1990 (10) TMI 142 - AT - Income Tax

Advance Tax, Appellate Assistant Commissioner, Assessing Officer, Interest Payable By Assessee, Late Filing

Issues Involved:
1. Admissibility of appeal against charging of interest under sections 139(8) and 215/217 of the Income-tax Act, 1961.
2. Whether the charging of interest under the aforesaid sections is mandatory and dependent on the existence of reasonable cause.
3. The jurisdiction of the Tribunal to pronounce on the waiver or reduction of interest charged under sections 139(8) and 215/217.

Detailed Analysis:

1. Admissibility of Appeal Against Charging of Interest:
The first ground of appeal was whether the Commissioner of Income-tax (Appeals) was correct in admitting the appeal against the charging of interest under sections 139(8) and 215/217. The Departmental Representative argued that the CIT (Appeals) had not considered the Allahabad High Court's decision in CIT v. Geeta Ram Kali Ram [1980] 121 ITR 708 (FB), which was not overruled by the Supreme Court in Central Provinces Manganese Ore Co. Ltd. v. CIT [1986] 160 ITR 961/27 Taxman 275. The Tribunal noted that if the matter is concluded by the Jurisdictional High Court, which is not modified or overruled by the Supreme Court, it must follow that decision. However, the Supreme Court had endorsed the legal position of the Gujarat and Karnataka High Courts, which was contrary to the Allahabad High Court's view. Thus, the Tribunal concluded that the Supreme Court's approval of the Gujarat and Karnataka High Courts' decisions implied that the Allahabad High Court's decision should be considered overruled. Therefore, the Tribunal rejected the Revenue's ground regarding the admissibility of the appeal against the charging of interest under sections 139(8) and 215/217.

2. Mandatory Nature of Charging Interest:
The second issue was whether the charging of interest under sections 139(8) and 215/217 was mandatory and dependent on the existence of reasonable cause. The Departmental Representative argued that the charging of interest was mandatory and not dependent on reasonable cause, citing the Tribunal's decision in ITO v. N. Saikrishna [1987] 22 ITD 548 (Hyd.). The Tribunal observed that the assessee's request for the sale of seized jewellery to pay advance tax was not legally valid as the Income-tax Officer had no obligation to act on such a request. The Tribunal also noted that the provisions under section 132(5) of the Income-tax Act required the assessing officer to retain sufficient assets to satisfy the tax, interest, and penalty liabilities. Given that the value of the seized assets was not sufficient to cover the total liabilities, the Tribunal held that the interest under sections 139(8) and 215/217 was correctly charged as the return of income was filed late and the last instalment of advance tax was not paid.

3. Jurisdiction of the Tribunal on Waiver or Reduction of Interest:
The third issue was whether the Tribunal had the jurisdiction to pronounce on the waiver or reduction of interest charged under sections 139(8) and 215/217. The Tribunal referred to the Supreme Court's decision in Central Provinces Manganese Ore Co. Ltd.'s case, which held that the question of waiver or reduction of interest could not be the subject of an appeal under section 246(c) of the Income-tax Act. The Tribunal concluded that while there might be grounds for reduction or waiver of interest under Rules 40 and 117A of the Income-tax Rules, 1962, or under section 264 of the Act, it had no jurisdiction to pronounce on that matter. The assessee was advised to approach the appropriate authorities for such relief.

Conclusion:
In conclusion, the Tribunal held that the interest under sections 139(8) and 215/217 was correctly charged due to the late filing of the return and non-payment of the last instalment of advance tax. The Tribunal also clarified that it had no jurisdiction to pronounce on the waiver or reduction of interest, and the assessee should seek relief from the appropriate authorities. The appeals were partly allowed, affirming the charging of interest while leaving the door open for the assessee to seek waiver or reduction from the relevant authorities.

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