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Commissioner of Income-tax Vs. P.S. JaIn Motors (P.) Ltd. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtPunjab and Haryana High Court
Decided On
Case NumberIncome-tax Reference No. 81 of 1976
Judge
Reported in(1981)21CTR(P& H)132; [1981]130ITR842(P& H)
ActsIncome Tax Act, 1961 - Sections 154, 155, 215, 215(1), 215(3), 246, 250, 254, 260, 262 and 264
AppellantCommissioner of Income-tax
RespondentP.S. JaIn Motors (P.) Ltd.
Appellant Advocate D.N. Awasthy and; B.K. Jhingan, Advs.
Respondent AdvocateNone
Excerpt:
.....has not communicated the order of refusal passed to the persons concerned, the period of limitation for filing an appeal would commence from the date when the parties concerned acquire knowledge of passing of the said order. - this finding misled the tribunal and the tribunal came to the conclusion that the appeal was maintainable, which in our view is not, as it is a well-established principle of law that the right of appeal is a creature of the statute......the same is, accordingly, dismissed.'3. the assessee went in appeal before the income-tax appellate tribunal, amritsar bench (hereinafter referred to as 'the tribunal'), which allowed the same and, qua the relief of interest, observed as under:'the last ground by the assessee in this appeal is that the appellate assistant commissioner was not justified in holding that the charge of interest under section 215 of the income-tax act, 1961, is not appealable under section 246 of the income-tax act. it was submitted that the whole assessment order was the subject-matter of appeal before the appellate assistant commissioner and in view of the provisions of section 246(1)(c) the interest under section 215 imposed by the income-tax officer was a part of the assessment order and hence an.....
Judgment:

B.S. Dhillon, J.

1. For the assessment year 1966-67 the ITO, Jullundur, assessed the company to a total income of Rs. 1,87,298, Since the ITO was of the view that the advance tax paid by the assessee fell short by more than 25 per cent. of the tax found to have been payable by it, he ordered penal interest to be charged on the outstanding amount of tax.

2. The assessee went up in appeal. The AAC gave it relief of Rs. 37,278 about the quantum of its total income, but declined to grant any relief regarding payment of penal interest on the following ground:

'In the last ground, charge of interest Under Section 215 is challenged. This ground is incompetent as there is no provision for appeal Under Section 246 against the charge of interest. The same is, accordingly, dismissed.'

3. The assessee went in appeal before the Income-tax Appellate Tribunal, Amritsar Bench (hereinafter referred to as 'the Tribunal'), which allowed the same and, qua the relief of interest, observed as under:

'The last ground by the assessee in this appeal is that the Appellate Assistant Commissioner was not justified in holding that the charge of interest under Section 215 of the Income-tax Act, 1961, is not appealable under Section 246 of the Income-tax Act. It was submitted that the whole assessment order was the subject-matter of appeal before the Appellate Assistant Commissioner and in view of the provisions of Section 246(1)(c) the interest Under Section 215 imposed by the Income-tax Officer was a part of the assessment order and hence an appeal lies to the Appellate Assistant Commissioner. We agree with the contention of the learned counsel. Since the Appellate Assistant Commissioner has not given his finding about the charge of penal interest we set aside his order on this point and direct him to entertain this ground of appeal and decide the point on merits after allowing opportunity of being heard to both the parties.'

4. The revenue felt aggrieved against the order of remand and succeeded in getting the following question of law referred to us for our opinion:

'Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that an appeal lies to the Appellate Assistant Commissioner against the order of the Income-tax Officer charging interest Under Section 215 of the Income-tax Act, 1961 ?'

5. With a view to decide the question of law referred to us, the relevant provisions of Section 215 of the Act may usefully be reproduced, which are as follows:

'215. (1) Where, in any financial year, an assessee has paid advance tax under Section 209A or Section 212 on the basis of his own estimate (including revised estimate), and the advance tax so paid is less than seventy-five per cent. of the assessed tax, simple interest, at the rate of twelve per cent, per annum from the 1st day of April next following the said financial year up to the date of the regular assessment shall be payable by the assessee upon the amount by which the advance tax so paid falls short of the assessed tax.

(2) Where before the date of completion of a regular assessment, tax is paid by the assessee under Section 140A or otherwise :--

(i) interest shall be calculated in accordance with the foregoing provision up to the date on which the tax is so paid; and

(ii) thereafter, interest shall be calculated at the rate aforesaid on the amount by which the tax as so paid (in so far as it relates to income subject to advance tax) falls short of the assessed tax.

(3) Whereas a result of an order under Section 154 or Section 155 or Section 250 or Section 254 or Section 260 or Section 262 or Section 264, the amount on which interest was payable under this section has been reduced, the interest shall be reduced accordingly and the excess interest paid, if any, shall be refunded....'

6. Section 246 of the Act makes provision as regards appeals to the AAC. The orders passed under various sections mentioned therein have been held to be appealable, but an order regarding interest passed under Section 215 of the Act does not find mention in the said section. It cannot, therefore, be disputed that the Legislature in its wisdom did not make any provision for filing an appeal against the order passed under Section 215(1) of the Act. There is a reason for this. As would be obvious from the provisions of Sub-section (2) of Section 215 of the Act, the Legislature in its wisdom, while enacting the said sub-section, gave a mandate that whereas a result of an order under Section 154 or Section 155 or Section 250 or Section 254 or Section 260 or Section 262 or Section 264, the amount on which the interest was payable under this section has been reduced, the interest shall be reduced accordingly and the excess interest paid, if any, shall be refunded. It would thus be seen that in view of this mandate of of the Legislature, it would not be necessary for any assessee to file any appeal with a view to claim the relief regarding interest paid under Sub-section (1) of Section 215 of the Act. In all cases covered by Sub-section (3) of Section 215 of the 'Act and, of course, the first appeal to the AAC and second appeal to the Tribunal being covered by this sub-section, even if the appellate order does not mention the re-payment of the excess interest to the assessee, the ITO is bound to return the excess interest to the assessee in view of the mandate given in Sub-section (3) of Section 215 of the Act. This mandate having been given by the Legislature, it became unnecessary to make any provision for appeal as regards the re-payment of interest in this regard. In this background, it would be seen that the AAC, instead of holding that the assessee will be entitled to the return of the interest in view of the provisions of Sub-section (3) of Section 215 of the Act, unnecessarily recorded a finding that the appeal was not competent. This finding misled the Tribunal and the Tribunal came to the conclusion that the appeal was maintainable, which in our view is not, as it is a well-established principle of law that the right of appeal is a creature of the statute. If there is no provision for appeal made in the statute, the said right cannot be availed of. As already pointed out, no appeal has been provided against an order passed under Section 215(1), under Section 246 of the Act. We may make it clear that the finding recorded by the AAC that no appeal lay would not prejudice the right of the assessee and the ITO is bound to comply with the provisions of Sub-section (3) of Section 215 of the Act, so as to return the amount of interest to the assessee to which it is entitled as a consequence of having been given relief in the quantum appeal before the AAC. In view of the law laid down above, it was wholly unnecessary for the Tribunal to have remanded the case to the AAC with a view to give relief to the assessee as regards the interest. As already observed, even in the absence of the order of the Tribunal and that of the AAC, the assessee is entitled to the relief under Sub-section (3) of Section 215 of the Act. We may make it clear that the observations made by the AAC that no appeal lay as regards the charge of interest will in no way take away the right of the assessee to receive interest in accordance with Sub-section (3) of Section 215 of the Act.

7. For the reasons recorded above, the question of law referred to us is answered in the negative, i.e., against the assessee and in favour of the revenue. We order accordingly. There will be no order as to costs.


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