Ajay Kumar Mittal, J. - (1.) THIS appeal by the assessee under Section 260A of the Income Tax Act, 1961 (for short "the Act") is against the order dated 31.10.2006 passed by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar (SMC)(hereinafter referred to as "the Tribunal") in IT.A. No. 188 (ASR)/2006 relating to the assessment year 1988 -89.
(2.) VIDE order dated 18.9.2007 while issuing notice of motion by this Court, the learned Counsel for the assessee has claimed that the following substantial question of law would arise for determination of this Court: Whether in facts and circumstances of the case, the Income Tax Appellate Tribunal had fallen in error in confirming the charge of interest under Section 217 of the Income Tax Act by invoking the Sub Clause 6 of Section 215 even though the original return of income was filed by the Assessee on 31st August, 1988 and the reassessment made under Section 147 of the Income tax Act was not the "first assessment? The facts, in short, are that the assessee filed the return of income for the assess ment year 1988 -89 on 31.8.1988. A search and seizure operation was conducted at the business premises and the residential premises of the partners of the assessee on 13.5.1989. A notice was issued under Section 148 of the Act to initiate the reassessment proceedings under Section 147 of the Act. The assessment was completed on 6.3.1995 at an income of Rs. 3,42,380/ -. It was pleaded that interest to the tune of Rs. 47, 912/ - and Rs. 69,390/ - was charged under Section 139(8) of the Act as the assessee had not furnished any evidence to show that the original return had been filed. Being aggrieved, the assessee filed appeal before the CIT(A) challenging the action of the Assessing Officer for charging interest under Sections 139(8) and 217 of the Act. The assessee pro duced letter No. 1872 dated 6.8.1997 of ITO, Ward No. 1, Phagwara where he had admitted the filing of original return of income by the appellant on 31.8.1988. The CIT (A) vide order dated 20.8.1997 allowed the appeal of the assessee holding that the interest was not chargeable either under Section 139(8) or Section 217 of the Act. The revenue thereafter took the matter in appeal before the Tribunal and the Tribunal vide order dated 20.12.1994 modified the order of the CIT(A) to the extent that the interest under Section 139(8) was chargeable for a default of one month and not beyond that and had accepted that original return was filed on 31.8.1988. As regards the interest charged under Section 217 of the Act, the Tribunal remanded the matter back to the CIT(A) to re -decide the issue after affording due opportunity to the parties. The CIT(A) took up the appeal and after hearing the parties, upheld the action of the Assessing Officer for charging interest under Section 217 of the Act being regular assessment within the meaning of Sub -section 6 of Section 215 of the Act. Hence the present appeal by the assessee.
(3.) MS . Radhika Suri, learned Counsel for the assessee -appellant raised an argument that the assessee had filed a valid return on 31.8.1988 and this fact has been acknowledged by the Tribunal in its orders dated 20.12.2004 and 31.10.2006. Learned Counsel submitted that in the facts and circumstances of the present case, the substantial question of law as framed has two facets. According to the learned Counsel, once it was held that a valid return had been filed on 31.8.1988, then two eventualities arise; a) either an order of assessment had been passed on the said return or b) there were no assessment proceedings undertaken by the department. Learned Counsel urged that, in both the situations, no interest under Section 217 of the Act could be levied. If the assessment proceedings were undertaken then the assessment made in pursuance to the notice under Section 147 of the Act dated 22.3.1989 was not the assessment made for the first time, whereas if no assessment proceedings had been completed, then in view of judgments in Commissioner of Income Tax, Madras v. : [1970]78ITR69(SC) , B.R. Bamasi v. : [1972]83ITR223(Bom) and CESC Ltd. v. : [2003]263ITR402(Cal) , the issuance of notice for re -assessment proceedings under Section 147 itself was bad and the question of levy of interest did not arise.;