TMI Blog1995 (2) TMI 128X X X X Extracts X X X X X X X X Extracts X X X X ..... guments advanced on behalf of the parties require a brief reference to the facts of the case and that we do as hereunder. 3. Shri Kanhaiya Lal Doshi is an old IT assessee returning share income from partnership business of M/s. Champa Lal Gordhanlal, Salumber (SLGL) for the last several years. The accounting period, relevant to assessment year 1984-85, which is under consideration ended on 27th April, 1983. 4. During the period between 21st and 23rd of Dec., 1983, a search under section 132 of the Act was carried on at the residential premises of the assessee. In the course of the search proceedings, the assessee was found in possession of cash amounting to Rs. 92,894.75, gold ornaments and jewellery weighing 8365.599 gms., silver bullion, coins, ornaments--weighing 65,855 kg., FDR Rs. 1,500, advancement to debtors to the extent of Rs. 2,61,310 and evidence regarding investment in immovable properties, animals and vehicles. Documents seized and marked as Exs. 1, 9, 13, 14, 15, 16, 17, 18, 19, 20, 21, 24, 33 and 34, etc., in the course of search proceedings disclosed upon the search party that the assessee had been earning income from money-lending business but not disclosing th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f tax out of the cash seized for Rs. 92,000 on 22nd Dec., 1983. With reference to the above named assessee and in connection to the return filed by the assessee from the assessment years 1984-85 and 1985-86 the assessee has requested that the amount of tax of Rs. 61,314 and Rs. 30,686 payable by him under section 140A of the IT Act, 1961, has been adjusted by the assessee from the cash seized and lying with the Deptt. w.e.f. 22nd Dec., 1983. The aforesaid amount of Rs. 92,000 together with the interest on it must have been called from the CIT's account of income-tax and would have been adjusted in the amount of tax as mentioned above for the assessment years 1984-85 and 1985-86. As note to that effect was made by the assessee while filing the return of income for the assessment years 1984-85 and 1985-86. If the amount has not been called for from the CIT's account, the same may please be called for and be adjusted against the tax payable by the assessee for the assessment years 1984-85 and 1985-86 at the earliest. " 7. The Assessing Officer made the assessment order on 29th Aug., 1986, computing the total income of the assessee at Rs. 5,38,717. 8. In that order, the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne the charge of interest under section 217 according to law after affording due opportunity to the appellant. The ITO is also directed to pass a speaking order for the chargeability of interest under section 217. " 9. In the set aside proceedings, the Assessing Officer discussed the issue relating to charge of interest under section 217 at great length and quantified the same at Rs. 85,239 as against Rs. 1,18,685 charged by him in the original assessment order. The assessee again appealed to the CIT(A) against charge of interest under section 217. The CIT(A) upheld the charge of interest under section 217(1A) and directed the Assessing Officer to give credit of the seized amount of Rs. 92,000 against assessee's liability for tax before charging interest under section 217. Aggrieved by such order of the CIT(A), both the parties are now before the Tribunal placing their grievance before it in the following manner : Grounds raised in assessee's appeal (ITA 1179/91) " The learned CIT(A) erred in law and on facts of the case in confirming the levy of interest under section 217 whereas the appellant submits that no interest under section 217 is leviable and rather the appellant de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty to pay interest under section 217 unquestionably arose. It was further submitted that the assessee himself accepted such liability to pay interest under section 217 by seeking waiver/reduction thereof under rule 40 of the Rules before the IAC. In view of such established facts, and assessee's own conduct, the levy of interest was not at all in dispute so as to make subject of an appeal before the CIT(A). In support of such contentions reliance was placed on Supreme Court decision in the case of Central Provinces Manganese Ore Co. Ltd. v. CIT [1986] 160 ITR 961. 11. In reply Mr. N.M. Ranka, the learned counsel for the assessee, urged that in the first round of appeal against the original assessment order, the assessee had challenged the very levy of interest under section 217 of the Act and such a plea was entertained by the learned CIT(A) and now no challenge can be made against the maintainability of the same plea in the second round of appeal. The learned counsel further submitted that levy of interest being a part of the process of assessing the tax liability of an assessee, may be challenged in appeal against the order of assessment and the assessee did exactly the same in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y interest would be a partial denial to be assessed under the Act, an appeal against the order of assessment contending that the assessee is not liable to tax, would lie under section 246(c). This view proceeds on the principle that an appeal is the rehearing of the original lis and the power of the appellate authority in this respect is co-terminus with that of the original authority. Therefore, the appellate authority would be competent to entertain an appeal from an order levying interest, [1959] 36 ITR 363 (sic), IAC v. T. T. Vasu [1992] 43 ITD 8 (Mad.), K.B. Stores v. CIT [1976] 103 ITR 505 (Gau), Vidyapat Singhania v. CIT [1977] 107 ITR 533 (All.), Addl. CIT v. Allahabad Milling Co. [1978] 111 ITR 111 (All), CIT v. Geeta Ram Kali Ram [1980] 121 ITR 708 (All)(FB), U.P. Hotel Restaurants Ltd. v. CIT [1981] 127 ITR 660 (All.) and CIT v. P. S. Jain Motors (P.) Ltd. [1981] 130 ITR 842 (Punj. Har.), on the other hand, appear to have subscribed to the view that section 246 does not provide for any appeal against an order levying interest. 12. The conflict in the opinions on the point, however, now stands set at rest by the apex Court's decision in the case of Central Provinces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere the assessee objects to the amount of income assessed or to the amount of tax determined or to the amount of loss computed or to the status under which he is assessed. Inasmuch as the levy of interest is a part of 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 pay at all'. 15. Approving the commonly held view of the Karnataka High Court in National Products' case and by the Gujarat High Court Bhikhoobhai N. Shah v. CIT [1978] 114 ITR 197 on the legal position of the question posed, their Lordships finally held that : " In cases where the jurisdictional facts attracting the penalty cannot be, disputed, for example, that the return has been furnished under section 139 with delay, it will be question merely of satisfying the relevant authority that there are circumstances calling for a reduction or waiver of the interest. If an opportunity to do so has not been made available to the assessee before the order levying interest is made, it will be open to the assessee to apply to the ITO after such order has been made to show that a reduction or waiver of interest is justified. " [Em ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 215 applicable to interest payable under it. Sub-section (4) of section 215 r/w rule 40 of the Rules provides that the ITO may reduce or waive the interest payable by the assessee. Section 273A(1)(iii) as it stood at the relevant time, provided that the CIT may, in his discretion, whether on his own motion or otherwise, reduce or waive the amount of interest paid or payable under section 139(8) or section 215 or 217. Thus, section 273A(1)(iii) gave a further remedy to the assessee to seek reduction or waiver of the interest under section 217. Above all section 264 makes provisions for revision of an order passed by the ITO and such order may include an order charging interest under section 217. Thus, the Legislature has given ample rights to an assessee to seek proper remedy against the charge of interest under section 217. In view of such remedies available to the assessee under the Act, the Legislature could have in its wisdom not thought it proper to make an order under section 217 appealable in those cases wherein the jurisdictional facts cannot be disputed. 20. Now coming to the merits of the instant case, we find that it is not in dispute that the jurisdictional facts whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect was to observe that the order regarding charge of interest was not a speaking order and, hence, he directed the ITO to redetermine the same after giving an opportunity to the assessee. In compliance of such directions, the Assessing Officer reconsidered the entire issue. The plea taken by the assessee was that in the course of the hearing of his petition under section 273A(1)(iii) for reduction or waiver of interest the learned CIT had assured him that no interest would be charged under section 217. This plea itself suggests that what the assessee was pressing for was the reduction in or waiver of the interest and not the very levy of interest itself. The plea taken by the assessee did not succeed and the interest was neither reduced nor waived. Such order of the Assessing Officer in the set aside proceedings would not be appealable under section 246(c) of the Act. The first ground raised by Revenue in its appeal must, therefore, succeed. 23. Relying upon the cases reported in Jaipur Metals Electricals Ltd. v. CIT [1974] 97 ITR 721 (Raj.), CIT v. Bharat Machinery Hardware Mart [1982] 136 ITR 875 (Guj.), CIT v. Birla Cotton Spg. Wvg. Mills Ltd. [1985] 155 ITR 448 (Cal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aining to assessment years 1977-78 to 1985-86 and held that since the liability created for those years in terms of clauses (ii) and (iia) of sub-section (5) of section 132 exceeded the value of seized asset, the assets were being retained in order to satisfy such liability. That apart, the provisions of clause (iii) of sub-section (5) of section 132 empowered him to retain the seized asset with a view to satisfy any existing liability under the Act or more of the Acts specified in clause (a) of sub-section (1) of section 230A. 26. Assets seized and retained as per provisions of section 132(5) are required to be dealt with in accordance with the provisions of section 132B of the Act which reads as under : "132B(1) : The assets retained under sub-section (5) of section 132 may be dealt with in the following manner, namely : (i) The amount of the existing liability referred to in clause (iii) of the said sub-section and the amount of the liability determined on completion of the regular assessment or reassessment for all the assessment years relevant to the previous years to which the income referred to in clause (i) of that sub-section relates (including any penalty levied or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directs to forthwith make over the assets or proceeds thereof which remain after the liabilities referred to in clause (1) of sub-section (1) are discharged. Sub-section (4) casts an obligation on the Central Government to pay simple interest @ 15% p.a. on the amount by which the aggregate of money retained under section 132 and of the proceeds, if any, of the assets sold towards the discharge of the existing liability referred to in clause (iii) of sub-section (5) of section 132 exceeds the aggregate of the amounts required to meet the liabilities referred to in clause (i) of sub-section (1) of section 132B. Sub-clause (b) of sub-section (4) of section 132B speaks of the date of commencement of the interest payable by the Central Government. It may thus be appreciated that the subject of application of the retained assets has been dealt with quite specifically and exhaustively and the manner of application of the retained asset should not lightly be disturbed by other authorities. 28. The direction of the learned CIT(A) to the Assessing Officer to charge interest under section 217(1A) on the tax payable after giving credit for the seized amount of Rs. 92,000 is not in line with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f his income from money-lending business, the assessee did neither send to the ITO an estimate of his current income and the advance tax payable by him on the current income nor pay the amount of advance tax by instalment to be revised under section 209A(5). In view of such facts of the case and such conduct of the assessee, we find no force in the grounds raised in assessee's appeal. 32. In the course of his arguments, Mr. Ranka had advanced a number of arguments which we have dealt with while deciding Revenue's appeal as those were relevant for the decision of the appeal. One of the arguments raised by Mr. Ranka and which remains to be considered was that after issuing notice to charge interest under section 217(1) the IT authorities [the learned CIT(A)] could not have charged interest under section 217(1A) of the Act. We find no substance in this argument. 33. In the first place, we would like to observe that no such ground was raised in the grounds of appeal filed before the Tribunal. No permission of the Tribunal was also sought to raise such a ground which materially and adversely affected the rights and interests of the adversary. The point was stressed in the course of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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