1982 (3) TMI 123 - AT - Income Tax

Summary

Issues Involved:

1. Levy of interest under section 220(2) of the Income-tax Act, 1961.
2. Maintainability of appeal against the order passed by the Income-tax Officer (ITO) under section 220.
3. Legality of the order passed by the Commissioner (Appeals).

Detailed Analysis:

1. Levy of Interest under Section 220(2):

The assessee contested the levy of interest amounting to Rs. 29,410 under section 220(2) of the Income-tax Act, 1961. The grounds of appeal included the argument that the Income-tax Officer (ITO) erred in making a non-speaking order without providing calculations, and interest should not be charged on previously levied interest under section 215.

2. Maintainability of Appeal Against the Order Passed by the ITO under Section 220:

The revenue raised a preliminary objection regarding the maintainability of the appeal, arguing that no appeal is provided under the Act against the order passed by the ITO under section 220. The learned departmental representative argued that the Commissioner (Appeals) acted illegally, and his order is thus non est and should be annulled to restore the status quo ante.

In opposition, the learned counsel for the assessee contended that the preliminary objection by the revenue was not maintainable as the revenue was neither in cross-appeal nor in cross-objection. The counsel further argued that an appeal lies against an order made by the ITO under section 220 read with section 246(c) of the Act, as interest charged under section 220 partakes the character of income-tax, and the assessee denies his liability to be assessed even to interest under section 220.

3. Legality of the Order Passed by the Commissioner (Appeals):

The Tribunal examined whether an appeal lies against an order made by the ITO under section 220. It was noted that section 246 specifically mentions orders against which appeals can be filed. The Tribunal held that the phrase "denies his liability to be assessed under this Act" pertains to the process of assessment, which had already been finalized. Interest under section 220 is related to the amount specified in any notice of demand under section 156 after the completion of the assessment process and cannot be considered a continuation of the assessment proceedings.

The Tribunal referred to judgments from the Allahabad High Court and the Punjab High Court, emphasizing that the right of appeal is a creature of statute, and no appeal lies unless explicitly provided by the statute. The Tribunal concluded that the order of the Commissioner (Appeals) is ab initio void as no appeal lies against the order of the ITO made under section 220.

Conclusion:

The Tribunal held that the appeal by the assessee was not maintainable and annulled the order of the Commissioner (Appeals), restoring the order of the ITO. The appeal was dismissed.