RASTOGI,J. - (1.) THE Income-tax Appellate, Delhi Bench-B (hereafter "the Tribunal"), has made this reference under s. 256(1) of the IT Act, 1961. The question referred is : " Whether, on the facts and in the circumstances of the case, the Tribunal was correct in upholding the cancellation of the ITO's order under S. 154 of the IT Act, 1961, on the ground that there was no prior order passed by the ITO for levy of interest under S. 139(1)(b)(iii)?"
(2.) THE brief facts are these. The respondent-assessee, Himalaya Drug Company, Dehradun, is a partnership firm. For the asst. yr. 1970-71, it filed its return on January 27, 1971, that is, after a delay of 27 days. The ITO made the assessment and while preparing ITNS-150 a sum of Rs. 382 was charged as interest under S. 139(1) of the Act, taking the status of the assessee as that of a registered firm. Subsequently, the ITO found that interest had been wrongly charged treating the assessee as a registered- firm. On the other hand interest under S. 139 should have been charged treating the assessee as an unregistered firm which came to Rs. 17,708. In his opinion, it was a mistake apparent from the record and hence he took action under S. 154 of the Act. Pursuant to the notice the assessee appeared before the ITO and contended that there was no mistake apparent from the record which could be rectified. The ITO did not agree and, by an order dated December 27, 1972, charged interest at Rs. 17,708 under S. 139(8)(a). On appeal, the AAC cancelled this order, the reasons being that there was no order passed by the ITO in the first instance to show how the amount of Rs. 382 as interest had been calculated. If calculation had proceeded on the basis of the tax payable by a registered firm, then the amount of interest charged should have been Rs. 463 from which fact it could be inferred that the ITO had in his discretion reduced the amount of interest chargeable. Another reason given was that the previous approval of the IAC was required to be obtained since the amount of interest chargeable exceeded Rs. 1,000 on the tax payable by the assessee if treated as an unregistered firm. No such prior approval had been taken and hence it could not be said that there was any mistake apparent from the record. Lastly, in the opinion of the AAC, a decision on a debatable point of law or failure to apply the law to a set of facts which remained to be investigated cannot be corrected by an order under S. 154.
(3.) AGGRIEVED , the Department filed an appeal before the Tribunal. The Tribunal repelled the contention of the Revenue that the tax calculation form known as ITNS-150 could be treated as an order charging interest which could be corrected under S. 154 of the Act. As observed by the Tribunal : "In our view this is a tax calculation form meant purely for Departmental purposes and hence cannot be equated with an order of the ITO, such as an assessment order or any other order, by which the assessee is made liable to pay a sum by way of interest, penalty or tax." The Tribunal has also taken the view that even the levy of interest at Rs. 382 on the basis of the tax payable by the assessee as a registered firm was not correct. The correct amount should have been Rs. 463 and from this fact it could be inferred that there was no ascertainable basis or an order for charging interest at Rs. 382. In the result, the Department's appeal was dismissed.;