9911796707
TMI Blog1987 (11) TMI 130X X X X Extracts X X X X X X X X Extracts X X X X ..... ned in the demand notice attaching therewith the calculation sheet clearly indicated that the ITO had applied his mind and had charged the interest. In the written submission, the assessee had submitted that unless and until the interest is charged in the assessment order itself, the assessee cannot be said to be liable for interest. Even the Allahabad High Court in CIT v. Himalaya Drug Co. (1982) 135 ITR 368 has expressed the same view that what is mentioned in the calculation sheet does not necessarily mean to be part of the assessment order itself. 3. After having heard both the parties and after considering the assessment order that has been passed by the ITO, it seems that the ITO had no intention of charging the interest at all. In the assessment order, the ITO does not mention as to whether the return was delayed or not. The ITO is duty bound to comply with the statutory provisions to mention in the order the defaults that are committed by the assessee. The reading of the ITO's order passed on 28-2-1983 does not indicate that the assessee had defaulted on any of the counts. It is the ITO, who has the powers of passing the orders and also in determining the various defaults ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able in consequence of any order passed under this Act, the Income-tax Officer shall serve upon the assessee a notice of demand in the prescribed form specifying the sum so payable. It, therefore, follows that an assessment order u/s 143(3) would be a separate order different from the calculation sheet prepared under this section. Actually it has been so held in CIT v. Executors of the Estate of Late H. H. Rajkuverba Dowager Maharani Saheb of Gondal (1978) 115 ITR 301 (Kar.). In any event the calculation sheet can be either considered as part of the assessment order or not a part thereof. If it is not a part of it, then no appeal would lie against it under clause (c) of section 246(1) of the IT Act. In that case the AAC was not at all competent to entertain the assessee's ground raised in this behalf. At best the legal position would be that there is no valid order for levy of interest and there was a wrong claim in the demand notice. For that the assessee should have moved for rectification to the ITO himself. In fact in the original memorandum of appeal filed before the AAC, the assessee did not take any ground in this behalf, but later it sought for an additional ground challeng ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o adjudicate upon the additional ground of the assessee. Now he has rectified his mistake and disposed of the additional ground raised before him, but he has not passed any order allowing the assessee to raise the ground as such. Does it mean that the original order should be cancelled because there is a mistake apparent in that or does it mean that this order should be cancelled because he has not specifically passed an order allowing the assessee to raise the additional ground. Such an interpretation divorced from the realities is not expected of mature judicial authorities. 4. Coming to the authorities one can find case laws for everything. So far as the silence of the ITO in relation to levy of interest is concerned, it has been held in CIT v. City Palayacot Co. (1980) 122 ITR 430 (Mad.) that while in cases under sec. 216 it may be possible to infer waiver because of the existence of an absolute discretion, in cases under secs. 215 and 217 it is not possible to infer any waiver from the omission to charge interest especially when the power to waive is restricted to particular cases. It would also be necessary for the officer, if he exercised the discretion, to indicate in his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred to me under section 255(4) of the Income-tax Act for my opinion. The point of difference of opinion is : "Whether the departmental appeal should be dismissed altogether or the matter should be sent back to the ITO for examining the same afresh ?" 2. The dispute arose in the following circumstances : The assessee, a registered firm carrying on business in operation of trucks, filed for the assessment year 1980-81 a return declaring a loss of Rs. 24,520. For the reasons mentioned by the Income-tax Officer in the assessment order, the income was computed at Rs. 56,110. This income was divided among the partners in accordance with profit sharing ratio and registration was granted to the firm and no other direction was given by the Income-tax Officer in the assessment order either to levy interest u/s 139 or u/s 217 or for the initiation of any action under any other section. But in a form called ITNS-150, which accompanied the asst. order the Income-tax Officer directed the charging of interest u/s 217 and 139(8). Aggrieved by the assessment made by the Income-tax Officer and also by the levy of interest, the assessee preferred appeal before the Appellate Asst. Commissioner. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t order, was invalid and illegal because that form could not be equated to an assessment order. He also referred to a decision of the Allahabad High Court in the case of Himalaya Drug Co. where also the question of status to be accorded to the form that accompanied the assessment order was considered and decided against the Revenue. 3. Aggrieved by this order passed by the Appellate Asstt. Commissioner u/s 154, the department filed a further appeal before the Tribunal. After hearing the case at length, the Members took two divergent views. The learned Accountant Member was of the opinion, following the judgement of the Allahabad and Calcutta High Courts that the action of the Income-tax Officer in directing the payment of interest through a form ITNS-150 and not through assessment order, the presumption has to be in favour of the assessee that there was no delay in the filing of the return and therefore interest was not chargeable. He upheld the order of the Appellate Asstt. Commissioner in dismissing the departmental appeal. But the learned Judicial Member held that the non-mention by the Income-tax Officer in the assessment order about the levy of interest was only an accidenta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all done by the calculation sheet did not have the legal sanctity, and therefore unenforceable at law. If this view is correct in law, then the action of the Income tax Officer can be held to be incorrect. The Calcutta High Court in the case of Smt. Bhagwanti Gidwany held that unless the order of assessment itself incorporates an order for the payment of interest, the assessee cannot be asked by means of a simple demand notice to pay penal interest both u/s 139 and u/s 217 of the Income-tax Act, 1961. In this case the firm filed a return for the assessment year 1962-63 and applied for registration. Though the assessments on the partners were completed as a consequence of proceedings u/s 147, the partners received notices of demand and challans for payment of tax and it was only through challans that the interest leviable u/s 139 and 217 were charged. When the Revision Petitions challenging the levy of interest was dismissed, a writ petition was filed against the order of the Commissioner against the levy of interest in the High Court of Calcutta. The Calcutta High Court held that though the challan accompanying the demand notice was part of the demand notice as there was no mention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Income-tax Act, 1961. 5. Thus there appears to be direct conflict of judicial opinion as to whether a calculation sheet accompanying the assessment order would or world not constitute an assessment order. The learned Accountant Member as well as the Appellate Asstt. Commissioner relied upon the decisions of the Jammu and Kashmir High Court and the Calcutta High Court for the view that if the assessment order did not contain the direction to levy interest, such a levy would by illegal because the inclusion of interest in the calculation sheet would not be according to law. This view proceeded on the assumption that the calculation sheet did not form part of the assessment order. These two decision were given before section 292B of the Income-tax Act was introduced on the statute book. The effect and impact of the introduction of section 292B in the Income-tax Act was considered for the first time by the Karnataka High Court in the case of R. Giridhar. After taking into account the decisions of the Jammu and Kashmir as well as the Calcutta High Courts, the Karnataka High Court came to the view that a calculation sheet formed part of the assessment order provided it as in pu ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
