- (1.) This is a reference at the instance of the Revenue. The following question of law has been referred by the Income-tax Appellate Tribunal for the decision of this court : "Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in holding that the Income-tax Officer was not within his jurisdiction in invoking his powers under section 154 of the Income-tax Act, 1961 - While passing the assessment order dated April 14, 1975, for the assessment year 1973-74, the Income-tax Officer allowed interest to the assessee purportedly under section 214 of the Income-tax Act on the amount of Rs. 1,76,000 treating the same as advance tax paid during the said year. Out of the amount of Rs. 1,76,000, Rs. 1,43,000 was paid by the assessee on March 21, 1974, i.e., beyond the due dates prescribed under section 211 of the Income-tax Act. Later on, the assessing authority felt that there was an obvious mistake in law in the assessment order in so far as the interest under section 214 was allowed despite the fact that the advance tax was paid after the due date prescribed. A show cause notice was issued proposing to rectify the mistake apparent from the record to which the assessee objected through his letter dated October 16, 1978. The objection taken by the assessee was that there was no apparent mistake inasmuch as the issue involved the "interpretation of the provisions of the Act" regarding which there was scope for debate. The Income-tax Officer overruled the objection and passed the order of rectification under section 154 on March 20, 1979, disallowing the interest on the sum of Rs. 1,43,000. In coming to the conclusion that there was an obvious mistake of law, the Income-tax Officer relied upon the decision of this court in Kangundi Industrial Works (P.) Ltd. v. ITO , which was decided on March 6, 1979, i.e., a few days prior to the rectification order. The Commissioner of Income-tax (Appeals) affirmed the order of the Income-tax Officer holding that, in the light of the decision of this court in Kangundi Industrial Works (P.) Ltd. v. ITO , which was binding on the Income-tax Officer, the grant of interest under section 214 can be said to be the result of an obvious error. On further appeal, the Income-tax Appellate Tribunal reversed the orders of the lower authorities. The Tribunal held that the Income-tax Officer was not within his jurisdiction in invoking his powers under section 154. 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. That is how this reference has come up before us.
(2.) Section 154 of the Income-tax Act, 1961, corresponding to section 35 of the Indian Income-tax Act, 1922, empowers the income-tax authority to amend any order passed by it under the provisions of the Act or to amend any intimation sent under sub-section (1) of section 143 or to enhance or reduce the amount of refund granted under that sub-section "with a view to rectifying any mistake apparent from the record."
(3.) The crucial phrase "mistake apparent from the record" has been interpreted by the Supreme Court in more than one decision. Suffice it to advert to the decision in T. S. Balaram, ITO v. Volkart Brothers , the Supreme Court observed (p. 53) : "It was not open to the Income-tax Officer to go into the true scope of the relevant provisions of the Act in a proceeding under section 154 of the Income-tax Act, 1961. A mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long drawn process of reasoning on points on which there may conceivably be two opinions." Learned standing counsel for the Income-tax Department, Sri S. R. Ashok, has vehemently urged before us that, in regard to the question of admissibility of interest under section 214 on the belated advance tax payments, the legal position admits of no doubt and that, in any case, having regard to the judgment of this court in Kangundi Industrial Works (P.) Ltd. v. ITO , the assessment order dated April 14, 1975, can be said to have been vitiated by a mistake apparent from the record. He submits that the fact that the decision of this court came to be rendered subsequent to the assessment order was of no consequence because, the judgment of this court merely declares the law and the law so declared must be deemed to be the correct law even on the date of passing the assessment order. Learned standing counsel points out that the Tribunal is not justified in referring to the decision of some other High Court, viz., the Gujarat High Court in Bharat Textile Works v. ITO , decided on February 22, 1978, in order to say that the issue was a debatable one.;