JAWAHARLAL PANNALAL v. INCOME TAX OFFICER
[Citation -1985-LL-0723-1]

Citation 1985-LL-0723-1
Appellant Name JAWAHARLAL PANNALAL
Respondent Name INCOME TAX OFFICER
Court ITAT
Relevant Act Income-tax
Date of Order 23/07/1985
Assessment Year 1978-79
Judgment View Judgment
Keyword Tags rectification order • unabsorbed loss
Bot Summary: The assessee's claim for interest under section 243 was rejected on the ground that there was no delay in the issue of refund after the passing of the rectification order. The learned counsel for the assessee contended that the income is determined only by an assessment order and the assessment order in this case is dated 28-11-1979 and even after the rectification the income would be deemed to have been determined only by the original assessment order. The power of rectification is an independent power and the order passed under section 154 is appealable if it is prejudicial to the assessee. In S. Sankappa v. ITO 1968 68 ITR 760, the Hon'ble Supreme Court has held that an order under section 35 of the Indian Income-tax Act, 1922 is a part of the assessment proceedings. An order passed under section 154 modifying an assessment is itself as assessment order and determine the assessee's total income. The refund becomes due as a result of the order passed under section 154 and it does not flow from the original order of assessment which in this case was passed on 28-11-1979. An assessee would be entitled to interest on refund only if the refund was delayed after the passing of the order under section 154 and the delay cannot be calculated with reference to the assessment order as it stood before the rectification.


This is assessee's second appeal against order under section 154 of Income-tax Act, 1961 ('the Act') rejecting inter alia assessee's claim of interest under section 243 of Act. 2. We have heard learned counsel for assessee and learned departmental representative. 3. facts are that vide assessment for assessment year 1977-78 there was unabsorbed loss of Rs. 28,204 which was ordered to be carried forward. While making assessment for assessment year 1978-79, this loss was not carried forward and assessee's total income was determined vide order dated 28-11-1979 at Rs. 64,490. assessee moved application dated 18-8-1983 under section 154 claiming adjustment of aforesaid loss and also interest under section 243 on resultant refund. application was allowed vide order dated 27-8-1983 adjusting said loss and resultant refund was accordingly granted. assessee's claim for interest under section 243 was rejected on ground that there was no delay in issue of refund after passing of rectification order. assessee moved appeal before AAC but failed. 4. learned counsel for assessee contended that under section 243 interest is to be paid if refund is not made within three months from end of month in which total income is determined under Act. According to him total income was determined vide assessment order dated 28-11-1979 and, therefore, interest is permissible from 1-3-1980. contention of authorities below, on other hand, was that refund became due only after rectification order dated 27-8-1983 and resultant refund was granted without any delay whatsoever and, therefore, no interest is payable. 5. No direct authority on respective interpretation has been cited from either side. learned counsel for assessee contended that income is determined only by assessment order and assessment order in this case is dated 28-11-1979 and, therefore, even after rectification income would be deemed to have been determined only by original assessment order. This contention does not appear to be correct. power of rectification is independent power and order passed under section 154 is appealable if it is prejudicial to assessee. In S. Sankappa v. ITO [1968] 68 ITR 760, Hon'ble Supreme Court has held that order under section 35 of Indian Income-tax Act, 1922 (equivalent to present section 154) is part of assessment proceedings. Assessment has been defined under section 2(8) of Act and includes reassessment. Therefore, order passed under section 154 modifying assessment is itself as assessment order and determine assessee's total income. refund, therefore, becomes due as result of order passed under section 154 and it does not flow from original order of assessment which in this case was passed on 28-11-1979. assessee would, therefore, be entitled to interest on refund only if refund was delayed after passing of order under section 154 and delay cannot be calculated with reference to assessment order as it stood before rectification. In our view, therefore, authorities below were right in negativing assessee's claim for interest. 6. In result, appeal is dismissed. *** JAWAHARLAL PANNALAL v. INCOME TAX OFFICER
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