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TMI Blog1985 (3) TMI 112X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. The Commissioner invoked the provisions of section 263 of the Act as he was of the view that non-levy of interest in the assessment order was erroneous and prejudicial to the interests of the revenue. In response to the notice issued under section 263, the assessee appeared and objected to the proceedings under section 263. After considering the assessee's objections, the Commissioner (Investigation and Survey) passed the order dated 27-12-1983 under section 263 directing the IAC to invoke the provisions of section 215 and levy such interest as is leviable under the provisions of the said section read with rule 40 of the Income-tax Rules, 1962 ('the Rules') after giving a due opportunity of being heard to the legal representative o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re is no mention of the levy of interest under section 215 in the assessment order it should be deemed that the levy of interest has been waived under rule 40. The provisions of section 263 cannot be invoked for non-levy of interest under section 215. Thus, the Commissioner had no jurisdiction to pass the impugned order. He placed reliance on a few decisions. The learned departmental representative justified the order of the Commissioner (Investigation and Survey). He submitted that there is nothing on record to indicate that the levy of interest under section 215 has been waived. If the interest leviable under section 215 is not levied, the Commissioner has ample jurisdiction to invoke the provisions of section 263. He placed reliance on a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been passed by the assessing authority. This will clearly indicate that the assessing authority has not exercised the discretionary power to waive or reduce the interest payable under section 215. Thus, the action of the assessing authority in not levying the interest under section 215 is erroneous and prejudicial to the interests of the revenue, as in the instant case, the assessee has not paid any advance tax at all and so the provisions of section 215 are clearly attracted. Thus, the Commissioner has jurisdiction to invoke the provisions of section 263 as the assessment order is erroneous and prejudicial to the interests of the revenue on account of the omission to charge interest under section 215. 5. In CIT v. Cochin-Malabar Est ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15 and 217, it is not possible to infer any waiver from the omission to charge interest especially when the power is restricted to particular cases in the circumstances prescribed in rule 40. It would be necessary for the ITO, if he exercises his discretion to indicate in his order as to why he waives or reduces the interest liable to be charged and the particular clause in rule 40 may have also to be referred to as that alone would give a clue to his exercise of the power. The charging of interest and the omission to do so would be subject to the revisional powers of the Commissioner under sections 263 and 264 of the Act. In cases where the ITO has omitted to exercise his jurisdiction, it would be necessary for the Commissioner to act unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refer to the penal interest payable under section 215 or 217 in the assessment order cannot lead to the inference that the ITO has waived the interest payable without giving any reasons for doing so. This observation supports the case of the revenue. In this decision, it was held that as no order under section 217 has been passed separately, which could be said to be prejudicial to the revenue, provisions of section 263 cannot be invoked. The decision of the Delhi High Court in the case of CIT v. Caxton Press (P.) Ltd. [1981] 129 ITR 462 relied on by the assessee's counsel is clearly distinguishable. On the facts of that case, it was observed that it was nobody's case that the delay in making the assessment was on account of any default by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to which we have already referred are in favour of the revenue. We respectfully follow those decisions. In the instant case, there is nothing in the record to show that the assessing officer has either waived or reduced the interest leviable under section 215. Hence the Commissioner had jurisdiction to invoke the provisions of section 263 for non-levy of interest under section 215. We may observe that before levying interest under section 215, the IAC will consider the provisions of section 215 and rule 40 with regard to the waiver or reduction of interest if the assessee's case falls within the circumstances referred to in rule 40. Thus, we uphold the order of the Commissioner. 8. In the result, the appeal fails and is dismissed. - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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