left to the Assessing Officer to decide whether or not ....
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.... not direction the consequential proceedings are bad in law." 15. In respect of paragraph 18, we have already made observation in paragraph 13 above and have noted that in order dated 16th August, 1996, the Assessing Officer had not been barred or prohibited from imposing or levying interest under Section 217. Of course, interest could be levied if it was permissible in law. Therefore, we do not understand the first line in paragraph 19 of the impugned order, wherein it stands recorded that "without prejudice", Section 217 only empowered levy of interest while making the regular assessment. Further observation that regular assessment could be made by virtue of Section 215(3) was incorporated in Section 217(2), but a fresh charge was impermissible, does not appear to be logical and coherent. 16. The facts as noted above, clearly reveal that at the time of original assessment under Section 143(3) vide order dated 22nd March, 1991, the Assessing Officer had directed charging of interest under Section 201 and 217. The computation form also referred to and computed interest under Section 217. The first appellate authority had also directed the Assessing Officer to pass a speaking ....
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....eed. Section 217(1) and (1A) both use the expression "on the making of the assessment". Therefore, the interest could be imposed after income of an assessee stands computed pursuant to the assessment. The interest component had to be calculated in the computation form. The assessment order determines and decided disputes and quantifies the income. The computation form was/is not the assessment order, but quantifies the tax demand/tax payable, interest payable under different sections by the assessee or in case of refund, refund and interest payable by the Revenue. Supreme Court in Kalyankumar Ray vs. CIT (1991) 191 ITR 634 has observed as under: "The statute does not, however, require that both the computations (i.e., of the total income as well as the sum payable) should be done on the same sheet of paper, the sheet that is superscribed "assessment order". It does not prescribe any form for the purpose. It will be appreciated that once the assessment of the total income is complete with indications of the deductions, rebates, reliefs and adjustments available to the assessee, the calculation of the net tax payable is a process which is mostly arithmetical but generally time con....
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.... determining the sum payable by the assessee. We are unable to see why this document, which is also in writing and which has received the imprimatur of the Income-tax Officer, should not be treated as part of the assessment order in the wider sense in which the expression has to be understood in the context of section 143(3). There is no dispute in the present case that the Income-tax Officer has signed the Form I. T. N. S. 150. We, therefore, think that the statutory provision has been duly complied with and that the assessment order was not, in any manner, vitiated." 18. The same view was taken in Commissioner of Income Tax vs. Vijay Yarn and Textiles P. Ltd. [2008] 303 ITR 219 (P & H) after making reference to judgment in Vinod Khurana vs. CIT [2002] 253 ITR 578 (P&H). The aforesaid judgments would show that the assessment stands completed when the assessment order was/is passed. The assessment order should state details of income, deduction, rebates, relief etc. After the assessment is completed, the computation of tax etc. is made. It is in this context that we would like to mention and state that the assessment order dated 22nd March, 1991, had specifically directed levy o....
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....tion was rejected by the Commissioner and the Assessing Officer was directed to levy interest. Tribunal however held that Commissioner had no power under Section 263 to pass the said direction and cancelled the revisional proceedings. Three questions arose before the Karnataka High Court (1) Whether the ITO was required to make an order under Section 217 to give effect to the said provision; (2) Whether an order under Section 217 formed part of the assessment order; and (3) whether the Commissioner could exercise jurisdiction under Section 263 of the Act when the Assessing Officer had expressed no opinion in his order to impose interest under Section 217. It was held that the proceedings under Section 217 were quasi judicial in nature and, therefore, Assessing Officer had to pass an order to give effect. Secondly, the order under Section 217 could be made after the regular assessment was made and therefore regular assessment did not include the order under Section 217 or Section 215. The order under Section 217 did not form part of the assessment order and it could be made after the regular assessment was made. In view of the answer given to the second question, the answer to the t....