Income-Tax---

----Appellate Tribunal---Scope of powers--Duty of Tribunal to consider law as it existed though assessee failed to bring it to notice of Tribunal-- Assessee becoming entitled to interest under S.214(1-A)---Tribunal holding that interest payable only up to date of first assessment ---Assessee filing application before Tribunal and contending that mistake was committed by it in not specifically referring to subsection (I-A) of S.214 when claiming interest---Tribunal rejecting application on ground that no reference made to S.214(1-A), in course of hearing Revenue's appeal---Provision existed in statute book when question came up for decision before Tribunal---Tribunal bound to consider all provisions of 5.214 including subsection (1-A)---Indian Income Tax Act, 1961, S.214(1), (1-A).

The original assessment for the assessment year 1983-84 was completed on March 27, 1986, fixing the total income of Rs.19,94,620 and demanding a total sum of Rs.11,18,460 towards income-tax, interest, etc. On appeal, the Commissioner of Income-tax (Appeals) granted certain relief s and consequently the advance tax paid by the assessee was found to be in excess of the tax demand which resulted in a refund. Consequently, the amount on which interest was payable under subsection (1) of section 214 increased and the assessee became entitled to interest in terms of section 214(1 A) of the Act. However, the Assessing Officer did not allow any interest under section 214(1-A). On appeal, the Commissioner of Income-tax (Appeals) directed the Assessing Officer to grant interest under section 214. On appeal by the Revenue to the Tribunal it held that the interest under section 214 is payable only up to the date of first assessment under section 143 or under section 144, on the amount found to be in excess of the tax demand. The assessee filed a miscellaneous application before the tribunal and contended that it had committed a mistake in not referring to the provisions of subsection (1-A) of section 214. The Tribunal rejected the said petition holding that no reference was made to section 214(1-A) in the course of hearing of the Revenue's appeal. However, in view of the submission of the assessee that it was the duty of the Tribunal to make a reference to the provisions contained in section 214(1-A) of the Act, the Tribunal made a reference on the question redrafted by the Tribunal:

Held, that subsection (1-A) of section 214 was in the statute book when the question came up for decision before the Tribunal. Even though the assessee did not specifically refer to subsection (1-A) the Tribunal could not ignore the said provision when taking the decision. The Tribunal ought to have considered and referred to .the said provision. It is the duty of the Tribunal to consider the law as it existed then even though the assessee failed to bring it to its notice. Therefore, -the Tribunal is bound to consider all the provisions of section 214 including section 214(1-A) when the assessee did not refer to section 214(1-A) in the course of the argument and the case proceeded only the provisions of section 214(1) of the Income-tax Act.

CIT v. Mahalaxmi Sugar Mills Co. Ltd. (1986) 160 ITR 920 (SC)

CIT v. Carona Sahu Co. Ltd. (1984) 146 ITR 452 (Bom.); CIT v. G.B. Transports (1985) 155 ITR 548 (Ker.) and Parekh Brothers v. CIT (1984) 150 ITR 105 (Ker.) ref.

Pathros Mathai M. and Mariam Mathai for the Assessee.

P.K.R. Menon and N.R.K. Nair for the Commissioner.

JUDGMENT

P.A. MOHAMMED, J.---The question referred to us for decision in this case is as follows:

"Whether the Tribunal is bound to consider all the provisions of section 214 including section 214(1-A) when the assessee did not refer to section 214(1-A) in the course of the argument and the case proceeded only on the provisions of section 214(1) of the Income Tax Act, 1961?"

This income-tax reference case is coming up for decision before us at the instance of the assessee, a company engaged in the business of manufacture of chemicals. The original assessment for the assessment year 1983-84 was completed on March 27, 1986, fixing the total income at Rs.19,94,620 and demanding a total sum of Rs.11,18,460 towards income tax, interest, etc. On appeal, the Commissioner of Income-tax (Appeal) vide the order, dated February 27, 1987, granted certain reliefs. Consequently, the advance tax paid by the assessee was found to be in excess of the tax demand which resulted in a refund. Consequently, the amount on which interest was payable under subsection (1) of section 214 increased and the assessee became entitled to interest in terms of section 214(1-A) of the Act. However, the Assessing Officer did not allow any interest under section 214(1-A). On appeal, the Commissioner of Income-tax (Appeals) directed the Assessing Officer to grant interest under section 214. However, the Revenue went up in appeal. But the Tribunal following the Full Bench decision of this Court in CIT v. G.B. Transports (1985) 155 ITR 548 and the decision of the Bombay High Court in CIT v. Carona Sahu Co. Ltd. (1984) 146 ITR 452 (FB) held that the interest under section 214 is payable only up to the date of first assessment under section 143 or under section 144, on the amount found to be in excess of the tax demand.

Later, the assessee filed a miscellaneous application before the Tribunal and contended that it had committed a mistake by not referring to the provisions of subsection (1-A) of section 214. However, the Tribunal rejected the said petition holding that no reference was made to section 214(1-A) in the course of hearing of the Revenue's appeal. What was contended by counsel for the assessee was that it was the duty of the Tribunal to make reference to the provisions contained in section 214(1-A) of the Act. In view of the said submission, the Tribunal allowed the reference on the question redrafted by the Tribunal. That is how the matte coming before us.

The only question is whether the Tribunal is bound to take rote of the provision contained in subsection (1-A) of section 214 and to apply the same while deciding the question of interest. 'The said provision was there in the statute when the question came up for decision before the Tribunal. Even though the assessee did not. specifically refer to subsection (1-A), we cannot say that the Tribunal can ignore the said provision when taking the decision, We are of the view that the Tribunal ought to have considered and referred to the said provision. It is the duty of the Tribunal to consider the law as it existed then even though the assessee failed to bring it to its notice. The Supreme Court in CIT v. Mahalaxmi Sugar Mills Co. Ltd. (1986) 160 ITR 920 observed, thus, (page 928):

"In the second place, there is a duty cast on the Income-tax Officer to apply the relevant provisions of the Indian Income-tax Act for the purpose of determining the true figure of the assessee's taxable income and the consequential tax liability. Merely because the assessee fails to claim the benefit of a set-off, it cannot relieve the Income-tax Officer of his duty to apply section 24 in an appropriate case."

It is difficult for us to say that the principle emerging from the above decision cannot be extended to the cases before the other authorities under the Income-tax Act. We are of the view that the above principle can equally be applied to the cases coming before the Income-tax Appellate Tribunal. Also refer to the decision of this Court in Parekh Brothers v. CIT (1984) 150 ITR 105. In the result, the question referred to us for decision is answered in the affirmative, that is to say, in favour of the assessee and against the Revenue.

A copy of this judgment under the seal of this Court and the signature of the Registrar shall be sent to the Income-tax Appellate Tribunal, Cochin Bench.

M.B.A./4091/FC Reference answered.