Commissioner of Income Tax vs Eastern Art Corporation

D.K. Kapur, J.—For the assessment year 1968-69, the following question has been referred to us :

" Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that an appeal u/s 246 of the Income Tax Act, 1961, is maintainable against the order of the Income Tax Officer charging interest u/s 139(1) of the Income Tax Act, 1961 ?"

This point has been decided by a Bench of this court in Commissioner of Income Tax Vs. Mahabir Prashad and Sons, and it has been held that if there is a competent appeal from an assessment order u/s 246(c) of the Income Tax Act, 1961, then the question of interest u/s 139 may also be dealt with by the appellate order, but by itself no appeal lies. As in the present case, the appeal was competent, it was open to the Appellate Assistant Commissioner to deal also with the question of interest u/s 139.

It was urged by learned counsel for the Revenue that the said decision requires re-examination. We are aware of the fact that some courts have taken a different line, but there are many decisions which are in accord with the Delhi High Court and we do not find any reason to hold that the question of interest cannot be gone into when there is a competent appeal. In fact, something can be said for the view that when an appeal lies u/s 246(c), then the only point in issue is the interest u/s 139 of the Act. As, in the present case, we do not have to analyze this question, we would refrain from dealing with the same. We would only refer to the decision of the Calcutta High Court in Mohanlal Soni Vs. Union of India (UOI) and Others, , where it was held that an appeal lies also against an order imposing interest u/s 139.

The aforementioned decision of the Delhi High Court has elaborately examined the various decisions regarding the scope of an appeal u/s 246 and we do not find any reason to differ from the same.

We accordingly answer the question referred to us in the affirmative on the basis of the judgment of this court in Commissioner of Income Tax Vs. Mahabir Prashad and Sons, , aforementioned. The answer is in favor of the assessed, but there will be no order as to costs.