2001 (3) TMI 86 - HC - Income Tax

Summary

Issues:
1. Interpretation of the right to appeal against the charging of interest under section 216 in the course of reassessment under section 147.

Analysis:
The judgment pertains to a reference made under section 256(1) of the Income-tax Act, 1961 regarding the legality of appealing against the charging of interest under section 216 during reassessment under section 147. The dispute relates to the assessment year 1971-72, where the original assessment included charging of interest under section 216, which was not challenged by the assessee at that time. Subsequently, during reassessment under section 147, the Income-tax Officer again charged interest under sections 215 and 216. The assessee appealed against the charging of interest under section 216, arguing that there was no bona fide belief for filing a nil estimate and that the interest was not justified. The Appellate Assistant Commissioner and the Tribunal considered various aspects, including the lack of challenge during the original assessment and the nature of interest under section 216 as a compensatory charge. The Tribunal held that interest under section 216 could not be charged without proving that the estimate of advance tax was not bona fide.

The High Court analyzed the legal position, emphasizing that reassessment proceedings do not nullify the original assessment entirely but only address underassessment or escaped income. The Court highlighted that the assessee did not challenge the levy of interest under section 216 during the original assessment or through the available appeal remedy, making it final. The Court referred to a similar case to support its conclusion that if the assessee wished to challenge the interest levy, it should have done so during the regular assessment. The Court noted that the Tribunal failed to consider crucial aspects, such as the absence of an appeal against the interest levy under section 216 earlier, which favored the Revenue's position. Therefore, the Court answered the referred question in the negative, supporting the Revenue and rejecting the assessee's claim to appeal against the interest levy during reassessment under section 147.