1981 (3) TMI 63 - HC - Income Tax

Summary

Issues:
Competency of an appeal to the Appellate Assistant Commissioner against the levy of interest under section 139(1) of the Income-tax Act.

Analysis:
The judgment pertains to the competency of an appeal to the Appellate Assistant Commissioner (AAC) against the levy of interest under section 139(1) of the Income-tax Act for the assessment years 1965-66 and 1966-67. The Income Tax Officer (ITO) had levied interest under section 139(1) during the assessments. The assessee filed appeals before the AAC challenging the levy of interest. The AAC held that the order of the ITO under section 139(1) was not appealable. However, the Tribunal allowed the appeal, stating that the assessee could challenge the levy of interest as part of the assessment order appeal. The revenue contended, relying on a Full Bench decision, that the appeal against the levy of interest could not be entertained by the AAC. The Full Bench had previously held that an appeal could lie if the assessee denied liability to pay interest altogether. The revenue argued that the assessee did not deny liability to be assessed under the Act, hence the appeal was not maintainable.

Mr. Patil, representing the assessee, cited decisions from different High Courts to support the argument that denying liability to pay interest under section 139 would constitute a denial of liability as per the Act, making the appeal maintainable. The Court considered whether the challenge to the interest levy under section 139(8) would fall under the denial of liability as per section 246(c) of the Act. The Court was not inclined to accept this argument, as the appeal memo did not state that the assessee was denying liability to be assessed under the Act. The Court noted that the challenge was based on the ITO's lack of jurisdiction to levy interest, which could not be raised at that stage.

The Court observed that the grounds raised by the assessee did not imply a denial of liability to be assessed under the Act. The question referred to the High Court was considered in light of the facts and circumstances of the case. The Court concluded that the grounds raised by the assessee did not align with the decisions relied upon. Therefore, the Court answered the question in the negative, stating that the appeal against the levy of interest was not maintainable. The assessee was directed to pay the costs of the reference.

This judgment clarifies the scope of appeal to the AAC against the levy of interest under section 139(1) of the Income-tax Act, emphasizing the requirement of denying liability to be assessed under the Act for the appeal to be maintainable. The decision provides a detailed analysis of the legal provisions and previous court rulings to determine the competency of such appeals, setting a precedent for similar cases in the future.