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Section 154, read with section 214, of the Income-tax Act, 1961 - Rectification of mistake - Apparent from record - Assessment year 1973-74 - ITO allowed interest to assessee on advance tax paid after due date - Afterwards, in view of subsequent decision of Court in Kangundi Industrial Works (P.) Ltd. v. ITO [1980] 121ITR 339 (AP) to effect that interest could not be granted, ITO rectified its earlier order - Whether this issue that interest could not be allowed if advance tax was paid after due date, still remained a debatable one and as such ITO was not justisfied in rectifying earlier assessment order - Held, yes. - Whether for purposes of rectification there is an analogy between retrospective legislation and a judicial decision of High Court - Held, no FACTS The ITO allowed interest to the assessee under section 214 even in respect of tax paid by the assessee beyond the due dates prescribed. Later, in view of the Andhra Pradesh High Court decision in Kangundi Industrial Works (P.) Ltd. case (supra) , the ITO rectified the assessment to withdraw the interest allowed under section 214. On appeal, the Commissioner (Appeals) affirmed the order of the ITO. On further appeal, the Tribunal took the view that the matter was debatable, more especially because two High Courts had by then taken different views in the matter. The Tribunal, therefore, gave relief to the assessee. On reference, the revenue relied upon the well-known of the Supreme Court in M.K. Venkatachalam, ITO v. Bombay Dyeing & Mfg. Co. Ltd. [1958] 34 ITR 143 and contended that the principle is the same, whether it is a case of retrospective legislation or subsequent judicial pronouncement. The Supreme Court held in that case that though the order of the ITO was proper and valid when it was made, it was plainly inconsistent with the provision which was introduced later with retrospective effect and, in the light of such retrospective provision, the order of assessment could be rectified under section 35 of the Indian Income-tax Act, 1922, so as to be in conformity with the newly introduced provision. HELD In Kangundi Industrial Works (P.) Ltd.'s case (supra ) the Andhra Pradesh High Court took…

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