9911796707
|
Home
Issues Involved:
1. Right of appeal under Section 246 of the Income-tax Act, 1961, against the levy of interest under Sections 139 and 217. Detailed Analysis: 1. Right of Appeal under Section 246 against Levy of Interest under Sections 139 and 217: The primary issue referred for opinion was whether the Tribunal was justified in holding that there was no right of appeal under Section 246 against the levy of interest under Sections 139 and 217 of the Income-tax Act, 1961. The court examined the provisions of the Income-tax Act, 1961, particularly Section 139 concerning the return of income and the levy of interest for late filing, and Section 217 concerning the levy of interest for failure to file an estimate of income. It was noted that interest under these sections is often referred to as "penal interest," although it is, in fact, compensatory and not penal. The court referenced the decision in Commissioner of Income-tax v. Sharma Construction Company [1975] 100 ITR 603 (Guj), which held that no appeal lies merely against the order levying penal interest if the appeal challenges the quantum of interest or the failure to waive or reduce it. However, if the appeal challenges the very liability to pay such interest, it would be maintainable. The court also discussed the decision in Commissioner of Income-tax v. Jagdish Prasad Ramnath [1955] 27 ITR 192 (Bom), where it was held that the legislature did not provide a right of appeal against the payment of penal interest. The reasoning was that penal interest is a matter of computation following the regular assessment, and any grievances regarding the regular assessment can be addressed in the appeal against it, which would indirectly affect the penal interest. The court further referred to the Karnataka High Court's decision in National Products v. Commissioner of Income-tax [1977] 108 ITR 935 (Kar), which summarized that while the levy of interest under Sections 139 and 215 is part of the assessment, the right of appeal is limited to denying liability to be assessed to such interest, not merely questioning the quantum or seeking waiver. The court concluded that: - No appeal lies merely against the order levying penal interest under Sections 139, 215, or 217 if the appeal challenges the quantum of penal interest or the failure to waive or reduce it. - An appeal is maintainable if the assessee denies liability to pay penal interest at all, either on the ground of not being liable to pay advance tax or that the conditions for levying penal interest were not satisfied. - In an appeal against the regular assessment, the assessee can raise points that may reduce the taxable income or tax payable, which would consequentially reduce the penal interest. Regarding the specific case, the court noted that the assessee's counsel admitted that the levy of penal interest under Sections 139(1) and 217 was justified on the facts and circumstances. Therefore, the court affirmed the Tribunal's decision in favor of the revenue, stating that the assessee cannot challenge the quantum of penal interest or seek its waiver or reduction before the Appellate Assistant Commissioner. Conclusion: The question referred was answered in the affirmative, favoring the revenue and against the assessee, based on the admission by the assessee's counsel that the levy of penal interest was justified. The court clarified that the assessee could still move the appropriate authorities for the reduction or waiver of penal interest if so advised.
|
