1993 (6) TMI 122 - AT - Income Tax

Summary

Issues: Delay in filing appeal, Cancellation of interest under section 216 of the Income-tax Act, 1961

Delay in filing appeal:
The Appellate Tribunal, ITAT Gauhati, addressed a delay of 166 days in filing the appeal. After reviewing the condonation petition and the date chart filed by the Departmental Representative, it was concluded that the delay was due to a reasonable cause as certified copies of the impugned order were not received despite timely application. Consequently, the appeal was admitted.

Cancellation of interest under section 216:
The appeal centered on the cancellation of interest amounting to Rs. 11,236 charged under section 216 of the Income-tax Act, 1961. The Assessing Officer had completed the assessment without mentioning the levy of interest under section 216 in the assessment order. The CIT (Appeals) found the levy of interest appealable and emphasized the necessity for the Assessing Officer to pass a speaking order with reasons, which was not done in this case. Relying on a judgment of the Calcutta High Court, the CIT (Appeals) deemed the levy of interest without assigning reasons as illegal and subsequently canceled it.

Analysis:
The Appellate Tribunal emphasized the statutory requirements under section 216 of the Act for the levy of interest, which include a definitive finding by the Assessing Officer on the underestimation of advance tax by the assessee. Referring to a CBDT letter, it was highlighted that the Assessing Officer must consider the mens rea of the assessee before charging interest under section 216. The Tribunal noted that the lack of reasons supporting the levy rendered it invalid, as observed in previous judicial decisions.

The Tribunal distinguished the case from a previous decision of the Calcutta High Court, emphasizing the necessity for a speaking order and the fulfillment of conditions precedent for the exercise of power under section 216. It was noted that the absence of any materials in the assessment order or demand notice to justify the levy of interest indicated that the chargeability of interest was not supported by evidence of deliberate underestimation by the assessee.

In conclusion, the Tribunal upheld the CIT (A)'s decision to cancel the interest under section 216, as the levy lacked justification and did not meet the statutory requirements. The appeal was dismissed based on the absence of evidence supporting the chargeability of interest in the present case.