2005 (8) TMI 533 - AT - Income Tax

Advance tax - Interest payable by assessee when no estimate made, Rectification of mistakes, Return of income, Collection and recovery of tax, Appeal-able orders

Summary

Issues Involved:
1. Chargeability of interest under sections 139(8), 217, and 220(2).
2. Appealability of interest under sections 139(8), 217, and 220(2).
3. Whether non-mentioning of interest in the assessment order amounts to waiver.
4. Depreciation issues for assessment years 1979-80 and 1980-81.

Detailed Analysis:

1. Chargeability of Interest under Sections 139(8), 217, and 220(2):

Assessment Year 1978-79:
- The assessee filed the return late, and the original assessment order did not charge interest under sections 139(8) or 217.
- The CIT(A) and ITAT set aside various orders and directed re-assessment, but interest was not charged initially.
- The tribunal concluded that non-charging of interest in the original assessment does not amount to waiver. However, interest under section 139(8) cannot be charged for less than a completed month of default.
- Interest under section 217 can be charged based on assessed tax, even if the original assessed income was a loss or below the taxable limit. The tribunal cited several cases supporting this view.
- Interest under section 220(2) cannot be charged for periods when no demand existed, following the principles laid down by the Supreme Court in Vikrant Tyres Ltd. v. First ITO.

Assessment Year 1979-80:
- The original assessment order directed to charge interest under section 217.
- The tribunal held that the CIT(A)'s direction based on the facts of the assessment year 1978-79 is misplaced. The Assessing Officer will charge interest under section 217 on the finally assessed income up to the date of regular assessment.

Assessment Year 1980-81:
- Similar to the previous years, the tribunal held that interest under section 217 should be charged on the finally assessed income up to the date of regular assessment.

2. Appealability of Interest under Sections 139(8), 217, and 220(2):
- The tribunal noted that while no appeal lies against mere quantification of interest, an appeal can be filed if the assessee denies liability to be charged interest.
- The Supreme Court's decision in Central Provinces Manganese Ore Co. Ltd. v. CIT was cited, which allows an appeal if the assessee disputes the levy of interest as part of the assessment process.
- The tribunal held that appeals against charging of interest under sections 139(8) and 217 are maintainable when the assessee denies liability. However, no appeal lies against the levy of interest under section 220(2), following the decision in Princess Usha Trust v. CIT.

3. Whether Non-Mentioning of Interest in the Assessment Order Amounts to Waiver:
- The tribunal concluded that non-mentioning of interest in the original assessment order does not amount to waiver. The Assessing Officer must consciously waive interest by giving a finding that conditions for waiver are satisfied.
- The tribunal referenced several judicial decisions supporting this proposition, including Addl. CIT v. Krishna Narayan Naik and R.R. Pictures v. CIT.

4. Depreciation Issues for Assessment Years 1979-80 and 1980-81:
- The tribunal restored the issue of depreciation to the file of the CIT(A) for re-decision, noting that the matter was still pending for the assessment year 1978-79.

Conclusion:
- The appeals of the revenue were partly allowed, and the appeals of the assessee were allowed for statistical purposes only.
- The tribunal provided detailed guidelines for the Assessing Officer to work out interest in accordance with the principles laid down by the Supreme Court and other judicial precedents.