1984 (12) TMI 95 - AT - Income Tax

Summary

Issues:
1. Levy of interest under section 217(1A) by the Income Tax Officer (ITO) without a specific order in the assessment order.
2. Interpretation of the requirement for mentioning the levy of interest in the assessment order.
3. Applicability of interest under section 217(1A) in cases involving short term capital gains.
4. Authority of the ITO to levy interest on the basis of the demand notice without a specific order in the assessment order.
5. Validity of interest levied under sections 139 and 217 in the absence of mention in the assessment order.

Analysis:

1. The case involved the ITO not passing any order levying interest under section 217(1A) in the assessment order but including the interest in the tax calculation and demand notice. The CIT (A) directed the withdrawal of the interest levy, stating that the ITO must give a specific order for charging interest under section 217(1A) either in the assessment order or separately. The Revenue appealed this decision.

2. The Department argued that interest under section 217(1A) was mandatory due to the assessee's failure to file an estimate or advance tax, even if not mentioned in the assessment order. They cited a decision from the Allahabad High Court to support this position. The Department also relied on a prescribed form (ITNS 150A) for charging interest in the demand notice.

3. Referring to a decision of the Calcutta High Court, it was argued that interest under section 217 could not be levied without proper mention in the assessment order. The absence of penal interest in the assessment was deemed as invalid, and interest under section 217 could not be levied on reassessment under section 147.

4. The Tribunal found that interest under section 217(1A) may not be leviable in this case, especially considering the significant amount of short term capital gain in the assessee's income. The Tribunal concluded that the ITO must pass a fresh order specifically applying his mind to levy interest. However, due to the detailed computations and directions given by the CIT (A) regarding the income and deductions, it was deemed unnecessary to send the matter back to the ITO.

5. Ultimately, the Tribunal dismissed the appeal, stating that the taxable income, after considering the deductions and directions from the CIT (A), did not warrant the ITO to reconsider the levy of interest under section 217(1A). The appeal was therefore dismissed, upholding the decision of the CIT (A) to withdraw the interest levy.