1995 (2) TMI 128 - AT - Income Tax

Advance Tax, Appellate Authority, Assessment Order, Assessment Year, Reduction Or Waiver, Retained Assets, Waiver Of Interest

Summary

Issues Involved:
1. Maintainability of the assessee's appeal before the CIT(A) against the levy of interest under section 217.
2. Direction to give credit for the seized amount of Rs. 92,000 against the tax liability before charging interest under section 217.
3. Legality of the liability to pay interest under section 217.
4. Correctness of charging interest under section 217(1A) instead of section 217(1).

Issue-wise Detailed Analysis:

1. Maintainability of the Assessee's Appeal Before the CIT(A) Against the Levy of Interest Under Section 217:
The Revenue contended that the order of the Assessing Officer (AO) charging interest under section 217 was not appealable under section 246(2) of the IT Act, 1961. The Supreme Court's decision in Central Provinces Manganese Ore Co. Ltd. v. CIT was cited, which clarified that the levy of interest is part of the process of assessment and is compensatory, not penal. The Tribunal concluded that the CIT(A) had no jurisdiction to entertain the appeal on the levy of interest under section 217 when jurisdictional facts were not in dispute. The Tribunal noted that the assessee's conduct, including filing for waiver/reduction of interest, indicated acceptance of liability, thereby making the appeal under section 246(c) non-maintainable.

2. Direction to Give Credit for the Seized Amount of Rs. 92,000 Against the Tax Liability Before Charging Interest Under Section 217:
The Tribunal examined the provisions of section 132B, which governs the application of assets retained under section 132(5). It was noted that the CIT(A)'s direction to give credit for the seized amount before charging interest was not in line with the statutory provisions. The Tribunal vacated the CIT(A)'s direction, emphasizing that the retained assets should be applied as per section 132B and not disturbed lightly by other authorities.

3. Legality of the Liability to Pay Interest Under Section 217:
The Tribunal held that the foundational facts, such as the assessee being liable to pay advance tax, not revising the estimated income, and not paying the advance tax by the due date, were undisputed and attracted the provisions of section 217 automatically. The assessee's petition for waiver or reduction of interest further indicated acceptance of the liability. Therefore, the Tribunal upheld the charge of interest under section 217.

4. Correctness of Charging Interest Under Section 217(1A) Instead of Section 217(1):
The Tribunal addressed the argument that interest should not have been charged under section 217(1A) when notice was issued under section 217(1). It was observed that no specific ground was raised in the memorandum of appeal regarding this issue. The Tribunal found that the assessee was aware of the nature of his default and had been given proper opportunity to be heard. The Tribunal concluded that interest under section 217(1A) was rightly directed to be charged, as the nature of liability had not changed.

Conclusion:
The Tribunal allowed the Revenue's appeal, vacating the CIT(A)'s direction to give credit for the seized amount before charging interest and dismissing the assessee's appeal. The Tribunal upheld the charge of interest under section 217(1A), confirming the legality of the liability and the correctness of the interest charged.