Law: Income Tax Act, 1961

Section: 214&244(1A)

(a) Income-tax----Refund---Interest payable by Government---Appeal---Rectification of mistakes---Reduction of tax by Tribunal---Interest on excess payment as advance tax or excess payment in pursuance of any order of assessment ---Assessee entitled to interest in rectification proceedings---Interest payable under Ss.214 & 244(1-A)---Indian Income Tax Act, 1961, Ss.214 & 244(1-A). Section 214 of the Income Tax Act, 1961, provides for payment of interest by the Government on the amount by which the aggregate sum of any instalments of advance tax paid during any financial year in which they are payable under sections 207 to 221 exceeds the amount of the tax determined on regular assessment. The expression "regular assessment" occurring in section 214(1) means the original order of assessment made by the Income Tax Officer as also the final made as a result of any direction having been given by the appellate authority. Section 244(1-A) provides for payment of interest where the amount paid in pursuance of assessment or penalty or part thereof is found in appeal or other proceeding under the Act to be in excess of the amount which such assessee is liable to pay as tax or penalty. On such amount, the assessee is entitled to simple interest at the rate specified in subsection (1) on the amount found to be in excess from the date on which such amount was paid to the date on which the refund is granted. The assessee was a partner in a firm. The assessment was completed on an income of Rs.82,940 on which a tax of Rs.31,290 was determined. After giving credit for the tax deducted at source, advance tax payments and self¬ assessment tax, a balance of Rs.7,711 was determined as payable. However, on appeal to the Appellate Assistant Commissioner and to the Tribunal his income was reduced and he became entitled to a refund. He submitted an application under section 154 claiming interest under sections 214 and 244(1-A). The Income Tax Officer rejected the claim but the Tribunal held that the assessee was entitled to interest under sections 214 and 244(1-A) in the rectification proceedings. On a reference: Held, (i) that the point whether the assessee was entitled to…

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