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Issues Involved:
The issue involves the right of the assessee to appeal to the Commissioner of Income-tax (Appeals) against the levy of interest u/s 220(2) for the assessment years 1973-74 and 1974-75. Summary: The High Court of Madhya Pradesh, in response to a reference u/s 256(1) of the Income-tax Act, 1961, addressed the question of whether the assessee had the right to appeal against the levy of interest u/s 220(2) for the mentioned assessment years. The assessee had failed to pay the tax demanded, leading to the Income-tax Officer levying interest. The Commissioner of Income-tax (Appeals) dismissed the appeals on the grounds that an appeal against the interest levy was not competent. The Tribunal also upheld this decision, prompting the assessee to seek reference to the High Court. Legal Analysis: The counsel for the assessee argued that the appeal was competent u/s 246(c) of the Act as the assessee denied the liability to pay the tax demanded. However, the Revenue contended that regardless of any refund due to the assessee under another Act, interest u/s 220(2) was still payable. The Court noted that there was no provision allowing the set-off of refundable amounts against tax payable under the Act. Section 220(2) mandates interest payment if the tax specified in the notice of demand is not paid within the stipulated time. The Court distinguished the present case from precedent, emphasizing that the levy of interest was not part of the assessment process. Denying interest payment did not equate to denying liability for assessment, thus rendering the appeal not competent u/s 246(c). Conclusion: The High Court ruled in favor of the Revenue, affirming that the assessee had no right to appeal against the interest levy u/s 220(2) for the mentioned assessment years. The parties were directed to bear their own costs in this reference.
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