1987 (4) TMI 70 - HC - Income Tax

Summary

Issues Involved:
1. Constructive waiver of interest u/s 139 and u/s 217.
2. Merger of Income-tax Officer's orders with the Appellate Assistant Commissioner's orders.
3. Appealability of orders charging interest u/s 139 and u/s 217.
4. Validity of the Additional Commissioner's order regarding waiver of interest.
5. Rate of interest chargeable u/s 139 and u/s 217.

Summary:

1. Constructive Waiver of Interest u/s 139 and u/s 217:
The Tribunal decided in favor of the Revenue, acknowledging that the Income-tax Officer had constructively passed an order waiving interest u/s 139 and u/s 217. However, this question could not be answered in this reference due to the Supreme Court decision in CIT v. V. Damodaran [1980] 121 ITR 572.

2. Merger of Income-tax Officer's Orders with the Appellate Assistant Commissioner's Orders:
The Tribunal held that the orders of assessment passed by the Income-tax Officer merged with the orders of the Appellate Assistant Commissioner, including the deemed order of waiver of interest u/s 139 and u/s 217. This view was supported by the court's decision in CIT v. Tejaji Farasram Kharawala [1953] 23 ITR 412, which remains binding. The court concluded that the order of the Income-tax Officer under appeal merges completely in the order of the Appellate Assistant Commissioner.

3. Appealability of Orders Charging Interest u/s 139 and u/s 217:
The Tribunal, following the court's decision in Mathuradas B. Mohta v. CIT [1965] 56 ITR 269, held that the orders charging interest u/s 139 and u/s 217 are appealable orders. The court agreed with this view, emphasizing that the deemed order of waiver of interest was part of the assessment process and thus merged with the Appellate Assistant Commissioner's order.

4. Validity of the Additional Commissioner's Order Regarding Waiver of Interest:
The Tribunal found that the Additional Commissioner was not convinced that the orders of waiver were erroneous or prejudicial to the interests of the Revenue. The court upheld this view, stating that since the orders of assessment had merged with those of the Appellate Assistant Commissioner, the Additional Commissioner could not exercise jurisdiction u/s 263 of the Act.

5. Rate of Interest Chargeable u/s 139 and u/s 217:
The Tribunal accepted the assessee's submission that interest u/s 217 was chargeable at a uniform rate of 6%. The court did not need to address this issue separately due to the resolution of the second question.

Conclusion:
The second question of law was answered in the affirmative and in favor of the assessee. The other questions of law were returned unanswered. No order as to costs.