1986 (1) TMI 181 - AT - Income Tax

Summary

Issues: Liability for payment of interest under section 216 of the Income-tax Act, 1961.

Analysis:
1. The dispute in the appeal revolves around the assessee's liability for payment of interest under section 216 of the Income-tax Act, 1961. Initially, the Income Tax Officer (ITO) did not pass any order for the levy of interest under section 216 but included an amount in the demand notice without specific mention. Subsequently, the ITO provided the assessee with a computation sheet showing interest under section 216 at Rs. 610. The assessee's appeal before the Commissioner (Appeals) was rejected as incompetent, leading to the second appeal before the Appellate Tribunal ITAT Jaipur.

2. The Commissioner (Appeals) rejected the assessee's appeal on the grounds that the issue raised in the appeal was not part of the earlier appeal against the ITO's order under section 143(3) of the Act. The Appellate Tribunal acknowledged the Commissioner's reasoning but expressed concern over the potential unfairness of the situation. The Tribunal highlighted that while the levy of interest under sections 215 and 217 is automatic, the levy under section 216 is discretionary. The Tribunal emphasized that the right to appeal should not be easily restricted and that the assessee should be able to challenge the levy of interest under section 216 independently, even if not appealing on other grounds.

3. Upon reviewing the facts and circumstances, the Tribunal found that the assessee was not subjected to a regular assessment and was not obligated to file an estimate of current income in Form No. 29. The only estimate filed by the assessee was before the due date of the last installment of advance tax. The Tribunal noted that any earlier estimate filed by the assessee was not necessary and could not prejudice the assessee. Ultimately, the Tribunal ruled in favor of the assessee, deeming the levy of interest unjust for a nominal sum of Rs. 610, leading to the deletion of the interest levy.

This detailed analysis covers the issues surrounding the liability for payment of interest under section 216 of the Income-tax Act, 1961, as addressed in the Appellate Tribunal ITAT Jaipur's judgment.