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Chandulal Vora and Co. Vs. First Income-tax Officer - Court Judgment

LegalCrystal Citation
CourtIncome Tax Appellate Tribunal ITAT Jaipur
Decided On
Judge
Reported in(1985)13ITD828(JP.)
AppellantChandulal Vora and Co.
RespondentFirst Income-tax Officer
Excerpt:
.....139(8) of the income-tax act, 1961 ('the act'). upon the assessment order passed for 1979-80, the assessee had appealed to the commissioner (appeals), who gave certain reliefs. the ito, while giving effect to the order of the commissioner (appeals), charged interest under section 139(8) for delay in riling the return.against that order, the assessee had appealed to the commissioner (appeals), who by his impugned order dated 11-5-1982 rejected the same as unmaintainable. the order is challenged before us.2. the commissioner (appeals) did not entertain the appeal and in his view cit v. mahabir parshad & sons [1980] 125 itr 165 (delhi) and 123 itr 495 (sic) did not cover the question. the decision of the bombay high court in cit v. daimler benz a.g. [1977] 108 itr 961 (fb) had also.....
Judgment:
1. The short ground in the appeal filed by the assessee is about interest levied under Section 139(8) of the Income-tax Act, 1961 ('the Act'). Upon the assessment order passed for 1979-80, the assessee had appealed to the Commissioner (Appeals), who gave certain reliefs. The ITO, while giving effect to the order of the Commissioner (Appeals), charged interest under Section 139(8) for delay in riling the return.

Against that order, the assessee had appealed to the Commissioner (Appeals), who by his impugned order dated 11-5-1982 rejected the same as unmaintainable. The order is challenged before us.

2. The Commissioner (Appeals) did not entertain the appeal and in his view CIT v. Mahabir Parshad & Sons [1980] 125 ITR 165 (Delhi) and 123 ITR 495 (sic) did not cover the question. The decision of the Bombay High Court in CIT v. Daimler Benz A.G. [1977] 108 ITR 961 (FB) had also brought to his notice and it was the contention of the assessee that he was denying the liability itself and, as such, the appeal was maintainable. The organic discussion of the Commissioner (Appeals) to reject this contention is as hereunder : In that case, the question before the Bombay High Court was interest under Section 13A of the Indian Income-tax Act, 1922, denial of liability under that particular section was held to be appealable.

This was so when there were other grounds of appeal including denial of liability to penal interest. In the instant case, there was no other ground of appeal. Therefore, the contention advanced by the learned chartered accountant cannot be accepted.

On behalf of the revenue, it was urged that mere denial of the liability does not bring a proceeding within the exception stated in Daimler Benz A.G.'s case (supra). In all cases, the basis on which the liability is disputed should be examined to know whether an appeal falls within the exception pointed out in Daimler Benz A.G.'s case (supra).

3. Turning to facts, the return had to be filled on or before 30-6-1979. Actually, it was filed on 31-7-1979. The returned income was Rs. 3,02,730 and tax payable was Rs. 67,460. Advance tax of Rs. 51,800 had been paid and the balance was paid with the return. So, this was a case where tax was in fact due as on the date of the return and on that basis the liability cannot be disputed.

4. In the instant case, the very jurisdiction to levy penal interest is questioned. The relevant facts are in this way. The ITO had not levied penal interest when he first made the assessment order. After the appeal of the assessee was disposed of and while giving effect to the order of the Commissioner (Appeals) dated 5-6-1981, penal interest was charged under Section 139(8). The ITO after passing the assessment order had become functux officio and he ceased to have jurisdiction over the matter. All that he could have done when the appeal of the assessee was disposed of by the Commissioner (Appeals), was to give effect to the terms of the order passed in appeal. There was no direction in the appellate order for charging interest and, as such, the penal interest levied by the ITO was without jurisdiction.

Consequently, the assessee is entitled to challenge the levy as the question touches the very jurisdiction. In our opinion, the ITO lacked the authority to charge interest in view of the facts stated above and the assessee is right in complaining about the demand notice issued in this behalf. The order passed by the ITO being one without jurisdiction is required to be interfered with.

5. For all the above reasons, the appeal is allowed. The order levying penal interest under Section 139(8) is set aside.


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