TMI Blog1974 (8) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... ultimately granted registration with effect from July, 1963, for the assessment year 1964-65. This has been stated at the Bar before us but that statement of fact has no bearing on the question that we have to consider. The assessee filed an appeal before the Appellate Assistant Commissioner against the estimate of profit and two of the grounds in the memorandum of appeal before the Appellate Assistant Commissioner were regarding charging of penal interest under sections 139 and 217 of the Income-tax Act, 1961. The Appellate Assistant Commissioner held that no appeal lay against the charging of interest under these sections and these two grounds of appeal were, therefore, not considered by the Appellate Assistant Commissioner. In the memorandum of appeal filed by the assessee before the Income-tax Appellate Tribunal, ground No. 6 was : " The authorities below have erred in maintaining the penal interest charged under sections 139 and 217 of the Income-tax Act, 1961. " The Tribunal decided the appeal on merits and granted certain deductions but while disposing of the appeal, the Tribunal did not consider ground No. 6 in the memorandum of appeal. By a subsequent application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 139 or of penal interest under section 217 is not appealable as such and no appeal would lie against any such order. However, while dealing with a similar provision of the Indian Income-tax Act, 1922, a Division Bench of the Bombay High Court consisting of Chagla C.J. and Tendolkar J. has held in Commissioner of Income-tax v. Jagdish Prasad Ramnath that when the scheme of the 1922 Act is that penal interest must follow upon the regular assessment, the appeal should be against the regular assessment, and in the regular assessment it should be open to the assessee to take all points which may legitimately not only reduce the taxable income or the tax to be paid or with regard to the proper head under which the income should fall, but also reduce the quantum of penal interest. The decision of the Division Bench was delivered by Chagla C.J. and at page 198 he has observed : " Therefore, the legislature has clearly kept in mind the distinction between a penalty imposed under certain provisions of the Act and the interest which the assessee is liable to pay under section 18A, and while providing for a right of appeal against orders of penalty the legislature has not provided for a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... right of appeal if we felt that we were denying to him the right of contending that he was not liable to pay advance tax at all and, therefore, he was not liable to pay a penalty. But, in our opinion, that right is not really denied to him, and as we have already pointed out when the assessee appeals against his regular assessment it is open to him to take up every contention 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. In this very case he has appealed against his assessment. To the extent that this appeal merely raises the question of his liability to pay penal interest, his appeal is clearly not maintainable, but if in this appeal he wants to urge 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 by section 18A, then certainly it would be open to him to argue this in this very appeal. " (Emphasis supplied by us). It is, therefore, clear that according to this Division Bench of the Bombay High Court, no appeal lay against t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case. We may, however, point out that in the instant case we are not concerned with the provisions of the 1922 Act. The word " tax " was nowhere defined under the 1922 Act and that is why the Division Bench in Mathuradas B. Mohta's case referred to the meaning of the word " tax" as explained in C. A. Abraham's case. At page 289 Tambe J., delivering the judgment of the court, observed : " Now, 'tax' has not been defined in the Act. In considering this question the decision of their Lordships of the Supreme Court in C. A. Abraham v. Income-tax Officer, Kottayam affords guidance." In the Income-tax Act, 1961, however, section 2(43) defines " tax " to mean income-tax chargeable under the provisions of the Act in relation to the assessment year commencing on the 1st day of April, 1965, and any subsequent assessment year and in relation to any other assessment year income-tax and super-tax chargeable under the provisions of the Act of 1961, prior to 1st day of April, 1965. It is in the light of this definition of the word " tax " occurring in section 2(43) that we have to consider the provisions of section 246 and even if the decisions in C. A. Abraham's case and Bhikaji Dad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rivy Council is in no way modified or overridden by the subsequent decision of the Supreme Court in Commissioner of Income-tax v. Kanpur Coal Syndicate . After considering the decision of the Supreme Court in Kanpur Coal Syndicate's case the Division Bench held that the denial of liability contemplated by section 30(1) of the Act of 1922 was denial of liability to be charged with tax under the Act which was the same thing as saying that the assessee was not liable to be assessed at all under any of the provisions of the Act or subjected to any part of the procedure laid down in the Act for imposing liability to tax. Applying the definition of the word " tax " in section 2, sub-section (43), of the Act of 1961 to this interpretation of the words " liability to be assessed under this Act " in section 246(c), it is obvious that an appeal contemplated by the first part of section 246(c) is an appeal where the assessee denies his liability to be charged to tax under the Act of 1961, and that the word " tax " means income-tax or, in some context, income-tax and super-tax, but not penal interest. Hence, it is obvious that under section 246(c), no appeal would lie against the order char ..... X X X X Extracts X X X X X X X X Extracts X X X X
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