K.L. Manjunath, J.
1. We have heard the learned Counsel for the parties.
2. The assessee has filed this appeal under Section 260A of the Income-Tax Act, 1961, being aggrieved by the concurrent findings of the order passed by the Assessing Officer which has been confirmed by the Commissioner of Income-Tax (Appeals) and further affirmed by the Income-Tax Appellate Tribunal, Bangalore, in ITA No.218/Bang/02, dated 28.1.2004.
2. The facts leading to this case are as hereunder:
The appellant - Company is a leading Chit Fund Company. The dispute is in regard to the assessment year 1998-99. The assessee filed its return of income for the assessment year 1998-99 on 19.11.1998 declaring an amount of Rs. 28,77,633/-. The return was processed under Section 143(1) of the Act and ordered for refund of Rs. 19,52,528/- (including interest of Rs. 1,61,168/-) and the amount was adjusted towards the arrears of tax payable by the assessee for the earlier assessment years. A notice under Section 143(2) was issued. After hearing, an order was passed directing the assessee to pay the balance of Rs. 74,56,355/-. This order was passed on 29.1.2001.3. Subsequently, a notice under Section 154 was issued to the assessee by the Joint Commissioner for Income-Tax on the ground that the order of assessment passed on 29.1.2001 has to be rectified on the ground that the interest payable under Section 234B had not been levied while passing the order of assessment. An order under Section 154 of the Income-Tax Act was passed as per Annexure-B dated 28.6.2001. According to the Assessing Officer, the order of assessment was completed under Section 143(3) of the Income-Tax Act for the assessment year 1998-99 and he had not charged the interest payable under Section 234 relying upon the Judgment of the Hon'ble Apex Court in Ranchi Club Ltd. case and that the order of rectification was required to be passed by him in view of the subsequent retrospective amendment of Section 234B of the Finance Act, 2001. Accordingly an order was passed calling upon the assessee to pay a sum of Rs. 1,06,48,211/-. Being aggrieved by the order of rectification, the assessee filed an appeal before the Commissioner of Income-Tax (Appeals), Bangalore. The Commissioner of Income-Tax (Appeals) after hearing the parties dismissed the appeal by confirming the order of rectification by his order dated 12.11.2001. While dismissing the appeal, the Commissioner of Income-Tax, (Appeals) relied upon the judgment of this Court in Mysore Cement Ltd. v. Deputy Commissioner of Commercial Taxes passed in W.P. Nos. 16891 to 16895/1993. Being aggrieved by the concurrent findings, the Assessee filed an appeal before the Income-Tax Appellate Tribunal, Bangalore Bench, which appeal also came to be dismissed relying upon the Judgment in Mysore Cement Limited v. Deputy Commissioner of Commercial Taxes, Being aggrieved by these orders, the present appeal is filed.
4. The appeal was admitted on 30th September 2004 to consider the following substantial questions of law:
Whether the Appellate Tribunal was right in holding that the order of rectification passed under Section 154 of the Act for the assessment year 1998-99 levying interest for the first time under Section 234B is valid?5. Mr. G. Sarangan, learned Senior Counsel appearing for Mr. Ramamurthy submits that all the authorities did not consider that the Judgment in Mysore Cement Ltd v. Deputy Commissioner of Commercial Taxes, has no application to the fact of this case. According to him, the Hon'ble Supreme Court in Commissioner of Income-Tax v. Max India Limited reported in : (2007) 295 ITR 282 (SC) has taken a view at the relevant point of time when two views were possible, if the Assessing Officer has taken one view, but on account of subsequent amendment, the view cannot be held to be invalid and the same has to be held as valid. Relying upon this Judgment, he submits that the Judgment relied upon by the Commissioner of Income-Tax as well as the Tribunal was not rendered under the provisions of the Income-Tax Act but under the provisions of the Karnataka Sales Tax Act. According to him, considering the background of this case, the said Judgment has no application to the facts of this case. Therefore, he requests this Court to consider the question of law raised in the light of the Judgment of the Apex Court in Commissioner of Income-Tax v. Max India Limited.
6. Per contra, Mr. Aravind, the learned Counsel appearing for the revenue submits that the order passed under Section 154 of the Income-Tax Act was just and proper. The levy of interest under Section 234B is mandatory and Assessing Officer had left out to levy interest under Section 234B. To rectify the mistake committed by the officer, it was always open for him to pass an order of rectification. Therefore, he requests the Court to dismiss the appeal and he mainly relied upon the amendment brought into Section 234E retrospectively.
7. Having heard the Counsel for the parties, what is to be considered by us in this appeal is whether the order of assessment passed by the Assessing Officer at the first instance was passed relying upon the Judgment of the Supreme Court. If he has passed the order of assessment based on the Judgment of Supreme Court, is it open for an Assessing Officer to rectify the order relying upon the subsequent amendment to the provisions of Section 234B?
8. It is not in dispute, the order of assessment was passed by the Assessing Officer, as per Annexure-A dated 29.1.2001. The provision of Section 234B of the Income-Tax Act was got amended with retrospective effect under the Finance Act, 2001, with effect from 1.4.1989. From reading the order of assessment dated 29.1.2001 and the Finance Act, 2001 dated 1.6.2001, it is clear that as on the date of passing the order of assessment this amendment was not there. By reading the order of rectification passed under Section 154 of the Act, the Joint Commissioner of Income-Tax has categorically stated that while passing the order of assessment for the assessment year 1998-99, following the Judgment of the Hon'ble Supreme Court in Ranchi Club Limited he had not levied interest under Section 234. But he has reopened the case based on the amendment of Section 234B by Finance Act, 2001. From reading of the order passed under Section 154, it is clear to us that while passing an order of assessment, the Assessing Officer had not committed any error. He was justified in following the Judgment of the Apex Court in Ranchi Club Limited.
9. When the order of assessment has been completed, the short question that arises for our consideration is that in view of the subsequent amendment to Section 234B, is it open for him to reopen the assessment. According to us, in view of the Judgment of the Apex Court in Commissioner of Income-Tax v. Max India Limited, it was not possible for the assessing officer to reopen the case since the Assessing Officer had rightly passed the order relying upon the Judgment of Ranchi Club case while passing the order of assessment. Just because there is a subsequent amendment, assessing officer cannot reopen the file. Respectively, following the case in Commissioner of Income-Tax v. Max India Limited, the question of law in favour of the assessee and against the revenue.
10. Accordingly, this appeal is allowed. The order passed by the Assessing Officer under Section 154B dated 28.6.2001 as per Annexure-B which has been confirmed by the Commissioner of Income-Tax (Appeals) as per Annexure-C dated 12.11.2001 and further affirmed by the Income-Tax Appellate Tribunal, Bangalore Bench as per Annexure-D, dated 28.1.2004 are hereby set aside.