TMI Blog1993 (7) TMI 348X X X X Extracts X X X X X X X X Extracts X X X X ..... t legal in the instant case and in directing the Assessing Officer not to recover the interest charged under section 139(8) of the Income-tax Act, 1961 ? 2. Shortly stated, the facts are that while completing the assessment of the assessee, a registered firm, for the assessment year 1984-85, the ITO in his order dated 21-5-1986 directed to 'charge interest as per law'. Accordingly, in the notice of demand sums of ₹ 11,160 and ₹ 2,923 were included as interest payable under sections 139(8) and 217 of the Act. 3. The assessee challenged the above charging of interest before the Commissioner (Appeals) but remained unsuccessful. 4. The assessee then brought the issue in second appeal before the Tribunal. The Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een calculated under sections 139(8) and 217. The questions are whether the direction of the ITO to charge interest as per the law is invalid and whether the interest as levied should be deleted. 6. Our attention has been drawn to a decision of this Court in the case of CIT v. New Swadeshi Mills of Ahmedabad Ltd [1984] 147 ITR 163 . In that case, the question was whether the assessee was entitled to agitate in the quantum appeal the ground in respect of the order passed by the ITO levying interest under section 215 of the Act ? It was found in that case that in the assessment order there was a direction 'charge interest, if leviable'. On these facts the Division Bench of this Court held that the ITO in his discretion can charge i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 should have been charged treating the assessee as an unregistered firm which came to ₹ 17,708. In his opinion, it was a mistake apparent from the record and, hence, he took action under section 154. Pursuant to the notice the assessee appeared before the ITO and contended that there was no mistake apparent from the record which could be rectified. The ITO did not agree and, by an order dated 27-12-1972, charged interest at ₹ 17,708 under section 139(8)( a). 8. On appeal, the AAC cancelled that order, the reason being that there was no order passed by the ITO in the first instance to show how the amount of ₹ 382 as interest had been calculated. If calculation had proceeded on the basis of the tax payable by a registere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. The correct amount should have been ₹ 463 and from this fact it could be inferred that there was no ascertainable basis or an order for charging interest at ₹ 382. In the result, the department's appeal was dismissed. 10. The Allahabad High Court there held as follows : It was submitted before us by the learned standing counsel that ITNS-150 is a part of the assessment order, and, therefore, if there was any apparent mistake therein it could be rectified under section 154, and, secondly, that charging of interest under section 139(8)(a) is automatic. We do not find any merit in either of these two submissions. ITNS-150 is certainly not a part of the assessment order. It is only meant for a calculation of the tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd if the assessee is able to satisfy him, he may reduce or waive the interest payable under this sub-section. In the present case, the ITO had not passed any order charging interest under this provision . . . (p. 371) 11. In our view, this case has no application to the facts of this case inasmuch as in this case there was a direction to levy interest in accordance with law but in the case before the Allahabad High Court it was only calculated in the assessment form. It was not even mentioned in the demand notice but in the case before us not only there was a direction to levy interest but the interest was also calculated and shown in the demand notice and the amount shown in the demand notice was included in such interest. 12. Our ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a speaking order cannot be dispensed with even when the authority has been vested with the discretionary powers. The requirement is imperative because there the question of levy of interest arose under section 216 which is appealable unlike the present case where interest has been levied under section 139(8) as well as section 217. Therefore, the officer levying it has to render the reasons for which he considered such interest leviable. In absence of the reasons being spelt out the assessee's right to appeal gets defeated as he will not have the opportunity to assail the levy in appeal where he is aggrieved. Therefore, on both counts, that decision does not advance the assessee's case. 14. In the instant case, the ITO directed c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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