Commissioner of Income Tax vs J.K. Synthetic Ltd.

Kirpal, J.—The respondent was assessed on a total income of Rs. 5,74,87,422. In view of the fact that the return of income had not been filed in time, interest was levied u/s 139(8) at Rs. 6,86,616. Thereafter an order was passed by the Commissioner of Income Tax (Appeals) where some relief was granted to the respondent which resulted in reduction of the income assessed. On second appeal being filed, further relief was granted by the Income Tax Appellate Tribunal with the result that the total income assessed came to Rs. 3,55,82,700. As a result thereof, the interest payable stood reduced to Rs. 3,07,113.

It appears that thereafter an order was passed u/s 154/254 of the Act by the Income Tax Officer withdrawing the excess deduction which had been allowed u/s 80J of the Act. This resulted in the total income being computed at Rs. 4,00,13,410. As a result thereof, the interest now sought to be recovered was Rs. 3,83,877.

The Commissioner of Income Tax (Appeals) as well as the Tribunal came to the conclusion that in the assessment year 1975-76, as the law then stood, there could not be any enhancement of interest. The contention of Shri Jain, however, is that, on a correct interpretation of section 139(8), there is in fact no enhancement of interest because the interest now sought to be levied was Rs. 6,86,616 which after the orders u/s 254 passed by the Tribunal and u/s 154 passed by the Income Tax Officer now stands at Rs. 3,83,877. It is true, as contended by learned counsel, that after the appeal effect was given to the Tribunal''s decision, the interest stood reduced to Rs. 3,07,113 and in consequence of the order passed by the Income Tax Officer withdrawing excess deduction u/s 80J, interest now payable comes to Rs. 3,83,877. Even though with reference to the order passed by the Tribunal, the interest now being claimed is more, nevertheless, it is contended by learned counsel for the petitioner, that the interest is lower than what was payable when the original assessment was framed. Therefore, the contention of learned counsel for the petitioner is that there has been no increase of interest payable by the respondent.

In our opinion, the question involved is a pure question of law and it cannot be said that the answer thereto is self-evident. We, Therefore, direct the Tribunal so state the case and refer the following question of law to this court:

"Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was correct in dismissing the Revenue''s appeal on the ground that, prior to April 1, 1985, there was no provision to increase interest levied u/s 139(8) of the Income Tax Act, consequent to an order u/s 154, when the facts of the case show that interest originally levied u/s 139(8) was much higher and that there was as such no question of enhancement in this case?"

No order as to costs.