1983 (11) TMI 51 - HC - Income Tax

Summary

Issues:
1. Whether an appeal to the Appellate Assistant Commissioner (AAC) is competent in a case involving the waiver or reduction of interest under section 139 of the Income Tax Act, 1961.
2. Interpretation of section 246 of the Income Tax Act regarding appealable orders.
3. Application of rule 117A for waiver or reduction of interest.
4. Assessment of the ITO's failure to consider the waiver or reduction of interest before the appeal.
5. Determining the proper course of action when the ITO has not passed an order regarding the waiver or reduction of interest.

Analysis:
1. The judgment pertains to three references concerning assessment years 1966-67, 1967-68, and 1968-69, where the assessee, a former Minister, filed returns late, leading to interest charges. The AAC accepted the appeal for interest waiver, prompting an appeal to the Income-tax Appellate Tribunal. The Tribunal upheld the waiver, citing sufficient cause for delay due to the assessee's health issues. The Department questioned the Tribunal's decision on appeal competency (para 2-4).

2. The primary issue raised is whether an appeal to the AAC is legally permissible in cases involving interest charges under section 139 of the Income Tax Act. The court considered various judgments and conflicting views on this matter, noting the absence of representation from the assessee. The court highlighted the differing interpretations by High Courts on the appealability of interest charges alone (para 5-8).

3. Rule 117A provides for the waiver or reduction of interest under specified conditions, such as the assessee proving sufficient cause for the delay in filing returns. The court emphasized the necessity for the ITO to allow the assessee to present evidence before deciding on interest waiver. The failure of the ITO to consider this provision was a crucial aspect of the analysis (para 13-15).

4. The judgment highlighted the ITO's oversight in not addressing the waiver or reduction of interest before the appeal process, raising concerns about the competency of the appeal. The court emphasized the importance of the ITO's consideration before assessing appeal validity (para 16-18).

5. The court concluded that the proper course of action was for the ITO to pass an order regarding the interest waiver or reduction. Without such an order, the question of appeal or revision could not be determined. The judgment underscored the necessity for the ITO to make a decision before addressing the appeal's competency (para 19-21).