Law:

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Section 244 of the Income-tax Act, 1961 - Refund - Interest on, where no claim is needed - Assessment years 1958-59 and 1959-60 - Assessee-HUF was allowed refund on account of interest under section 244(1A) - Assessments for years under consideration had been made much before coming into force of Act - Subsequently, ITO withdrew interest under section 244(1A) by passing an order under section 154 - Whether assessee was disentitled for interest under section 244(1A) since such interest is payable only on excess tax paid on or after 31-3-1975 - Held, yes - Whether, therefore, allowing of interest under section 244(1A) was an apparent mistake and as such, it could be withdrawn in an order under section 154 - Held, yes FACTS The assessee-HUF was allowed refund on account of interest under section 244(1A) in respect of the assessment years 1958-59 and 1959-60. Subsequently, the refund was adjusted against a demand created against the assessee. Such order of adjustment was passed prior to 1-4-1975. By subsequent order dated 21-5-1991, the ITO withdrew the interest allowed by him under section 244(1A) and in appeal, his action was upheld by the Commissioner (Appeals). In appeal before the Tribunal, the assessee argued that when the interest had been allowed under section 244(1A), the interest could not have been withdrawn in an order under section 154. The Tribunal upheld the assessee's claim and cancelled the order dated 21-5-1991 withdrawing the interest allowed under section 244(1A). On reference : HELD It is true that if any amount has been paid for the assessment which assessment has been made after 1-4-1975 and the advance tax has been paid or TDS has been deducted, that be treated as payment after 1-4-1975 and if the total tax paid is in excess of the tax payable on assessed income, the tax paid prior to 1-4-1975, but the assessment made after 1-4-1975, that cannot be ignored for the purpose of interest under section 244(1A). In the instant case, the assessment had been made on 22-1-1956 (sic). On the date of assessment, not only the provision of section 244(1A) was not forming part of the Act, but even the Act was not in existence. Therefore, there was no…

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