1979 (8) TMI 64 - HC - Income Tax

Summary

Issues Involved:
1. Whether the levy of interest under s. 139, s. 215, or s. 217 of the I.T. Act, 1961, is appealable under s. 246 of the Act.

Summary:

1. Appealability of Levy of Interest:
The primary issue addressed was whether the levy of interest for late filing of returns (u/s 139), for not paying or short paying advance tax (u/s 215), or for not sending the estimate (u/s 217) is appealable under s. 246 of the I.T. Act, 1961. The court emphasized that an appeal is a statutory right and can only be exercised if explicitly provided by the statute. Section 246 lists specific orders against which an appeal can be made, including regular assessments u/s 143(3) or s. 144, and orders u/s 216. However, it does not explicitly include orders levying interest under s. 139, s. 215, or s. 217.

2. Legislative History and Interpretation:
The court examined the legislative history and noted that the Tyagi Committee had recommended providing rights of appeal against orders levying interest, but Parliament did not accept this recommendation. The phrase "denies his liability to be assessed under this Act" in s. 246(c) was interpreted to mean denial of liability to be subjected to the entire procedure of the Act, not just specific provisions like s. 139, s. 215, or s. 217.

3. Judicial Precedents:
The court referred to several judicial precedents, including decisions from the Privy Council, Supreme Court, and various High Courts, to interpret the term "assessed" and the scope of "denial of liability." It was concluded that denial must be comprehensive, relating to the applicability of the Act as a whole, rather than to specific provisions.

4. Specific Case Analysis:
- I.T. Reference No. 52 of 1976 (CIT v. Suresh Chandra): The AAC's decision to interfere with the chargeability of interest u/s 139 and s. 215 was held invalid as these grounds related to the quantum of penal interest, which is not appealable.
- I.T. Reference No. 6 of 1977 (Sushil Kumar v. CIT): The Tribunal correctly held that no appeal lay against the levy of interest u/s 217 and s. 139 as the grounds did not relate to assessability of income or computation of tax.
- I.T. Reference No. 39 of 1976 (Sushil Kumar v. CIT): The Tribunal was right in holding that no appeal lay against the charge of penal interest u/s 139 and s. 217 as the grounds related to the quantum of interest.
- I.T. Reference No. 41 of 1976 (CIT v. Gita Ram Kali Ram): The AAC was not competent to entertain an appeal against the levy of interest u/s 217 as the ground of objection was not covered by the denial clause.

Conclusion:
The court concluded that the grounds relating to the quantum of penal interest or the applicability of specific provisions like s. 139 or s. 217 are not appealable under s. 246. The remedy for such grievances lies in applying for rectification u/s 154, revision to the Commissioner u/s 264, or filing a writ petition under Article 226 of the Constitution.