(a) Income-tax---

----Interest---Revision---Rectification of mistakes---Meaning of "regular assessment"---Fresh assessment made under C.I.T: s direction under S.263, Indian Income Tax Act, 1961---Not a regular assessment---Interest under S.215, Indian Income-tax Act, 1961 cannot be levied in such an assessment for assessment year 1977-78---Interest can be withdrawn in rectification proceedings.

Every word may not have a fixed connotation in all cases. In the Income-tax Act, the word "assessment" may carry different meanings depending on the context in which it is used. The words "assessment" and "reassessment" are wider in scope than the word "regular assessment". "Regular assessment" is narrower in its scope and is limited only to the assessment under section 143 or section 144 of the Indian Income-tax Act, 1961. A fresh assessment made under section 263 under the direction of the Commissioner of Income-Tax is not a regular assessment. It does not fall within the purview of sections 143 and 144 read with clause (40) of section 2 of the Indian Income- tax Act. Assessment made under section 263 has been termed "fresh assessment". This fresh assessment is limited only to the extent of directions given by the Commissioner under section 263. 1n the cases of modification of assessments, a part of the assessment remains as it is and part of the assessment is revised in accordance with the directions given by the Commissioner. Thus, it may be a limited assessment and the taxing authority has to do it in conformity with the directions given by the Commissioner of Income-tax. Interest under section 215 cannot be levied in such an assessment for the assessment year 1977-78. Section 215 was inserted in its present form by the Taxation Laws (Amendment) Act, 1984, with effect from April 1, 1985. This section is prospective in nature and it cannot be applied in its present form to cases relating to assessment year 1977-78. Subsection (3) of section 215 was also substituted by the Taxation Laws (Amendment) Act, 1984, with effect from April 1, 1985. This subsection is also prospective and not retrospective and the present subsection (3) cannot be applied in its present form. Assuming for the time being that though subsection (3) does not apply in its present form, yet, subsection (3) comes into play only where as a result of an order under section 154, the amount on which interest was payable under subsection (1) has been increased or reduced, as the case may be. The words "has been increased or reduced" should be considered in the proper perspective. If there was a dispute or a direction about the interest and if the assessing authority finds that no interest is leviable, even then the zero can be increased to any amount which may be found just and proper. However, where there is no dispute about the interest and the interest has not been assessed at all, in such cases, the word "increased" cannot be interpreted to include the imposition of interest.

A reference cannot be made to cases which are academic in nature.

The assessment of the assessee for the assessment year 1977-78 was finalised and no interest was charged under section 215. Subsequently, the Commissioner of Income-tax, acting under section 263, directed the Income- tax Officer to include the refund of excise duty received by the assessee as income of the assessment year 1977-78. This amount had been shown by the assessee as income in the, assessment year 1979-80. The Income-tax Officer passed an order of fresh assessment under the Commissioner's direction and charged interest under section 215. The assessee contended that interest could not be charged under section 215 and applied for rectification of the mistake. The application was rejected by the Inspecting Assistant Commissioner but the Commissioner of Income-tax accepted the appeal of the assessee and held that the Inspecting Assistant Commissioner was not justified in rejecting the application of the assessee under section 154. The Commissioner also held that the interest under section 215 was wrongly charged on the basis of the order passed by him under section 263 of the Act. The order of the Commissioner of Income-tax was confirmed by the Tribunal.' On an application to direct reference:

Held. dismissing the application, that the Tribunal had given a finding that there had been a bona fide mistake and the assessee should not be made liable to pay interest by way of penalty or otherwise and that finding had not been challenged. The Tribunal's order was valid. The questions sought to, be referred were academic in nature and could not be rejected.

Associated Cement Co. Ltd. v. C.T.O. (1981) 48 STC 466 (SC) ref.

(b) Income-tax---

----Reference---Academic questions cannot be referred.

(c) Interpretation of statutes--

---- Same word appearing in different parts of statutes---May have different meanings.

V.K. Singhal for the Commissioner.

N.M. Ranka for the Assessee.

JUDGMENT

This is a reference petition under section 256(2) of the Income Tax Act, 1961, submitted by the Commissioner of Income-tax. A prayer has been made that the Tribunal may be directed to make a reference on the following questions of law for the opinion of this Court:

"(1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessment order passed under section 143(3)/263 on July 22, 1982, was not included. in the definition of regular assessment?

(2) Whether, on the facts and in the circumstances of the case- the Tribunal was right in holding that the issue of chargeability of interest under section 215 was not a debatable one and fell within the purview of section 154, of the Income Tax Act, 1961?"

Assessment of the assessee, non-petitioner, for the assessment year 1977-78 was finalised by the Income-tax Officer, A Ward, Kota, on March 31, 1978. No directions were given under section 215 for charging of interest.

The Commissioner of Income-tax exercised the powers conferred on him under section 263 and passed an order dated March 28,1980 as under:

"In view of the facts and circumstances of the case which have been discussed above, I consider that the assessment order for the assessment year 1977-78 passed by the Income-tax Officer on March 31, 1978, is erroneous and prejudicial to the interest of the Revenue. In order to meet the ends of justice and in the circumstances of the case, I hereby set aside the assessment for the assessment year 1977-78 with the direction that only the items discussed in this order shall be examined and assessment in respect of the same above will be made de novo. The. Inspecting Assistant Commissioner (Assessment) is directed to pass a fresh order in accordance with the provisions of law subject to the above restriction after providing the assessee-company with a proper opportunity of being heard."

In pursuance of the order passed by the Commissioner of Income-tax, the Income-tax Officer passed a fresh assessment order in terms of the directions given by the Commissioner of Income-tax.

The respondent, being aggrieved with the fresh assessment order passed by the Income-tax Officer, submitted an appeal against the said order but the same was rejected on the ground that the appeal is not maintainable as an appeal does not lie. Thereafter, an application under section 154 of the Income-tax Act was submitted by the assessee for the rectification of the mistake stating therein that interest is not chargeable and that the same cannot be charged. The contention of the assessee was that since, in the first regular assessment order, interest was not charged by the Income-tax Officer it could not be charged in the fresh assessment done under the directions of the Commissioner issued under section 263 of the Act. It was also submitted that there is no provision under section 215 for the enhancement of the liability of interest. The application of the assessee was rejected by the Inspecting Assistant Commissioner of Income-tax, vide order dated February 11, 1985. An appeal was preferred against the said order before the Commissioner of Income-tax and the Commissioner of Income-tax vide order dated May 7, 1985, accepted the appeal of the assessee and held that the Inspecting Assistant Commissioner was not justified in rejecting the application of the assessee under section 154. The learned Commissioner also held that the interest under section 215 was wrongly charged on the basis of the order passed by him under section 263 of the Act. Learned Commissioner also held that the interest under section 215 can be charged only in the "regular assessment". The Inspecting Assistant Commissioner was directed to accept the application of the assessee moved by him under section 154 of the Act.

Being aggrieved with the order passed by the learned Commissioner of Income-tax, an appeal was preferred by the Revenue before the Tribunal. The Tribunal came to the conclusion that fresh assessment was done in consequence of the direction of the Commissioner under section 263 of the Act and refund of excise duty was included as income of the year 1977-78 though the amount was received subsequently and shown as income by the assessee in the assessment year 1979-80. The Tribunal held that there is a prima facie case that the assessee has not paid the tax under a bona fide belief that the tax is payable for the year 1979-80, the year in which the amount of refund was received and not in the year 1977-78. The Tribunal upheld the order passed by the learned Commissioner.

Reference under section 256(1) of the Income-tax Act was submitted by the Commissioner of Income-tax, Jaipur, before the Tribunal with the request that questions of law arise out of the order of the Tribunal and the questions referred to in para. 4 of the application should be referred to the High Court for decision. The petition was rejected by the Tribunal and as such, this application under section 256(2) was submitted before this Court for directing the Tribunal to refer the questions referred to above for the decision of this Court.

Mr. Singhal, appearing on behalf of the Revenue, with all vehemence at his command, submitted that the doctrine of merger should be applied in this case and that no application lies before the Inspecting Assistant Commissioner under section 154 of the Act. He submitted that the appeal was preferred against the order of the Inspecting Assistant Commissioner and the same has been dismissed, as such, the doctrine of merger should be applied and, if any application lies, it lies to the final authority, namely, the Commissioner who has rejected the appeal. We have perused the record and heard the submissions of both the parties. It is true that the appeal was submitted against the order of the Inspecting Assistant Commissioner and the same has been rejected by the Commissioner on the ground that the appeal does not lie and as such, the appeal is not maintainable. The appeal has not been decided on merits and the same has been rejected by the Commissioner on the ground of jurisdiction and as such, the question of merger does not apply. On this ground, it will not be proper to say that the petition under section 154 for rectification of the mistake apparent on the face of the record does not lie before the Inspecting Assistant Commissioner.

On behalf of the Revenue, it was submitted that the fresh assessment done in pursuance of the directions issued under section 263 should be considered as a regular assessment. Section 2(8) defines "assessment" as under:--

"assessment' includes reassessment."

Under section 2(40), "regular assessment" has been defined as under:

" regular assessment' means the assessment made under section 143 or 144."

The words "fresh assessment" as used in section 263 have not been defined under any of the provisions of the Income-tax Act.

Every word may not have a fixed connotation or meaning in ail cases. The words "assessment", "reassessment"; "fresh assessment", may be of variable import and may carry different meanings depending upon the context in which the words have been used. The very fact that, under clause (40), "regular assessment" has been defined it has been limited only to the assessment made under section 143 or 144 of the Act. Under clause (8) of section (2), the word "assessment" has been defined and reassessment has also been included in the definition of the word "assessment". Thus, "assessment" and "reassessment" are wider in scope than the word "regular assessment". Regular assessment is narrower in its scope and is limited only to the assessment made under section 143 or section 144. Under section 143 where a return has been made under section 139, the taxing authority may make an assessment according to law. Section 144 deals with cases where the assessee has not riled the return or has failed to comply with the terms of the notice issued under subsection (1) of section 142 or fails to comply with the directions issued under subsection (2-A) of that section. It also includes cases where the assessee fails to comply with all the terms of a notice issued under subsection (2) of section 143. The words "regular assessment" as used in sections 143 and 144 cannot be given a wider interpretation like the word "assessment" and "reassessment" as used in section 2, clause (8), of the Income-tax Act. Assessment includes all types of assessments including reassessment and fresh assessments except the assessments specifically provided under clause (40) of section 2 of the Income- tax Act.

Mr. Singhal has cited before us and submitted that the word "reassessment" has also been considered by some High Courts as a regular assessment. Before us, the controversy is limited only to whether the fresh assessment made under section 263 under the directions of the Commissioner can be said to be a regular assessment? We are of the view that the fresh I assessment does not fall within the purview of sections 143 and 144 read with clause (40) of section 2 of the Income-tax Act. Assessment made under section 263 has been termed "fresh assessment". This fresh assessment is limited only to the extent of directions given by the Commissioner under section 263. In the cases of modification of assessments, a part of the assessment remains as it is and part of the assessment is revised in accordance with the directions given by the Commissioner. Thus, it may be a limited assessment and the taxing authority has to do it in conformity with the directions given by the Commissioner. We are not inclined to accept the view that the fresh assessment made under section 263 should be termed or equated with a regular assessment.

Mr. Singhal, counsel for the Reveune, has invited my attention to the provisions of subsection (1) of section 263, which reads as under:

"263: -(1) The Commissioner may call for and examine the record of any proceedings under this Act, and if he considers that any order passed therein by the Income-tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deem necessary, pass such order thereon as the circumstances of the case justify including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment."

Under section 263, subsection (1), the Commissioner may call for aw examine the record of any proceedings under this Act and if he considers the any order passed thereunder by the assessing authority is erroneous in so far a it is prejudicial to the interests of the Revenue, he may pass such order thereof as the circumstances of the case justify including an order enhancing o modifying the assessment or cancelling the assessment or directing a fresh assessment. Thus, it is clear that the order passed under section 263 is limited only to the extent of directions issued in the instant case. Section 215 was inserted in its present form by the Taxation Laws (Amendment) Act, 19& w.e.f. April 1, 1985. This section is prospective in nature and it cannot applied in its present form to the cases of assessing year 1977-78. Subsection (3) of section 215 was also substituted by the Taxation Laws (Amendment) Act, 1984, with effect from April 1, 1985. This subsection is also prospective and not retrospective and the present subsection (3) cannot be applied in its present form. Assuming for the time being, that though subsection (3) does not apply in its present form, yet subsection (3) comes into play only where as a result of an order under section 154, the amount on which interest was payable under subsection (1) has been increased or reduced, ash the case may be. The words "has been increased or reduced" should be considered in the proper perspective. If there was a dispute or a direction about the interest under section 263 and, if the assessing authority finds that no interest is leviable, even then the zero can be increased to any amount which may be found just and proper. However, where there is no zero and there is no dispute about the interest and the interest has not been assessed at all, in such cases, the word "increased" cannot be interpreted to include imposition of I interest. Mr. Singhal has cited before us the case of Associated Cement Co. Ltd. v. CTO (1981) 48 STC 466. In the majority judgment the hon'ble Supreme Court interpreted the provisions of section 11-A of the Rajasthan Sales Tax I Act and held that the interest is automatic and it becomes leviable as soon as the tax is due. The case cited by the Revenue does not apply in the facts and circumstances of the present case, particularly when it is an assessment under section 263 and is not a regular assessment under section 143/144 of the Income-tax Act. Any assessment made in pursuance of the directions issued by the Commissioner under section 263 in his revisional jurisdiction cannot be said to be an assessment under sections 143 and 144 of the Income-tax Act, but should be limited to an assessment under section 263 under the directions of the Commissioner of Income-tax. Assessment so made under section 263 of the Act cannot be said to be a regular assessment within the purview of clause (40) of section 2, but is an assessment within the purview of clause (8) of section 2 of the Income-tax Act.

Section 154 of the Act provides that with a view to rectifying any mistake apparent on the record, the taxing authority referred to in section 116 may amend any order passed by it under the provisions of this Act. The authority, namely, the Commissioner, can make such amendment for rectifying any such mistake which has been brought to his notice by the assessee. The Commissioner has exercised the powers and passed the order in exercise of the powers conferred under section 154. The Tribunal held that the mistake was a bona fide mistake, the amount of income on account of refund was already included in year 1979-80 and the Revenue was of the view that it should be included in the year 1977-78. For the reasons mentioned above, the Tribunal gave a finding that it was a bona fide mistake and the assessee should not be made liable to make payment of interest by way of penalty or otherwise. On this finding, there can be a question as such whether in the facts and circumstances of the case, the Tribunal was justified in holding that the assessee has, not paid the tax on the amount in dispute under a bona fide belief. No prayer has been made for making a reference. Thus, all the questions argued by Mr. Singhal are of academic nature and it was not an intentional concealment case. It is not worthwhile to direct the Tribunal to make a reference.

In the result, the application under section 256(2) of the Income-tax Act is rejected.

M.BA./1535/TApplication rejected.