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TMI Blog1989 (9) TMI 145X X X X Extracts X X X X X X X X Extracts X X X X ..... , the ITO had levied an interest under sec. 215 at Rs. 7,33,346. 4. In an appeal filed against the order of assessment, the assessee, inter alia, challenged the levy of interest as well. The assessee, at the outset, denied its liability altogether to pay any interest and, even on merits, it was submitted that the profits and gains of the business shown at Rs. 30 lacs were subject to brought forward deficiency under section 80J at Rs. 60,28,000 and therefore, there was no positive income. It was contended that it was only after the amendment was brought about by the Finance (No. 2) Act, 1980 to the provisions of section 80J, the assessee's claim under section 80J was denied and, therefore, the assessee should not be penalised for the levy of interest. The CIT(A) found that the relief quantified for the assessment year 1975-76 was in accordance with the decision of the Calcutta High Court in Century Enka which came to Rs. 30,47,373 besides the claim for the year under consideration at Rs. 32,19,640. As against the assessee's income for the year under consideration before adjustment under section 80J was Rs. 31,25,153. He, therefore, observed that if such relief, as computed in acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ec. 80J that the income had resulted into a positive income for which there was no fault on the part of the assessee. He referred to the decision of the Tribunal in the case of Heatex Products (P.) Ltd. [IT Appeal No. 6073 (Bom.) of 1983], wherein it was held that interest under sec. 217 was appealable, when the assessee totally denies its liability before the lower authorities. Referring to the same decision, he further submitted that in that case also, the deficiency in the payment of advance-tax resulted on account of 80J deduction. He also referred to the CBDT Circular No. 492, dated 21st July, 1987 and another Circular No. 12/66-II (B), dated 9th June, 1965 reported in 168 ITR St. 1, which are clarificatory in nature regarding waiver/reduction of interest under sec. 215/217 read with Rule 40 of the Income-tax Rules, 1962. He has also referred to the decision of the Gujarat High Court in the case of Patel Engg. Co. Ltd. v. G.B. Rathi [1985] 151 ITR 542/22 Taxman 56 : 7. We have heard the parties and considered their rival submissions. Sec. 215 imposes a liability on an assessee in a case where the advance-tax paid under sec. 209A or sec. 212 is less than 75 per cent of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest is a part of the process of assessment, it is open to an assessee to dispute the levy in appeal provided he limits himself to the ground that he is not liable to the levy at all. It was further held that the question whether a case is made out for waiver or reduction of interest levied under sec. 139(8) or 215 could not be the subject matter of an appeal under cl. (c), of sec. 246. The matter can more appropriately be dealt with by the Commissioner in exercise of his revisional jurisdiction. 8. The present is not a case of denial of the assessee's liability to levy of interest. The assessment resulted into positive income by virtue of sec. 80J amendment by the Finance (No. 2) Act of 1980 and, therefore, the assessee was liable to tax. In our opinion, it could not be a case of the denial of the assessee's liability to tax including levy of interest. The assessee, in our opinion, was liable under the Act but its claim is that the circumstances were such that it should not be saddled with the liability of interest. It may further be stated that it was not the amendment in sec. 80J which reduced the claim of the assessee for 80J deduction but the liability prior to the amendment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest charged to him, he would have no right of appeal to the Appellate Assistant Commissioner inasmuch as the assessee in that event would not fall within the phrase 'assessee denying his liability to be assessed under this Act' occurring in section 30(1) of the Act. On a proper construction of the relevant phrase occurring in section 30(1) of the Act, it had to be held that in the former type of cases an appeal would lie to the Appellate Assistant Commissioner, whereas no appeal would lie merely against the quantum of penal interest charged by the Income-tax Officer to the assessee. An assessee can prefer an appeal to the Appellate Assistant Commissioner against his regular assessment and urge all contentions which, if accepted, must result in the Income-tax Officer holding that there was no liability to pay advance-tax, and, therefore, there was no liability to penal interest, or, even in an appeal preferred against an order charging penal interest, it would be open to him to raise a contention that the income in respect of which tax is imposed and in respect of which interest is calculated for the purpose of section 18A(8) was not income which fell under the head covered unde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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