AJAY KUMAR MITTAL, J. - (1.) THIS appeal has been preferred by the Revenue under S. 260A of the IT Act, 1961 (in short "the Act") against the order dt. 3rd June, 2003 passed by the Income-tax Appellate Tribunal, Chandigarh, Bench "A", Chandigarh (hereinafter referred to as "the Tribunal") in ITA No. 1078/Chd/1997, relating to the asst. yr. 1989-90. The appeal was admitted on 11th July, 2006 to consider the following substantial question of law : "Whether, on the facts and in the circumstances of the case, the interpretation of S. 234B(4) made by the Tribunal is sustainable in law as the same being based on misinterpretation of law as well as facts of the case inasmuch as order passed under S. 147 r/w S. 143(3) of the IT Act in view of Expln. 2 to S. 234B was a regular assessment as earlier only processing under S. 143(1)(a) was made ?"
(2.) BRIEFLY stated, the facts necessary for adjudication as narrated in the appeal are that the assessee filed its return on 1st Jan., 1990 declaring an income of Rs. 43,58,142 under S. 115J of the Act. The said return was processed under S. 143(1)(a) of the Act on 26th Feb., 1990 which resulted into a refund of Rs. 1,76,518. Thereafter, notice under S. 148 of the Act was issued to the assessee for the excess deduction claimed under ss. 80HHC and 80-I of the Act on 28th Sept., 1990. Notices under ss. 142(1) and 143(2) of the Act were issued on 4th July, 1991. The assessment for the first time was completed on 25th Aug., 1992 under S. 143(3)/147 of the Act at a total income of Rs. 11,62,739. The AO vide order dt. 25th Aug., 1992 computed the total income as per provisions of S. 115J of the Act at Rs. 45,90,182 and also charged interest under S. 234B of the Act. Feeling aggrieved, the assessee approached the Commissioner of Income-tax (Appeals) [in short "the CIT(A)"] who vide order dt. 27th Nov., 1992 partly allowed the appeal on the issue of charging of interest under S. 234B of the Act. Feeling dissatisfied, the Department took the matter before the Tribunal and the assessee filed cross-objections. The Tribunal upheld the order of the CIT(A) vide order dt. 28th Aug., 2001 by observing that the assessment completed under S. 147 of the Act was not a regular assessment. Further, the assessment made by the AO was revised by the Department under S. 263 of the Act vide order dt. 23rd March, 1995 and a direction was issued to the AO to withdraw relief granted under S. 80-I of the Act on the receipt of duty drawback relating to the goods exported which were manufactured by the assessee in the industrial undertaking. Accordingly, the AO made assessment under S. 143(3) of the Act on 31st Jan., 1997 and recomputed the assessed income at Rs. 68,83,294 after recomputing deduction under S. 80-I of the Act. The interest under S. 234B of the Act was increased by Rs. 9,82,000 on account of enhancement. Against the said assessment order, the assessee filed an appeal before the CIT(A) who vide order dt. 12th Aug., 1997 upheld the quantum addition. On the issue of charging of interest under S. 234B of the Act, the CIT(A) held that the same was not chargeable as the assessment order which had been revised was not a regular assessment. Being dissatisfied, the Department approached the Tribunal. The Tribunal vide order dt. 3rd June, 2003 upheld the order of the CIT(A) and dismissed the appeal. Hence, the present appeal by the Revenue. We have heard learned counsel for the parties.
(3.) LEARNED counsel for the Revenue submitted that the assessee having failed to pay the advance tax on the assessed income under the provisions of the Act was liable to pay interest under S. 234B of the Act. Learned counsel with the aid of Expln. 2 to S. 234B of the Act sought to draw support to contend that the assessment which was framed by the AO under S. 143(3)/147 on 25th Aug., 1992 was the first assessment as earlier the return which was filed by the assessee was processed under S. 143(1) (a) of the Act on 26 Feb., 1990 which had resulted into a refund of Rs. 1,76,518. According to the learned counsel, the order of the CIT(A) dt. 27th Nov., 1992 and the Tribunal dt. 28th Aug., 2001 deleting the interest levied under S. 234B of the Act was contrary to the decision of the Kerala High Court in CIT vs. K. Govindan & Sons (1998) 150 CTR (Ker) 634 : (1999) 238 ITR 1005 (Ker) and affirmed by the Supreme Court in K. Govindan & Sons vs. CIT (2000) 164 CTR (SC) 490 : (2001) 247 ITR 192 (SC) and also Allahabad High Court in Abdul Majid vs. CIT (2005) 199 CTR (All) 364 : (2006) 281 ITR 366 (All). He submitted that no appeal had been filed against the said decision in view of tax effect involved being below monetary limit of Rs. 2 lacs fixed for filing appeal under S. 260A of the Act by CBDT's Instruction No. 1979 dt. 27th March, 2000 and 1985 dt. 29th June, 2000 as mentioned in para 4 of the appeal. He urged that the decisions of the Tribunal and the CIT(A) being contrary to the statutory provision contained in Expln. 2 to S. 234B of the Act and the decision of the apex Court in K. Govindan & Sons' case (supra) which was binding under Art. 141 of the Constitution would render the order ineffective and would not take away the right of the Revenue to charge interest under S. 234B(4) of the Act. According to the learned counsel, interest under S. 234B of the Act was correctly charged in the assessment order passed under S. 143(3)/147 and, therefore, it could be subsequently enhanced on completion of set aside assessment.;