1. Pursuant to the direction given by the High Court under section 256(2) of the Income Tax Act, 1961 (briefly the Act), the Income-tax Appellate Tribunal drew up a statement of the case and referred the following question relating to the assessment year 1971-72 for the opinion of this Court-- "Whether, or the facts and in the circumstances of tile case, was the Tribunal correct in cancelling the order under section 154 passed by the Income-tax Officer on the ground that the question is debatable and involves ]on- drawn arguments both on question of law as well as orb facts`?"
2. "Likewise, for the assessm ent year 1971-72, the Income-tax Officer noted that the regular assessm ent under section 143(3) was completed on March 30, 1974. The t7payable was computed at Rs.1,18,69,285. The advance tax paid in respect of the assessment year 1971-72 amounted to Rs.1,21,03,966. Thus, the advance tax paid exceeds the amount of determined by Rs.2,34,68i. Interest under section 214 was calculated and allowed on the excess of Rs.2,34,681 from April 1, 1972 to March 30, 1974, at Rs.77,366. According to the Income-tax Officer, the assessment was revised under section 154 on May 7,1974, and on the amount of Rs.5,500 found refundable the assessee was allowed further interest under section 214 at Rs.1,815 "
3. The stand taken by the Income-tax Officer was that under section. 2.14 interest is allowed only on the difference of tax determined on regular assessment and the advance tax paid. He was of the view that further interest on refunds computed under section 154 which are not regular assessm ents could not have been allowed and payment of interest on refund resulting from the rectification order was a mistake apparent from the record, liable to be rectified under section 154 of the Act.
4. We, therefore, answer the aforementioned question in the affirmative, that is; in favour of the assessee and against the Revenue.