1. This appeal by the assessee is directed against the order of the Commissioner (Appeals) dated 25-1-1980 relating to the assessment year 1974-75. The grounds taken in appeal by the assessee are as under : 1. The learned income-tax authorities have erred in levying interest of Rs. 29,410 under Section 220(2) of the Income-tax Act, 1961.
2. That the learned Income-tax Officer has erred in making a non-speaking order levying interest under Section 220(2) without giving the calculations as to how the interest of Rs. 29,410 has been computed.
3. The learned income-tax authorities have erred in charging interest under Section 220(2) on the interest of Rs. 1,53,394 levied under Section 215.
2. Before the appeal was heard on merits, the revenue raised a preliminary objection and challenged the appeal of the assessee on the ground of its maintainability. We have, therefore, heard the parties with regard to the maintainability of the appeal without going into the merits of the issues involved. According to the revenue, it is clear from the grounds of appeal that the assessee is challenging the levy of interest under Section 220 of the Income-tax Act, 1961 ('the Act').
However, it was contended by Smt. Sudha Sharma, senior departmental representative arguing for the revenue, that no appeal is provided under the Act against the order passed by the ITO under Section 220. As such, when the assessee went in appeal to the Commissioner (Appeals) and he maintained the appeal and passed an order thereon, he was acting illegally and the order made by him was, therefore, bad in law and non est. However, the order has to be annulled to restore the status quo ante.
3. On the other hand, the learned counsel for the assessee, opposing these submissions, contended that the preliminary objection taken by the revenue is not maintainable because the revenue is neither in cross-appeal nor in cross-objection. At best, it can support the order of the Commissioner (Appeals), in view of the provisions of Rule 27 of the Appellate Tribunal Rules, 1963. But, the learned counsel for the assessee submitted, that supporting the order of the Commissioner (Appeals), while arguing in an appeal filed by the assessee, is entirely different from challenging the very validity of that order under the shelter of Rule 27. Therefore, it was contended that it does not lie in the mouth of the revenue now to claim that the order of the Commissioner (Appeals) is a nullity, as no appeal lies against the order made by the ITO under Section 220.
4. Without prejudice to the above submissions, the learned counsel for the assessee submitted that appeal lies against an order made by the ITO under Section 220 read with Section 246(c) of the Act, because interest charged by the ITO under Section 220 on the amount of tax due from the assessee, partakes the character of income-tax, as there is no debtor and creditor relationship between the Government and the assessee. He also contended that the assessee means a person by whom a sum is payable and he denies his liability to be assessed even to interest under Section 220 and the language of that section indicates that the order can be challenged in appeal provided under the Act. It was contended by him that a sum of Rs. 11,45,229 had been added to the total income of the assessee for the year under appeal and as a result of the demand on account of the said addition, interest under Section 215 of the Act had been charged. Since the addition of Rs. 11,45,229 had been deleted subsequently by the Tribunal, the assessee was denying his liability to the charging of interest under Section 220 and as such was entitled to go in appeal under Section 246(1)(c). The learned counsel for the assessee submitted that it had been held by the Punjab High Court in the case of Gopi Lal v. CIT  65 ITR 477, that it should be remembered that statutes pertaining to right of appeal have to be given a liberal construction since they are remedial. A right of appeal will not be restricted or denied unless such a construction is unavoidable. He, therefore, pleaded for a liberal construction of the relevant provisions of law to decide the preliminary objection raised by the revenue that no appeal lies against the order of the ITO under Section 220.
5. It was, however, further argued that the present appeal is justified in view of the provisions of Sections 250 and 253(1) of the Act. It was contended that the revenue raised no objection when an appeal was filed before the Commissioner (Appeals) and he having disposed of the appeal filed before him, the assessee is having a vested right of appeal to the Tribunal under Section 253(1). The appeal is, therefore, maintainable and should be heard on merits.
6. In the rejoinder, the learned departmental representative pointed out that the challenge to the maintainability of appeal was a question of law, and if no further enquiry on facts was necessary, it could be raised at this stage. It was further submitted that no enquiry on facts is necessary as there is no dispute on the relevant facts. She submitted that the Punjab and Haryana High Court has held in the case of CIT v. Raghubir Singh & Sons  125 ITR 256 that in case the appeal does not fall within the ambit of the provisions of Section 246(1)(c), the appeal against an order passed under Section 139(8) simpliciter will not be competent. It was also submitted that the concept of denial of liability to be assessed, propounded by the learned counsel for the assessee, was erroneous and untenable in view of the clear exposition of this phrase given by the Allahabad High Court in the case of CIT v. Geeta Ram Kali Ram  121 ITR 708 (FB).
It was submitted that denial of liability to be subjected to tax means that the denial should be against being subject to the whole procedure for ascertaining and imposing liability on the taxpayer. Since in the case of the assessee, the whole procedure for ascertaining and imposing liability of tax upon the assessee had terminated in the assessment that was made by the ITO on 20-3-1978, and interest was charged by the ITO later on, in view of the provisions of Section 220, the arguments of the learned counsel for the assessee were entirely fallacious. It was further contended by the learned departmental representative that if the assessee had approached the ITO, he probably could have himself, in view of the changed position, given the necessary relief to the assessee. It was pointed out by the learned departmental representative that the ITO is entitled to levy interest under Section 220, read with rules 118, 119 and 119A of the Income-tax Rules, 1962. The appeal on the facts of the case projected before the Tribunal by the assessee is, therefore, not maintainable, as the order of the learned Commissioner (Appeals) is ab initio void.
7. We have carefully considered the rival submissions. Before we proceed further, to deal with the arguments raised from the opposite sides, we would like to record the facts which are not in dispute. For the assessment year 1974-75, the ITO raised an assessment under Section 143(3) on 20-3-1978. In this assessment the ITO added a sum of Rs. 11,45,229. On the basis of this assessment, the ITO prepared a notice of demand under Section 156 of the Act. In this notice, he took note of the advance tax amounting to Rs. 4,68,935 paid by the assessee to the extent of Rs. 3,26,370. To this, the ITO added interest under Section 215 of the Act, amounting to Rs. 1,53,394. The total of these two amounts came to Rs. 4,79,764. The ITO issued demand notice for this amount on 20-9-1978.
8. The assessment made by the ITO was challenged in appeal and finally travelled to the Tribunal. The Tribunal vide order in IT Appeal No. 316 of 1978-79 dated 15-3-1980, deleted the addition of Rs. 11,45,228.98.
Before this order of the Tribunal was received by the ITO he had on 18-5-1979 levied interest of Rs. 29,410 upon the assessee, under Section 220(2).
9. It appears that the assessee filed an application under Section 273A of the Act before the Commissioner, Rohtak, and the Commissioner vide his order dated 4-2-1981 made under Section 273A held that the amount of Rs. 11,45,229 added by the ITO to the total income of the assessee had been deleted by the Tribunal and, consequently, there is no demand of interest under Section 215. But before this order was made by the Commissioner, Rohtak, the assessee had filed an appeal before the Commissioner (Appeals), Chandigarh, against the order of the ITO made under Section 220(2) on 18-5-1979. Hence, the present proceedings.
10. We are aware that ordinarily, an appellant filing appeal against an order cannot be worse off and when we say this, we are conscious of the contentions raised by the learned counsel for the assessee that at best the revenue could support the order of the Commissioner (Appeals) under Rule 27 of the Appellate Tribunal Rules. However, we are faced with a situation where the assessee has brought an order in appeal before us to which there is a challenge on the basis of its legality. Therefore, we are of the opinion that we cannot avoid looking into this aspect of the matter, whether the order of the Commissioner (Appeals) is maintainable or not, because unless this aspect is looked into, we will be deciding the appeal in a lopsided manner, closing our eyes to the various important issues that concern us. It has been held by the Supreme Court in the case of Raja Jagdambika Pratap Narain Singh v.CBDT 100 ITR 698 that merely because an order has been passed and has not been appealed against, it does not become legal and final if otherwise it is void. If we apply this principle, we find that the order of the Commissioner (Appeals) is in fact before us and it is challenged as ab initio void. Therefore, we cannot proceed further without deciding this issue first. Hence, the objection of the revenue, we hold, is in order and maintainable.
11. Now coming to the question whether an appeal lies against an order made by the ITO under Section 220, we find that in Section 246 providing for appeals to the AAC, orders made by the ITO, which could be appealed against, are specifically mentioned. The orders, for example, against which appeals are specifically provided are orders under Sections 104, 144 and 146 of the Act and orders made under Sections 216 and 237 of the Act, etc. The learned counsel for the assessee contended before us that the appeal is maintainable by virtue of the provisions of Section 246(c). This is as under : 246. Any assessee aggrieved by any of the following orders of an Income-tax Officer may appeal to the Appellate Assistant Commissioner against such order- (c) an order against the assessee where the assessee denies his liability to be assessed under this Act or any order of assessment under Sub-section (3) of Section 143 or Section 144, 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.
It would be seen that Section 246 provides that any assessee aggrieved by any order against the assessee, where the assessee denies his liability to be assessed under this Act, or any order of assessment, etc., and 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 in which he is assessed, appeal shall lie. The learned counsel for the assessee claims that the assessee's case is covered under the phrase 'denies his liability to be assessed under this Act'. We find that denial of liability to be assessed under the Act, apparently, would pertain to the process of assessment. Insofar as the case of the assessee is concerned, the assessment had been finalised by the ITO on 20-3-1978 and after it had gone in appeal to the Tribunal, the assessee got necessary relief as per order of the Tribunal mentioned supra.
Therefore, the assessee has already availed of the right of claiming that there was no liability of the assessee with regard to particular sums. The entire procedure gone through by the assessee shows that the assessee can deny liability to be subjected to any part of the procedure laid down in the Act for imposing the tax. In our opinion, the assessee's claim that he had denied his liability to be assessed is untenable, because interest under Section 220 cannot be said to be tax and the imposition of interest is after the entire procedure laid down in the Act for imposing liability to tax is over. Interest is related to the amount specified in any notice of demand under Section 156 after completion of such a process of assessment.
12. In this regard, it is important to note that Section 156 of the Act enjoins upon the ITO to issue a notice of demand when any tax, interest., penalty, fine, or any other sum is payable in consequence of any order passed under this Act. This section on the statute book clearly indicates the intention of the Legislature to treat interest as different from tax. Therefore, the argument of the learned counsel for the assessee that interest is nothing but something that partakes the character of tax is erroneous and untenable and has to be rejected. It is to be noted that even the opinion commonly held that penalty is nothing but additional tax, is not absolute as held by the Supreme Court in the case of Jain Bros. v. Union of India  77 ITR 107 where their Lordships have observed that although penalty has been regarded as additional tax in a certain sense and for certain purposes, penalty proceedings are not essentially a con inuation of the proceedings relating to assessment where a return has been filed. We can draw support from these observations of their Lordships to observe that levying of interest on sums which have been determined after completion of the process of assessment can, by no stretch of imagination, be called continuation of the proceedings relating to the assessment to give the right to anyone to claim that he, by challenging the order under Section 220, was denying his liability to be assessed.
13. The Allahabad High Court in the case of Geeta Ram (supra) cited by the revenue has held that an appeal is a creature of statute and an assessee has a right of appeal only if there is a statutory provision for it. Under Clause (c) of Section 246, any assessee aggrieved by an order made against him, where the assessee denies his liability to be assessed under this Act, may appeal to the AAC. However, their Lordships have held that the crucial phrases are 'denies his liability to be assessed' and 'under this Act'. It has been held by their Lordships that what is meant by these expressions is that the assessee contends that he is not liable to be assessed under any provisions of the Act or, in other words, he is not liable to be subjected to any part of the procedure laid down in the Act for imposing liability to tax and as such the denial should be against being subjected to the whole procedure for ascertaining and imposing liability on the taxpayer. It has been clarified by the Court that a denial against being subject to part of the process of ascertaining and imposing liability, is not within the ambit of the section.
14. Their Lordships have, therefore, given a clear position of law that shows that even a part of the process of assessment cannot be challenged under the guise of denial of liability to be assessed. But we have held above that levying interest under Section 220, in our humble opinion, is not a part of assessment and as such the case of the assessee is on a worse footing than the one on the basis of which the High Court made the observations.
15. The Punjab High Court in the case of Raghubir Singh (supra) has held that the right of appeal is a creature of the statute and, therefore, in a case where there is no provision provided in the statute for filing an appeal regarding a particular matter, no appeal shall lie. We, therefore, find that the judgment of the Punjab High Court, relied on by the learned counsel for the assessee, is of no avail to him.
16. Now the issue before us is whether the appeal that was entertained by the learned Commissioner (Appeals) and on which he has made an order and which has come before us, should be upheld as it is or it be annulled as being ab initio void. From what is stated above, it is clear that such an order, even if not appealed against, does not become legal and final in view of the judgment of the Supreme Court in the case of Raja Jagdambika (supra). But the order has come in appeal before us and we are of the opinion that we are competent to look into its legality on the set of facts before us and in our considered opinion, this order is ab initio void because no appeal lies against the order of the ITO made under Section 220. Therefore, on the preliminary objection raised by the revenue, we cancel the order of the Commissioner (Appeals) and restore in its place that of the ITO.