C. S. P. Singh, J. - Income-tax Appellate Tribunal, Allahabad Bench has referred the following question of law for our opinion :-
'Whether on the facts and in the circumstances of the case the Tribunal was legally correct in holding that the Appellate Asstt. Commissioner was entitled to adjudicate upon and give direction to the Income Tax Officer for excluding the interest for the period from 24.7.1956 to 22.4.1958 in view of the provisions of Section 18A (6) of the Income Tax Act, 1922 ?
2. This reference relates to the assessment year 1956-57, the relevant accounting period being the year ending on 31st October 1955. In response to a notice under section 23 (2) of the Income-tax Act, 1922 (hereinafter referred to as the Act), the assessee filed a return declaring an income of Rs. 1,61,576/-. This return was filed on the 24th July, 1956. It transpires that the first assessment of the Company was completed for the assessment year 1953-54 on 28th February, 1958, and the provisional assessment was completed on 6-8-1956. For the assessment year in question the assessee had not furnished an estimate of tax payable as required by Section 18A(3) of the Act. The Income-tax Officer while completing the assessment charged interest under Section 18A(6) of the Act on the ground that the assessee-company had neither filed any estimate nor paid the estimated amount of tax. The assessee filed an appeal against that Commissioner of Income-tax was that the levy of interest under section 18A(6) was unwarranted. The Appellate Assistant Commissioner while deciding the appeal held that as the order was not appealable he could not interfere with it. A second appeal was filed by the assessee before the Tribunal and the Tribunal vide its order dated 18-8-1965 remanded the case. On remand the Appellate Assistant Commissioner went into two questions, one of them being as to the imposition of penal interest under section 18A(6). Relying on Rule 48 of the Rules, the Appellate Assistant Commissioner held that no interest should be charged for the period between 24th July, 1956 to 22nd April, 1958 as the delay in making the final assessment was due to the Department and the Income-Tax Officer had taken no steps to decide the matter. An appeal was preferred against this order by the Department which failed.
3. Shri Deoki Nandan, appearing on behalf of the Department urged that the question as framed envisages two controversies (i) as to whether the Appellate Assistant Commissioner of Income-Tax was not entitled to judicate in the matter of levy of interest under section 18-A(3) and secondly whether the direction given by the Appellate Assistant Commissioner of Income-Tax for excluding the period from 24th July, 1956 to 22nd April, 1958 for the purpose of levy of interest was justified. It appears that this is so. Now so far as the first aspect of the question is concerned, the Tribunal has held that it was not open to the Department in the appeal out of which the reference arose, to urge that the Appellate Assistant Commissioner had no jurisdiction to decide on the validity of the levy of penal interest. The reason given by the Tribunal is that in the first place the Department had not taken any such ground in the memo of appeal specifically challenging the jurisdiction of the Appellate Assistant Commissioner of Income-tax to decide this point and secondly that they had not taken any step to have the direction given by the Tribunal in its earlier order dated 18-8-1965, directing the Appellate Assistant Commissioner of Income-tax to decide the issue of imposition of penal interest set aside. In the earlier appeal which resulted in remand it had been urged on behalf of the Department, that the Appellate Assistant Commissioner could not go into the validity or otherwise of imposition of interest under section 18-A(6) as no appeal lay in respect of the same. The attention of the Tribunal was drawn to a decision of this Court in the case of Pandit Deo Sharma vs. Comm. of Income-tax (23 I.T.R. 226) wherein the view had been taken that no appeal lay to the appellate Assistant Commissioner of Income-tax against an order levying interest under section 18-A(6). The Tribunal distinguished that case on the ground that while in the appeal before them, the assessment involved did not relate only to charge of interest under section 18-A(6) in the case of Pandit Deo Sharma appeal had been filed against an order of the Income-tax Officer levying interest under section 18-A(6). On these observations the Tribunal gave specific directions to the Appellate Assistant Commissioner to decide the question of imposition of penal interest, which was as follows :
'In the result the appeal of the assessee fails except in so far as the disallowance of Rs. 5,822/- in respect of cost of steam pump and failure to decide the issue of the imposition of penal interest. On which points the appeal is set aside to be decided afresh by the Appellate Assistant Commissioner.'
Now in view of this clear direction given by the Tribunal we do not think it is open to the Department to urge now that the Appellate Assistant Commissioner has no jurisdiction to decide on the validity of the levy of interest on remand. The remand order clearly directs the Appellate Assistant Commissioner to decide the question of penal interest. The grievance of the Department should have been ventilated earlier when the Tribunal made the remand. It is now too late to take up this issue. In this view the Tribunal was right in refusing to go into this controversy after the remand order had become final.
4. As regards to second aspect of the question there appears to be no merit, in the Departments case. The case is fully covered by Rule 48 and if the Appellate Assistant Commissioner in discretion granted relief to the assessee which has been upheld by the Tribunal we do not see how we can hold that it was erroneous on the part of the Tribunal to have sustained it.
5. In view of our above conclusions we answer the question referred to us in the affirmative and against the Department and in favour of the assessee. As none has appeared on behalf of the assessee, there shall be no order as to the costs. Counsel fee assessed at Rs. 200/-.