1989 (5) TMI 81 - AT - Income Tax

Summary

Issues:
- Appealability of rejection of interest under section 214
- Entitlement of interest under section 214 up to a specific date

Analysis:

1. The appeals related to the same assessee and assessment year were consolidated. The assessee initially filed a return as a Hindu Undivided Family (HUF), but the Income Tax Officer (ITO) completed the assessment as an Association of Persons (AOP) on a protective basis. Subsequently, the CIT(A) cancelled this assessment, leading to a refund of tax and interest. The assessee then applied for interest under section 214, which was rejected by the ITO. The CIT(A) directed the ITO to reconsider the interest claim based on a Gujarat High Court decision.

2. The Revenue's appeal questioned the maintainability of the appeal against the rejection of interest under section 214 and the allowance of interest until the date of the order giving effect to the appellate order. The Departmental Representative argued that the rejection was not appealable and the CIT(A) erred in directing interest payment based on the High Court decision.

3. The assessee contended that the rejection of the interest claim was appealable, citing relevant case laws. The Tribunal upheld the CIT(A)'s order, stating that the rejection letter constituted an appealable order under section 154.

4. Regarding the Revenue's grievance on interest payment until the ITO's order date, the Tribunal found no such decision by the CIT(A). They concluded that the matter was left open for further consideration.

5. The Tribunal confirmed the CIT(A)'s order, emphasizing the appeal arose from the assessee's application for interest under section 154, making the rejection appealable.

6. The assessee's appeal challenged the rejection of interest under section 214 by the ITO after reconsideration post the CIT(A)'s direction. The CIT(A upheld the rejection, stating the facts of the case differed from the High Court precedent. The assessee argued for interest until the CIT(A)'s order date.

7. The Tribunal held the assessee's appeal was maintainable, supported by relevant case laws. They ruled in favor of the assessee, stating they were entitled to interest under section 214 from the date of the CIT(A)'s order cancelling the assessment.

8. The Tribunal directed the ITO to grant interest to the assessee until the date of the CIT(A)'s order, partially allowing the assessee's appeal while dismissing the Revenue's appeal.