2006 (9) TMI 172 - HC - Income Tax

Interest - It was pleaded on behalf of the assesses that charging of interest in the absence of any direction in the assessment order was unwarranted and unjustified - in view of the fact that the demand notice which is a part of the assessment order indicated clearly charging of interest and its working, Tribunal was not right in deleting the interest charged u/s 139(8), 215/217 revenue appeal allowed

Summary

Issues:
- Interpretation of law regarding charging of interest under sections 139(8) and 217 of the Income-tax Act in the absence of specific direction in the assessment order.

Analysis:
The High Court was presented with a question of law referred by the Income-tax Appellate Tribunal regarding the charging of interest under sections 139(8) and 217 of the Income-tax Act for the assessment year 1986-87. The Tribunal noted that the Assessing Officer did not issue any specific direction for charging interest in the assessment order, yet interest was levied. The Tribunal had to determine whether interest could be charged in the absence of a clear direction in the assessment order. The Tribunal held that interest could not be charged without a specific direction in the order of assessment.

Upon considering the arguments presented, the High Court referred to a judgment by the Supreme Court in Kalyankumar Ray v. CIT [1991] 191 ITR 634. The Supreme Court observed that the statute does not mandate both computations of total income and tax payable to be on the same sheet of paper. It was emphasized that once the assessment of total income is completed, the calculation of the net tax payable is an arithmetical process. The Court highlighted the significance of the Income-tax Computation Form or Form for Assessment of Tax/Refund in determining the tax payable, which is considered an order in writing by the Income-tax Officer. The Court also referred to a previous decision in Vinod Khurana v. CIT [2002] 253 ITR 578, which supported the same view.

Based on the legal precedents and interpretations provided, the High Court ruled in favor of the Revenue and against the assessee. The Court concluded that the statutory provisions had been complied with, and the assessment order was not vitiated by the absence of a specific direction for charging interest. Consequently, the High Court disposed of the reference accordingly.