ASHOK MFG. CO. (P) LTD. vs COMMISSIONER OF INCOME TAX

BY THE COURT:

At the instance of the assessed in respect of assessment year 1973-74, the Tribunal has referred the following question u/s 256(1) of the Income Tax Act, 1961 (for short the Act) for the opinion of this Court :

"Whether, on the facts and circumstances of the case an appeal lies to the Appellate Assistant Commissioner against the charging of penal interest u/s 215 and s. 139 of the Income Tax Act, 1961 ?"

The question as to whether an appeal lies against an order charging interest u/s 215 of the Act came up for consideration before the Supreme Court in the case of Central Provinces Manganese Ore Co. Ltd. Vs. Commissioner of Income Tax, and it was held that unless the assessed raises a dispute that he was not liable to the levy at all, an order demanding or charging interest under the said section was not appealable. It was further held that levy of interest is part of the process of assessment and although ss. 143 and 144 do not specifically provide for the levy of interest and the levy is, in fact, attributable to s. 215, it is nevertheless a part of the process of assessing the tax liability of the assessed and to that extent it may be open to the assessed to dispute the levy in appeal provided he limits himself to the ground that he is not liable to the levy at all.

(Emphasis, italicised in print, supplied).

Similarly, the question as to whether an appeal can be taken against an order levying penal interest u/s 139 of the Act came up for consideration before this Court in Commissioner of Income Tax Vs. Mahabir Prashad and Sons, wherein it was held that second part of S. 246(c) of the Act is wide enough to permit the agitation of the issue of charging of interest u/s 139 in regard to both its liability and quantum in a valid and competent appeal against an order of assessment, though an appeal may not lie against a separate order levying interest and nothing more.

In the instant case, we find from the appellate orders that the assessed had disputed the levy of interest u/s 215 of the Act and had also disputed certain other additions/disallowances, which had resulted in enhancement of total income and levy of interest u/s 139 of the Act. In this view of the matter, in the light of the decision of the Supreme Court in Central Provinces Manganese Ore Co. Ltd. v. CIT and of this Court in CIT v. Mahabir Parshad & Sons (supra), we are of the opinion that an appeal lies to the Appellate Assistant Commissioner against the charging of penal interest under ss. 215 and 139 of the Act.

Accordingly, the question is answered in the affirmative i.e., in favor of the assessed and against the Revenue. No costs.