Ajit K. Sengupta, J. - (1.) In this writ petition, the petitioner challenges the legality and validity of a notice dated March 6, 1987, issued by the Income-tax Officer, respondent No. 1, under Section 154 of the Income-tax Act, 1961 ("the Act"), for the assessment year 1973-74. By the said notice, the Income-tax Officer seeks to rectify an alleged mistake in the calculation of interest under Section 220(2) of the Act. The notice itself does not make it clear as to how and what was the mistake sought to be rectified. It is stated by the petitioner that in the course of discussion, the petitioner's representative was informed that the Income-tax Officer proposed to charge interest under Section 220(2) of the Act from the date of the revised assessment order dated September 24, 1979, till May 8, 1986, when the Income-tax Officer made assessment giving effect to the appeal order dated October 3, 1985, of the Income-tax Appellate Tribunal for the said assessment year 1973-74.
(2.) The facts of the case are that for the assessment year 1973-74, the petitioner filed its return under the Act on October 31, 1973, which was revised on November 30, 1973, claiming, inter alia, deduction for gratuity liability calculated on the basis of actuarial valuation. The total income shown in the revised return was Rs. 8,29,370 and the tax paid thereon by way of tax deducted at source and self-assessment was Rs. 4,77,858. Assessment thereon under the Act was made on June 5, 1976, wherein the Income-tax Officer disallowed the claim of deduction of gratuity for not complying with the conditions of Section 40A(7) of the Act. The total income assessed was Rs. 60,56,160. The tax thereon was computed at Rs. 34,96,327 and after adjusting the tax paid as above the balance tax payable was determined at Rs. 30,18,469. Against the said assessment, the petitioner preferred an appeal. The Appellate Assistant Commissioner of Income-tax, by his order dated February 28, 1977, set aside the assessment with the direction to make fresh assessment after examining the question relating to deduction of gratuity afresh. The assessment was set aside to scrutinise other claims of the assessee as well. By reason of the said appeal order setting aside the assessment there was no subsisting outstanding tax demand payable by the petitioner.
(3.) The Income-tax Officer pursuant to the said appeal order, made a fresh assessment on September 24, 1979, again disallowing the claim for deduction of gratuity. In the said assessment total income was computed at Rs. 61,38,357 by making addition for gratuity of Rs. 12,13,929 (provided in the accounts and which was allowed by the Income-tax Appellate Tribunal) and Rs. 41,45,444 (not provided in the accounts). There were other additions and disallowances as well. Tax was computed at Rs. 35,43,895 and after adjusting the prepaid tax of Rs. 4,77,858, the balance payable was determined at Rs. 30,65,937.;