AJAY KUMAR MITTAL, J. - (1.) THIS order shall dispose of IT Ref. Nos. 58 and 58A of 1996 for asst. yrs. 1985 -86 and 1986 -87 as an identical question of law has been referred in these cases.
(2.) AT the instance of the Revenue, the Income -tax Appellate Tribunal, Delhi Bench 'E', Delhi (for short "the Tribunal") has referred the following question of law under s. 256(1) of the IT Act, 1961 (for short "the Act") for the asst. yrs. 1985 -86 and 1986 -87 for the opinion of this Court : "Whether, on the facts and circumstances of the case, the Tribunal was right in law in upholding the CIT(A)'s order whereby he had deleted the interest charged under s. 215/217 of the IT Act, 1961 -
(3.) BRIEFLY , the facts necessary to answer the above question are that original assessments in the aforesaid matters were completed under s. 143(1) of the Act on a total income of Rs. 17,140 and Rs. 39,566 respectively. No interest was charged thereon under s. 215/217 of the Act. The assessments, however, came to be reopened. The reassessment was completed on the enhanced income of Rs. 2,99,491 and Rs. 9,22,119 respectively. Interest under s. 217 of the Act was levied in pursuance of the enhancement made to the total income on the finalization of reassessment proceedings. The assessee moved applications under s. 154 of the Act requesting that interest charged under s. 217 of the Act amounting to Rs. 27,102 and Rs. 53,330 respectively on reassessment was wrongly charged and that part of the reassessment 1988 (Annexs. A1 and A2). The assessee preferred two separate appeals relating to the aforesaid two assessment years before the Commissioner of Income -tax (Appeals), Karnal [for short "CIT(A)"] on the ground that the rejection of its plea that no interest was leviable under s. 217 of the Act, was legally unsustainable. The plea raised by the assessee found favour with the CIT(A) and resultantly, the levy of interest under s. 215/217 amounting to Rs. 27,102 and Rs. 53,330 was cancelled. The CIT (A) observed in clear terms that s. 215(3) does not authorize the AO to levy interest de novo in a case where no interest was levied at the time of original assessment but it only empowers the AO to enhance or reduce interest in proceedings (Annexs. B1 and B2). The Revenue aggrieved by the appellate orders filed appeals before the Tribunal. The Tribunal on consideration of rival submissions approved the view taken by the CIT(A) and observed that there was no error in the order of the CIT(A) warranting interference. Additionally, the Tribunal held that no interest under s. 215 could be charged during the course of reassessment proceedings as it was not a regular assessment as defined under s. 2(40) of the Act and that any subsequent assessment proceedings under any provisions of the Act could not be termed as a regular assessment.;