1978 (5) TMI 62 - AT - Income Tax

Summary

Issues:
Competency of assessee's appeals to the AAC regarding charging of interest under sections 139 and 217(1A) for the assessment years 1972-73 and 1973-74.

Analysis:
The appeals were referred to the Vice President of the Appellate Tribunal due to a difference of opinion between the Accountant Member and the Judicial Member regarding the competency of the assessee's appeals to the AAC concerning the charging of interest under sections 139 and 217(1A) for the relevant assessment years. The Accountant Member supported the assessee's right to appeal against the quantum of levy of interest based on previous decisions, while the Judicial Member disagreed, stating that the assessee could not challenge such charging of interest in the appeals filed before the AAC. The Department contended that there was no right of appeal against the levy of interest under the mentioned sections. The Accountant Member and the Judicial Member relied on different legal precedents to support their respective views.

The assessment orders for the years in question indicated the levied interest under sections 139 and 217(1A) and the total tax payable by the assessee. The AAC had deleted certain interest amounts for the assessment year 1972-73 based on specific grounds related to the filing of forms and the completion of assessment. For the assessment year 1973-74, the AAC deleted interest under section 139 based on precedent where similar circumstances led to interest waiver. However, the AAC upheld the levy of interest under section 215.

The Vice President considered the arguments presented by the Departmental Representative, referencing legal decisions from the Karnataka High Court and the Madras High Court. The Vice President also highlighted a decision from the Bombay High Court summarizing the circumstances under which an appeal to the AAC would be permissible regarding the charging of interest. Based on the legal principles outlined in the various court decisions, the Vice President concluded that the assessee must deny liability to pay interest fundamentally to have a right of appeal to the AAC. Merely objecting to the quantum of interest charged does not amount to a denial of liability. Therefore, the Vice President agreed with the Judicial Member's view and answered the question in the negative, remitting the appeals back to the regular bench for further proceedings accordingly.