Graphite India Ltd. vs Commissioner of Income Tax and Others

Susanta Chatterji, J.—The present writ petition has been filed by Messrs. Graphite India Limited, a public limited company praying, inter alia, for a writ of mandamus commanding the respondents to cancel and/ or withdraw the order passed by respondent No. 1, Commissioner of Income Tax (Central-II), Calcutta, u/s 264 of the Income Tax Act on August, 1989, and also the order passed by the Income Tax Officer, Central Circle-XXV, Calcutta, to the extent that they refused to pay full interest u/s 214 of the Act as also the refusal of the respondents and/or that in action to pay interest u/s 244 of the Income Tax Act for the assessment year 1982-83 and all proceedings thereunder and in pursuance thereof on the ground that the petitioner is entitled under the law to interest on the amount which is refundable to the petitioner after giving effect to the order of the Commissioner of Income Tax (Appeals) and, as such, in view of the decision of the Hon''ble High Court at Calcutta in the case of Chloride India Ltd. Vs. Commissioner of Income Tax and Others, which is already affirmed by the Appeal Court, the petitioner is entitled to interest u/s 214 of the Act on the said amount up to the date when the Income Tax Officer has given effect to the order of the appellate authority by his order dated February 19, 1986, and, as such, the order passed u/s 264 of the Act in so far as it denies interest on the basis and in accordance with the rule laid down in. the case of Chloride India Ltd. Vs. Commissioner of Income Tax and Others, is illegal and invalid. It is emphasised that the petitioner is entitled to interest u/s 214 of the Act on Rs. 12,34,227 refunded to the petitioner on March 19, 1984, on the basis of the order of the Commissioner of Income Tax (Appeals) dated January 6, 1984, up to the date when he gave effect to the order of the Commissioner of Income Tax (Appeals) which became refundable in consequence of the aforesaid order of the Commissioner of Income Tax (Appeals) in detail. It is stated that, u/s 214 of the Act read with Section 2(40) thereof, the words "regular assessment" include an assessment which is made to give effect to the appellate order and as such the petitioner is entitled to interest on the balance refund of Rs. 30,43,270 which became refundable in view of the order passed by the Commissioner of Income Tax (Appeals) by virtue of the effect given by the Assessing Officer till the date of the order of assessment and the order passed by respondent No. 1 to the extent he has refused to grant the aforesaid interest u/s 214 is erroneous.

Dr. Pal, appearing for the writ petitioner, has strongly argued that the ratio of the decision in the case of Chloride India Ltd. Vs. Commissioner of Income Tax and Others, , Sabyasachi Mukharji J. (as His Lordship then was), clearly held that the obligation u/s 214 of the Income Tax Act is to pay interest on the amount by which the advance tax paid exceeds the tax determined on regular assessment. An order which is made by the Income Tax Officer to give effect to the order of the Appellate Assistant Commissioner is an order of assessment u/s 143. If that is the position, then, in view of. Section 2(40) of the Act, the regular assessment as contemplated by Section 214(1) should be the assessment made by the Income Tax Officer initially or the first assessment made by the Income Tax Officer if there is no appeal therefrom, but in a case where there is an appeal, the order passed by the Income Tax Officer finally to give effect to the direction, if any, of the appellate authority. Having regard to the scheme of the Act and the context in which the expression has been used, "regular assessment" u/s 214 would include in the particular facts and circumstances of the case an assessment made by the Income Tax Officer pursuant to the direction of the Appellate Assistant Commissioner. It is brought to the notice of this court that the Division Bench of this court has also affirmed the said decision and the unreported judgment has also been placed on record.

Mr. Moitra, the learned advocate appearing for the contesting respondent authorities, has tried to build his argument that although the view of the High Court of Calcutta is clear, there are other contrary views of various other Hon''ble High Courts and it would be better for the petitioner to move the Hon''ble Supreme Court under Article 32 of the Constitution of India to resolve the dispute and to obtain the reliefs.

With great anxiety, this court has considered the submissions made on behalf of the respective parties. It is needless to observe that there is a clear view of this hon''ble court decided by the single judge and duly affirmed by the Division Bench. The ratio of the said decision is squarely applicable to the facts of the present case and the decision is binding upon the parties and this court has to follow the same without any reservation.

Considering this aspect of the case, this court does not appreciate that the reliefs may be denied to the petitioner by rejecting the application and asking the petitioner to go to the hon''ble Supreme Court to seek reliefs under Article 32 of the Constitution. Mr. Moitra has, however, conceded fairly that the Department is obviously bound by the decision of this court and there is no escape for the Department to follow the same. He has submitted that his view may be placed on record and the same may be considered by this court.

Considering the facts of the case and the principle of law as interpreted in the decision as indicated above, this court finds that there is no bar and/or impediment to grant the reliefs as prayed for.

For the foregoing reasons, the writ petition is allowed. A writ of mandamus as prayed for is issued commanding the respondents to revoke the order as detailed in the writ petition and to take effective steps to pay to the petitioner the interest on the amount of refund as prayed for u/s 214 and Section 244 of the Act within a period of six months from date. There will be no separate order as to costs.