Law:

Section:

Section 256 of the Income-tax Act, 1961-Reference - Academic question - ITO rectified assessment of assessee under section 154 without issuing any notice as prescribed by sub-section (3) of section 154 and in rectification proceedings withdrew interest granted to assessee under section 214 and also charged interest from him under section 217 - Later on, ITO communicated a calculation chart to assessee stating out particulars of tax which was determined as payable in rectification order - AAC dismissed assessee's appeals filed against rectification order and calculation memo as incompetent - Tribunal entertained appeals of assessee filed against orders of AAC and held that rectification order was illegal inasmuch as no notice was issued before passing rectification order, that ITO had no power to withdraw interest allowed to assessee under section 214, and that ITO was equally incompetent to charge interest under section 217 - Whether questions of law referred to High Court for its opinion, which related to (a)withdrawal of interest allowed to assessee under section 214 and charging of interest from him under section 217 in rectification proceedings, and (b)entertainment of appeals by Tribunal were academic in nature and did not require to be answered - Held, yes FACTS The assessee was a partner in a firm. The ITO completed the assessment of the assessee before the assessment of the firm subject to rectification under section 154/155. Further, the ITO having found that the advance tax paid by the assessee was far higher than the tax determined payable allowed interest on excess payment of tax under section 214. Later on, the ITO completed the assessment of the firm and having found that the tax payable by the assessee was higher than the advance tax paid by him, rectified the assessment of the assessee under section 154 and in rectification proceedings withdrew the interest granted to the assessee under section 214. He also charged interest from him under section 217. A few days after passing of the rectification order, the ITO communicated a calculation chart to the assessee setting out the particulars of the tax which was determined as payable in the…

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