1983 (10) TMI 87 - AT - Income Tax

Summary

Issues:
1. Whether interest under section 216 of the Income-tax Act, 1961 should be levied.
2. Whether the order passed by the Income Tax Officer (ITO) is barred by limitation.

Analysis:
1. The Commissioner (Appeals) held that the order by the ITO was not under section 154 of the Act and was barred by limitation as it was passed after four years. The assessee argued that the ITO did not make any finding regarding the levy of interest in the assessment order, indicating that interest under section 216 should not be levied. The Tribunal noted that the absence of a mention of interest in the assessment order does not imply a waiver by the ITO, citing decisions by various High Courts. The Karnataka High Court clarified that an order under section 216 is separate from the assessment and must be passed after the regular assessment. The Tribunal concluded that the levy of interest is not mandatory, and the ITO has the discretion to decide on it independently.

2. The Tribunal determined that the order under section 216 is a separate proceeding and not a part of the assessment, hence not subject to the time limit for assessment proceedings. Referring to precedents, including the Bombay High Court and Supreme Court decisions, the Tribunal established that no specific time limit is prescribed for passing an order under section 216. As there was no undue delay in passing the order, the Tribunal found it to be within the permissible time frame. Consequently, the Tribunal restored the ITO's order and allowed the departmental appeal, as no submissions were made on the merits of the levy.