Dibrugarh Co. Ltd. vs Commissioner of Income Tax

A.K. Sengupta, J.—At the instance of the assessee, the following question of law has been referred to this court u/s 256(1) of the Income Tax Act, 1961 ("the Act"), for the assessment year 1970-71 :

"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that no appeal would lie u/s 154 of the Income Tax Act, 1961, with reference to the levy of interest u/s 139 of the Income Tax Act, 1961 ?"

The facts relating to this reference, are that after the completion of the assessment, the Income Tax Officer found the interest chargeable u/s 139 of the Act should be Rs. 9,816 and not Rs. 9,214 as originally assessed. The assessee was given opportunity to raise objections when notice u/s 154 was served upon it. The assessee, however, did not raise any objection to the proposed enhancement. The Income Tax Officer, therefore, rectified the assessment u/s 154 by enhancing the interest payable u/s 139.

When the assessee went up in appeal before the Appellate Assistant Commissioner, he held that the order u/s 154 was not justified.

The Revenue came up in appeal before the Tribunal and contended that no appeal lies against the order u/s 154 in the circumstances of the case and that the payment of tax was an ad hoc payment as it was beyond the prescribed time and that this payment could not be treated as payment towards advance tax. The assessee, on the other hand, contended that an appeal lies against the order u/s 154 and that the Income Tax Officer himself in his order of rectification u/s 143(3) read with Section 251 of the Act treated this payment as payment u/s 210 of the Act. The Tribunal rejected the contention of the assessee and reversed the decision of the Appellate Assistant Commissioner

The only contention raised before us is whether an appeal would lie against rectification made u/s 154 enhancing the interest levied u/s 139. The appeal in effect is not against the levy of interest u/s 139(8). It is no doubt true that no appeal lies against levy of interest u/s 139(8) but in this case the question is not whether an appeal would lie against the levy of interest. As indicated earlier, the interest was levied in the original assessment but the Income Tax Officer found that interest was not properly calculated. Accordingly, he revised the calculation. He had increased the interest from Rs. 9,245 to Rs. 9,816 directing the assessee to pay, the difference of Rs. 571. This, in fact, is a rectification of the assessment u/s 154 which provides for an appeal. One has to look to the substance of the matter and not to the form. The question here is not whether interest is leviable. The dispute pertains to the amount of interest. In our view, the Tribunal was not justified in holding that no appeal would lie in such a case. We, therefore, answer the question in this reference in the negative and in favour of the assessee,

The Tribunal will dispose of the appeal on merits and in accordance with the decision of this court in the case of Commissioner of Income Tax Vs. Koomsong Tea Co. Ltd., .