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TMI Blog1998 (6) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... section 139(8) of the Income-tax Act?" The brief facts which have given rise to this reference are as under : The assessee, Sri Durga Tobacco Company, Amaravathi Road, Guntur, is a registered firm. For the assessment year 1979-80, the Income-tax Officer, F-Ward, Guntur (for short "the ITO"), by his assessment order dated March 28, 1980, held that the assessee is liable to pay interest of Rs. 10,920 under section 139(8) of the Income-tax Act, 1961 (for short "the Act"). As against the decision of the assessing authority imposing interest, the assessee carried the matter in appeal before the Commissioner of Income-tax (Appeals) (for short, "the CIT (Appeals)"). The Commissioner of Income-tax (Appeals) by his order dated February 20, 1982, held that from the order passed by the assessing authority, it was not clear as to how the interest under section 139(8) of the Act had been calculated by the Income-tax Officer and, therefore, the Income-tax Officer was directed by the Commissioner of Income-tax (Appeals) to look into the question of chargeability of interest under section 139(8) of the Act and compute the same correctly after giving credit to the advance tax paid by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of the fact that the assessee paid a total advance tax amounting to Rs. 2,04,600 before March 31, 1979, and also took cognizance of the fact that the two instalments payable in September and December were in fact paid, though after due dates. The Commissioner of Income-tax (Appeals) ultimately held that "the amount of tax collected by using coercive methods shall not lose its character of advance tax merely because the payment was made after the due date of instalments." The Commissioner of Income-tax (Appeals) further held that the advance tax recovered has to be given credit to under section 219 of the Act. It is also held that though some instalments were paid after the due dates, still they should be treated as part of the advance tax paid under Chapter-17 and thus the Income-tax Officer was directed to compute the tax liability as if the appellant-firm was an unregistered firm and deduct the advance tax of Rs. 2,04,600 which was paid and thereafter compute the interest liability on the balance amount, if any, under section 139(8) of the Act, while giving an opportunity to the assessee. The order of the Commissioner of Income-tax (Appeals) dated February 24, 1983, was, how ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ub-section (4) for an assessment year is furnished after the specified date, or is not furnished, then, whether or not the Income-tax Officer has extended the date for furnishing the return under sub-section (1) or sub-section (2), the assessee shall be liable to pay simple interest at twelve per cent. per annum, reckoned from the day immediately following the specified date to the date of the furnishing of the return, or, where no return has been furnished, the date of completion of the assessment under section 144, on the amount of the tax payable on the total income as determined on regular assessment, as reduced by the advance tax, if any, paid, and any tax deducted at source:... Explanation 2.---For the purposes of this sub-section, where the assessee is a registered firm or an unregistered firm which has been assessed under clause (b) of section 183, the tax payable on the total income shall be the amount of tax which would have been payable if the firm had been assessed as an unregistered firm." On a careful reading of this provision, we have no hesitation to say that when a return is furnished belatedly or not furnished within the specified date, on the computation of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f chargeability of interest under section 139(8) of the Act, by taking into account the advance tax being paid by the assessee, the assessing authority passed the consequential order on March 15, 1982, in total disregard of the direction given by the appellate authority, i.e., the Commissioner of Income-tax (Appeals), on February 20, 1982, in a routine and casual manner. In our considered view, this action of the assessing authority tantamounts to improper exercise of power vested in him. Wherever an element of improper exercise of power creeps in the order of any authority, such an order is liable to be corrected on an appeal by the aggrieved party by moving the appropriate higher appellate forum, even though there is no specific provision in the Act, providing for an appeal to correct the improper order which has the tendency of causing prejudice to either party. Learned standing counsel for the Income-tax Department has laid his emphasis on the decision in Central Provinces Manganese Ore Co. Ltd. v. CIT [1986] 160 ITR 961 (SC) in support of his contention that no appeal lies against the interest levied under section 139(8) of the Act. In the said decision, the Supreme Court wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtunity to the assessee, the assessee could have convinced the assessing authority on the question of chargeability of interest under section 139(8) of the Act. We, therefore, reiterate and hold that an order flowing from improper exercise of power by an authority, is an appealable order. We are inclined to hold that the assessee is entitled to challenge the levy of interest by the assessing authority under section 139(8) of the Act. Thus, we uphold the order of the Tribunal in holding that an appeal lies against the levy of interest under section 139(8) of the Act. In so far as the second proposition of law as to "whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is justified in holding that the amounts of instalments paid by the assessee beyond the due dates stipulated in section 211 for payment of advance tax, are to be treated as advance tax and are to be given credit to for purposes of charging of interest under section 139(8) of the Income-tax Act", it is to be seen whether the submission of the Revenue that when there is a delay in the payment of each instalment of advance tax by the assessee, such payment of advance tax belatedl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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