Commissioner of Income Tax vs Vijay Yarn and Textiles P. Ltd.

Following question of law has been referred for opinion of this Court by the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh, arising out of its order dated October 17, 1995, in I.T.A. No. 893/Chandi/90, in respect of the assessment year 1986-87:

Whether, on the facts and circumstances of the case, the Income Tax Appellate Tribunal was right in law in deleting the interest charged u/s 139(8), 215/217 in view of the fact that the demand notice which is a part of the assessment order indicated clearly charging of interest and its working?

Facts noticed by the Tribunal in the statement of case are:

While passing the assessment order for the assessment year 1986-87, the Assessing Officer did not issue any direction for the charging of interest, in the body of the assessment order. The Assessing Officer, however, charged interest under Sections 139(8) and 217 of the Income Tax Act. The learned Commissioner of Income Tax (Appeals) upheld the charging of interest.

The assessee came in further appeal before the Tribunal. It was pleaded on behalf of the assesses that charging of interest in the absence of any direction in the assessment order was unwarranted and unjustified. It was also contended that this was not a defect which could be rectified u/s 292B of the Income Tax Act.

The question before the Tribunal was whether in the absence of direction for charging interest in the order of assessment, interest could be charged. The Tribunal held that such interest could not be charged.

We have heard learned Counsel for the Revenue and perused the record.

We find that the issue has been gone into by the hon''ble Supreme Court in Kalyan kumar Ray Vs. Commissioner of Income Tax, West Bengal-IV, Calcutta, , wherein it was observed:

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-consuming. If, therefore, the Income Tax Officer first draws up an order assessing the total income and indicating the adjustments to be made, directs the office to compute the tax payable on that basis and then approves of it, either immediately or some time later, no fault can be found with the process, though it is only when both the computation sheets are signed or initialled by the Income Tax Officer that the process described in Section 143(3) will be complete.

In this context, one may take notice of the fact that, initially, Rule 15(2) of the Income Tax Rules prescribed Form No. 8, a sheet containing the computation of the tax, though there was no form prescribed for the assessment of the income. This sub-rule was dropped in 1964. Thereafter, the matter has been governed by Departmental instructions. Under these, two forms are in vogue. One is the form of what is described as the ''assessment order'' (I.T. 30 or I.T.N.S. 65). The other is what is described as the ''income tax Computation Form'' or ''Form for Assessment of Tax/Refund'' (I.T.N.S. 150). The practice is that, after the ''assessment order'' is made by the Income Tax Officer, the tax is calculated and the necessary columns of I.T.N.S. 150 are filled up showing the net amount payable in respect of the assessment year. This form is generally prepared by the staff but it is checked and signed or initialled by the Income Tax Officer and the notice of demand follows thereafter. The statute does not, in terms, require the service of the assessment order or the other form on the assessee and contemplates only the service of a notice of demand. It seems that while the ''assessment order'' used to be generally sent to the assessee, the other form was retained on file and a copy occasionally sent to the assessee. I.T.N.S. 150 is also a form for determination of tax payable and when it is signed or initialled by the Income Tax Officer, it is certainly an order in writing by the Income Tax Officer, determining the tax payable, within the meaning of Section 143(3). It may be, as stated in Commissioner of Income Tax Vs. Himalaya Drug Co., , only a tax calculation form for Departmental purposes as it also contains columns and code numbers to facilitate computerisation of the particulars contained therein for statistical purposes but this does not detract from its being considered as an order in writing 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.

The same view was followed by this Court in Vinod Khurana Vs. Commissioner of Income Tax and Another, .

In view of the above, the question is answered in favour of the Revenue and against the assessee.

Reference is disposed of accordingly.