Law:

Section:

Section 215 of the Income-tax Act, 1961 [as it stood prior to its amendment with effect from 1-4-1985] - Advance tax - Interest payable by assessee - Assessment years 1971-72 and 1972-73 - Regular assessments were framed and as assessee had paid advance tax more than tax liability, interest was allowed to assessee on amount found refundable - Whether assessee was liable to pay interest on enhanced liability of tax created by an order passed under section 154, read with section 155 - Held, no Facts For the assessment years 1971-72 and 1972-73, regular assessments were framed and since the assessee had paid advance tax more than the tax liability, interest was allowed to the assessee on the amount found refundable. Later on, the ITO, by his orders passed under section 154, read with section 155, computed the income of the assessee at a higher figure and since the tax payable was found to be more, interest was charged on the enhanced tax liability. The assesses challenged the levy of interest. On second appeal, the Tribunal held that the charging of interest under sections 215/217, by invoking the provisions of sections 154/155 was not justified and, therefore, the levy of interest was set aside. On reference: Held In view of the provisions of section 215(3), as it stood before 1-4-1985, no interest was chargeable on the enhanced liability of tax created by an order passed under sections 154/155 as there was no provision to levy interest on creation of enhanced liability due and rather the provision was for payment of interest on the amount found refundable to the assessee. It was only with effect from 1-4-1985 that the provision was made for payment of interest, whether on enhancement of liability or reduction of liability to pay tax Therefore, in the instant case, the Tribunal was justified in setting aside the interest levied under section 215 on the basis of an order passed under sections 154/155. L.K. Sood for the Applicant. K.L. Kapur and M.L. Nanda for the Respondent. JUDGMENT Mital, J.-There were six partners of Handa & Chopra, Amritsar, one of them being the assessee before us. For the assessment years 1971-72 and 1972-73, regular assessments were…

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