TMI Blog1992 (12) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... tax in excess of the tax determined on regular assessment. The matter went in appeal up to the Tribunal. In consequence of the order of the Tribunal passed on February 12, 1974, the total income of the assessee was reduced to Rs. 80,70,666. The Income-tax Officer gave effect to the order of the Tribunal on June 15, 1974, and observed that interest payable to the assessee by the Government under section 214 will remain unchanged. For the assessment year 1972-73, by his order of assessment dated March 28, 1973, under section 143(3) of the Act, the Income-tax Officer assessed the total income of the assessee at Rs. 41,21,251. In consequence of the order of the Appellate Assistant Commissioner of Income-tax passed on November 14, 1973, the total income of the assessee was reduced to Rs. 37,24,970. In the assessment order made in pursuance of the direction of the Appellate Assistant Commissioner, the Income-tax Officer, however, did not allow interest under section 214 of the Act on the refund granted by him. Against the orders of assessment passed giving effect to the appellate orders for both the years, the assessee went in appeal before the Appellate Assistant Commissioner. The on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Government to the assessee on the advance tax paid by an assessee in excess of the amount of tax determined on regular assessment. This section as it stood at the relevant time, so far as it is relevant, reads as follows : "214. Interest payable by Government. - (1) The Central Government shall pay simple interest at twelve per cent per annum on the amount by which the aggregate sum of any instalments of advance tax paid during any financial year in which they are payable under sections 207 to 213 exceeds the amount of the tax determined on regular assessment, from the 1st day of April next following the said financial year to the date of the regular assessment for the assessment year immediately following the said financial year, and where any such instalment is paid after the expiry of the financial year during which it is payable by reason of the provisions of section 213, interest as aforesaid shall also be payable on that instalment from the date of its payment to the date of regular assessment : Provided that in respect of any amount refunded on a provisional assessment under section 141A, no interest shall be paid for any period after the date of such provisional asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stand taken by counsel for the Revenue. Counsel for the Revenue submits that an appeal is not maintainable under any of the aforesaid clauses as claimed by the assessee. According to him, an order of assessment passed by the Income-tax Officer in consequence of an order passed in appeal to give effect to the findings or directions contained therein is not an order of assessment under section 143(3). According to him such an order is only an administrative order against which no appeal has been provided. Counsel further submits that even if such an order is held to be an order under section 143(3) of the Act, an appeal will still not be maintainable under clause (c) of section 246 of the Act inasmuch as an appeal can be filed against such an order by an aggrieved assessee only if he objects, inter alia, to the amount of tax determined. Clause (c) does not permit an appeal by an aggrieved assessee who objects to the amount of interest and not tax. According to learned counsel, under the Income-tax Act, tax and interest are two different and distinct items and tax cannot be so construed as to take within its ambit interest also. On the same reasoning, according to learned counsel, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of annulment the order becomes non est. In case an order is set aside, the authority has to start the entire process afresh and make a fresh order of assessment complying with the directions given by the appellate authority. It is thus clear that what remains as a final order after giving effect to the orders of the appellate authorities is an order of assessment under section 143 or 144. It cannot be anything else. This aspect of the matter also came to be considered by the Calcutta High Court in Kooka Sidhwa and Co. v. CIT [1964] 54 ITR 54 in which it was held that where, pursuant to the directions of the Appellate Tribunal in an order under section 33(4) of the Indian Income-tax Act, 1922 (section 254 of the 1961 Act), to revise and amend the assessment made by the Income-tax Officer, the Income-tax Officer revises the assessment, the order passed by the Income-tax Officer partakes the character of a fresh assessment order and is referable only to section 23 of the Income-tax Act (corresponding to sections 143 and 144 of the 1961 Act). An appeal would, therefore, lie under section 30 of the Act (section 246 of the 1961 Act) to the Appellate Assistant Commissioner against a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against the maintainability of appeal in the present case. His contention is that even if such an order is an order of assessment, an appeal can lie against it only in a case where 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. An assessee objecting to the authority of the Income-tax Officer to compute interest under section 214 of the Act or to compute it at a lesser figure cannot file an appeal under this section because such an appeal does not fall in any of the four grounds set out in clause (c) of section 246. Counsel for the Revenue also submits that an appeal against interest may be filed only under the first part of clause (c) of section 246 and that is only in a case where the assessee denies his total liability to be subjected to interest. Reliance in this connection is placed on a decision of the Supreme Court in Central Provinces Manganese Ore Co. Ltd. v. CIT [1986] 160 ITR 961. Learned counsel also submits that there too an appeal will not lie against refusal to grant interest under section 214 or grant of lesser amount by way of interest than what i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 214 is not covered by the first part of clause (c). It may, however, fall in the second part which provides for an appeal against an order of assessment under sub-section (3) of section 143 of the Act. The only ground under which such an objection may fall is " objection to the amount of tax determined ". Now, here Again the question arises whether interest under section 214 is a part of assessment and even if it be so, can it be said to be tax determined in the year of assessment for the purpose of appeal under clause (c) of section 246. So far as the first part is concerned, we do not find much difficulty in view of the decision of the Supreme Court in M. Chockalingam and M. Meyyappan v. CIT [1963] 48 ITR 34 (SC). In this case the power of rectification was the subject-matter of scrutiny by the Supreme Court. By an order of rectification penal interest under section 18A of the old Act was enhanced. No opportunity of hearing as contemplated by section 35 of the said Act was given to the assessee before making the rectification and enhancing the amount of interest. It may be observed that the proviso to section 35 of the 1922 Act provided for a hearing to be given to the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble as cess. The enlargement of the cess liability is automatic under section 3(3). Relying on this decision counsel for the assessee submitted that if we substitute the word "cess" by the word " tax " and apply the aforesaid judgment, the interest for late payment of tax will also have to be treated as tax more so while dealing with the expression in a remedial provision dealing with the right of appeal of the assessee. We have considered this decision of the Supreme Court. We find some force in the submission of counsel for the assessee that interest payable by the Government to the assessee on the advance tax paid by him has directly the effect of reducing the amount or enhancing the amount of tax payable by him. Hence, while interpreting a provision dealing with appeal, we should give such a construction that if the assessee can have a right of appeal, he is given the same. There is no doubt that there is a distinction between interest under the provisions of the Act which is charged from the assessee and interest under section 214 which is payable by the Government. This has been made clear by saying in sub-section (1A) while dealing with excess of refund given to the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it. One of these in this case is emancipation from the 1939 level of rents. The statute says that you must imagine a certain state of affairs ; it does not say that having done so, you must cause or permit your imagination to boggle when it comes to the inevitable corollaries of that state of affairs. " The provisions of sub-section (1A) of section 214 in the context of the right of appeal under clause (c) of section 246 came up for consideration before the Calcutta High Court in Reliance Jute and Industries Ltd. v. CIT [1981] 127 ITR 842. The court there observed ( at page 848 ) : " Sub-section (1A) of section 214 deals with excess interest paid which is recoverable from the assessee and that has to be treated as tax. Counsel for the Revenue, then, contended that section 214(1A) had made the excess interest tax only for the purpose of recovery. He drew our attention to the heading of Chapter XVII which deals with collection and recovery of tax. He, therefore, submitted that such excess interest was to be treated as tax only for the purpose of collection and recovery and not for appeal which is a matter of substantive right. It is, however, difficult to accept this contention b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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