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Section 154 of the income-tax act, 1961 - Rectification of mistake - Whether amount of interest payable by government under section 214 could be rectified when assessment itself rectified to withdraw excess depreciation allowed earlier - Held, yes Facts The assessment of the assessee-company for 1962-63 was completed on a total income of Rs. 6,11,778 on 31-08-1966. As the advance tax paid exceeded the amount of tax payable as per the assessment, the assessee was granted interest under section 214 amounting to Rs. 1,28,778. Subsequently, when it was found that depreciation had been allowed in excess of what was admissible, the assessment was rectified under section 154 on 30-12-1972, with the consequential effect that the interest payable under section 214 worked out to Rs. 1,06,447 in place of Rs. 1,28,778 originally allowed. The ITO withdrew this excessive interest by passing an order under section 154 on 3-4-1972. The AAC accepted the assessee's contention that the ITO was not justified in doing so, in view of a Tribunal's (Delhi Bench) decision in a similar case. On appeal by the Revenue, the Tribunal found that the case, relied upon by the AAC, pertained to a controversy relating to the date up to which the interest was to be calculated-the date of original assessment or the date of its subsequent modification. It, therefore, held that since the question was highly controversial, the ITO was not entitled to pass a rectification order. On reference: Held 1. The controversy in the present case did not relate to the date up to which the interest was to be calculated. The ITO's order was merely to give a consequential effect after the assessment was reduced due to withdrawal of excess depreciation. There was nothing controversial in the matter. 2. The Tribunal had erred in law in holding that the ITO could not invoke the provisions of section 154 in withdrawing the excess interest allowed under section 214. Judgment R.R. Rastogi J.-The following question has been referred for our opinion : "Whether, on the facts and in the circumstances of the case, the Tribunal is justified in holding that the Income-tax Officer was not justified in law in invoking the…

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