ANIL DEV SINGH,C.J. - (1.) IN this reference under section 256(1) of the Income -tax Act (hereinafter referred to as the Act), the following question of law has been referred by the Income Tax Appellate Tribunal, Jaipur Bench, Jaipur for opinion of this court : 'Whether on the facts and in the circumstances of the case the)carried Member of ITAT were justified in confirming the decision of Commissioner (Appeals) holding that in re -assessment, interest under section 139(3) or 215 cannot be charged. Actually there was no fresh taxation of income and income as originally assessed was not charged and similarly the figures of interest originally charged was not subjected to any change and no re -assessment was made in fact and practically, the proceedings were closed after having satisfied the Income Tax Officer.'
(2.) THE brief facts giving rise to this reference are as follows : On 7 -7 -1980, the assessee filed a return in respect of the assessment year 1978 -79. Since the assessee defaulted in filing the return in time, the Income Tax Officer directed levy of interest under section 139(8) of the Act. It was found that the assessee bad advanced a sum of Rs. 2,00,000 to one Shri Harendra Mirdha as per the following details : (i) Rs. 1,00,000 was advanced on 24 -10 -1977 and (ii) Rs. 1,00,000 was advanced on 23 -12 -1977. The amount was returned by Shri Mirdha to the assessee on 30 -1 -1978 by making payment of Rs. 1,00,000 by cash and by handing over. a cheque for Rs. 1,00,000. The cheque given by Shri Mirdha was encashed by the assessee only on 12 -4 -1978. It is riot in dispute that 31 -3 -1978 was the date on which the accounting period of Shri Mirdha ended.
(3.) SHRI Mirdha in the return filed by him in respect of assessment year 1978 -79 showed the assessee -respondent as the creditor to whom he owed a sum of Rs. 1,00,000.The assessee however in his personal books of account on the basis of the cheque received by him from Shri Mirdha on 31 -3 -1978, squared up the account of Shri Mirdha even though, the cheque was encashed only on 12 -4 -1978. The Income Tax Officer after verifying the facts proceeded to complete the assessment. In the reassessment proceedings the assessee was able to satisfy the Income Tax Officer in regard to the question of advance and the manner in which it was accounted for. The Income Tax Officer completed the re -assessment proceedings, but no change was effected either in computation of the tax amount or in the amount of interest as detailed in the original assessment order. Subsequently, the assessee filed an application under section 154 of the Act for deletion of interest on the ground that the interest under sections 139(8) and 215 of the Act could riot be levied in re -assessment proceedings. The application was rejected by the Income Tax Officer on 15 -1 -1986.;