1991 (2) TMI 106

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..... of interest under section 217(1A) ?" The assessee is a company. It filed its return of income for the year disclosing a total income of Rs. 18,65,988 subject to the set-off of carried forward deficiency under section 80J of the Act. The assessment was completed under section 143(3) on a total income of Rs. 19,54,970. The Income-tax Officer had, inter alia, reduced the assessee's claim for deduction under section 80J by holding that the assessee was entitled to 5/12ths of Rs. 1,24,021, as the new industrial undertaking had worked for a period of five months only during the previous year. He had also levied interest under section 217(1A). The assessee's ground about the relief to be computed under section 80J was somehow not considered b .....

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..... hallenging the levy of interest in this appeal, but it was also challenging the quantum of income on various grounds and, in such a case, it was open to it to challenge the levy of interest also. It is submitted before us by Shri Jetley, learned counsel for the Department, that the decisions referred to and relied upon by the Tribunal have since been considered by the Full Bench judgment of our court in the case of CIT v. Daimler Benz A. G. [1977] 108 ITR 961 and that, in the view the Full Bench has taken, the assessee can challenge the levy of interest under section 217(1A) or under any other section only if its case falls under the clause "denying his liability to be assessed under the Act" in section 30 of the old Act. Since the assess .....

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..... hesitation in endorsing the legal position which has commonly found favour with the two High Courts. The legal position that commonly found favour with the two High Courts is that if the assessee denies his liability to pay penal interest at all (a) on the ground that he was not liable to pay advance tax at all in the case of levy of penal interest under section 215 or section 217 or (b) contends that the condition of exercise of power to levy penal interest under section 139 did not exist in his case, it would be open to him to challenge the order levying penal interest because, in such an eventuality, he would be challenging his liability to be assessed and would be denying his liability to be assessed at all to penal interest. In the pr .....

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