TaxTMI 
TaxTMI 
2001 (12) TMI 192
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....der s. 154 requesting the AO to delete the interest charged under s. 215 as no such interest could be charged in the reassessment. The AO rejected the applications of the assessee. However, on appeal the CIT(A) directed the AO to carry out the rectification and he has also held that the AO can charge interest only upto the date of first assessment and on the tax determined in the first assessment stage only. The CIT(A) has followed the decision of the Hon'ble Supreme Court in the case of Modi Industries Ltd. vs. CIT (1995) 128 CTR (SC) 361 : (1995) 216 ITR 759 (SC). 3. The learned Departmental Representative contended that the decision of the CIT(A) is not in order. It was contended that s. 215(6) was inserted by the Taxation Laws (Amendment) Act, 1984, w.e.f. 1st April, 1985, which permits levy of interest in an assessment under s. 147 made for the first time. Reference was made to the comments in Sampath Iyengar's Income-tax Law. It was, accordingly, contended that the order of the CIT(A) may be set aside and that of the AO restored. It was further contended that s. 215(3) permits levy of interest on the reassessed income and that the decision of the Hon'ble Supreme Court in M....
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....ct is consequential and, therefore, the AO will recalculate interest while giving effect to this order." 7. Similarly, for asst. yr. 1988-89, the CIT(A) decided the appeal of the assessee vide order dt. 31st March, 1995 and allowed some relief. The ground relating to levy of interest under s. 217 was decided by the CIT(A) vide para 9 of the said order which is reproduced hereunder for the sake of ready reference: "9. The next ground of appeal pertaining to charging of interest under s. 139(8)/215/217 of the IT Act is consequential and, therefore, the AO will recalculate interest while giving effect to this order." 8. The AO gave effect to the orders of the CIT(A) and recalculated interest under s. 215 as per the directions of the CIT(A). The assessee filed an application under s. 154 for asst. yr. 1987-88. Similar application was filed for asst. yr. 1988-89 claiming that there was a mistake in the order giving effect to the order of the CIT(A) insofar as interest under s. 215 which was not chargeable had been charged by the AO. The AO rejected the application under s. 154 for both the assessment years against which the assessee filed appeals to the CIT(A). The CIT(A) vide ....
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....application under s. 154, the assessee could have approached the CIT(A) with the same application with slight modification and if the CIT(A) had allowed the claim of the assessee in deciding the said application, no fault could be found with such decision. We are, therefore, faced with a situation where the assessee is entitled to relief but is pitied against the technicalities of law. Since we are satisfied that the assessee is entitled to some relief, we would, therefore, deem the appeal of the assessee against the order of AO under s. 154 as an application under s. 154 before the CIT(A) and the decision of the CIT(A) to be an order under s. 154 and consider its correctness and validity in that context. 11. Now we deal with the merits of the case. In an application under s. 154 before the AO, the assessee claimed that they had paid excess tax by way of advance tax. That as against the tax on the returned income, there was no shortfall as per provisions of s. 215 of the Act. That, therefore, the question of levy of interest under s. 215 does not arise. The AO rejected the contention of the assessee on 28th July, 1995. It is relevant to point out that on the date the AO passed t....
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....an order under s. 147 or s. 154 or s. 155 or s. 250 or s. 254 or s. 260 or s. 262 or s. 263 or s. 264 or on order of the Settlement Commission under sub-s. (4) of s. 245D, the amount on which interest was payable under sub-s. (1) has been increased or reduced, as the case may be, the interest shall be increased or reduced accordingly, and— (i) in a case where the interest is increased, the AO shall serve on the assessee, a notice of demand in the prescribed form specifying the sum payable, and such notice of demand shall be deemed to be a notice under s. 156 and the provisions of this Act shall apply accordingly; (ii) in a case where the interest is reduced, the excess interest paid, if any, shall be refunded." As is evident from the language of s. 215(3) quoted above, s. 147 has also been incorporated for the purpose of enhancement of interest chargeable under s. 215. In this case, there has been a revision of income as a result of assessment under s. 147. Therefore, the interest under s. 215 is chargeable with reference to the income as determined under s. 147. To that extent, the decision of the Hon'ble Supreme Court in the case of Modi Industries Ltd. & Ors. is not a....