Income-tax--

----Rectification of mistakes---Advance tax---Mistake must be obvious-- Debatable issue---Rectification proceedings not valid---Question whether interest was payable under S.214 debatable---Interest paid could not be withdrawn in rectification proceedings---Indian Income Tax Act, 1961, Ss.154 & 215.

If there is a debatable question involved, then the provisions of section 154 of the Income Tax Act, 1961, cannot be invoked because, under section 154, it is only a mistake apparent on the face of the order which can be rectified.

Held. that the question whether the payments made by the assessee were advance tax or not on which interest under section 214 had to be paid by Government was a debatable issue and so the order of the Income-tax Officer granting interest to the assessee under section 214 could not be rectified under section 154.

Balaram (T.S.), [TO v. Volkart Bros. (1971) 82 ITR 50 (SC) applied.

B. Gupta and R.C. Pandey for the Commissioner.

M.S. Syali for the Assessee.

JUDGMENT

B.N. KIRPAL, J.---At the instance of the Income-tax Department, the following question of law has been referred to this Court in respect of the assessment year 1971-72:

"Whether, on the facts and in the circumstances of the case, the Tribunal is correct in holding that the order of the Income-tax Officer granting interest to the assessee under section 214 cannot be rectified under section 154?"

Briefly stated, the facts arc that the assessee had paid advance tax, within the relevant financial year, but beyond the dates prescribed in the Income Tax Act, 1961. The Income-tax Officer, however, allowed interest of Rs.25,145 under section 214.

Subsequently, the Income-tax Officer came to the conclusion that the advance tax had not been paid in accordance with the previsions of sections 207 to 213 and, therefore, payment of interest was not warranted and he passed an order under section 154 withdrawing the amount of interest which had been allowed. The assessee filed an appeal before the Appellate Assistant Commissioner who came to the conclusion that it was a debatable issue as to whether interest on the instalment of advance tax was payable or not and, in that view of the matter, the same could not be withdrawn under section 154. The appeal of the assessee was allowed. The Department then filed a second appeal before the Tribunal who also came to the same conclusion, namely, that whether the payments made by the assessee were advance tax or not on whichinterest under section 214 to be paid was a debatable issue and, in view ofvarious decisions, both for and against the proposition, action could not be taken under section 154 of the Act.

It is now well-settled that the decision of the Supreme Court in the case of T.S. Balaram, ITO v. Vollcart Brothers (1971) 82 ITR 50, that, if there is a debatable question involved, then the provisions of section 154 cannot be invoked because, under section 154, it is only a mistake apparent on the face of the order which can be rectified. In view of the aforesaid decision of the Supreme Court in Volkrart Brother's case (1971) 82 ITR 50), the conclusion of the Tribunal has to be upheld. The question of law is, therefore, answered inthe affirmative and in favour of the assessee. There will be no order as to

costs.

MBA./2407/TReference answered.