1986 (2) TMI 98 - AT - Income Tax

Summary

Issues:
1. Appealability of orders directing to charge interest under different sections of the IT Act.
2. Whether an appeal lies against the charging of interest other than interest under s. 216 when the only ground taken in the appeal is against the charging of interest.

Detailed Analysis:

1. The appeals filed by the Department were against the common order of the AAC relating to the assessment years 1975-76 and 1976-77. The main issue was the charging of interest under sections 139(8) and 217 of the IT Act. The ITO estimated the cost of construction of a house differently from the assessee's declared cost, resulting in an addition to income from undisclosed sources. The ITO also charged interest under the mentioned sections. The AAC admitted the appeals and deleted the interest charged, stating that the income shown in the returns was notional and estimated by the ITO.

2. The primary contention before the ITAT was whether an appeal lies against charging interest under sections other than s. 216, especially when the sole ground in the appeal is against the charging of interest. The department argued that no appeal lies against mere charging of interest unless provided for in s. 246(m). The assessee's representative cited precedents from the Calcutta High Court, asserting that interest is appealable. The ITAT examined various decisions and emphasized that the objection to charging interest was not the only ground in successful appeals. The ITAT concluded that a single ground challenging the levy of interest cannot be validly relied upon before the appellate authorities.

3. The ITAT referred to decisions from the Calcutta High Court, including Lalit Prasad, Karam Chand Thapar, and New Swadeshi Mills cases. It highlighted that in all these cases, the objection to charging interest was not the sole ground for appeal. The ITAT stressed that there is no inherent right of appeal, and the right must be expressly conferred by the statute. Citing case law and the absence of specific provisions for appealing against interest charges under other sections, the ITAT vacated the AAC's order and restored the ITO's orders for both years. The decision in the case of CIT vs. Mahabir Prasad & Sons was also referenced to support this conclusion.

In conclusion, the ITAT allowed the appeals, emphasizing the need for multiple grounds to challenge interest charges and highlighting the absence of an inherent right of appeal against interest charges under various sections of the IT Act.