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Third Income-tax Officer Vs. A. Mohamed Sehal BashA. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtChennai High Court
Decided On
Case NumberI. T. APPEAL NOS. 1235 TO 1240 (MAD.) OF 1983 [ASSESSMENT YEARS 1972-73, 1973-74 AND 1978-79]
Reported in[1986]17ITD1067(Mad)
AppellantThird Income-tax Officer
RespondentA. Mohamed Sehal BashA.
Excerpt:
.....order refusing to grant interest under section 214(2) and/or section 244(1a) is not an order of assessment and no appeal therefore lies thereagainst. held : the appeals field by the assessee were directed only to claim the interest under sections 214(2) and 244(1a). no appeal has however been provided under section 246 against such claims. it is well settled now that no appeal is provided against non-grant of interest under section 214 as such although the assessee could raise that question if appeal has been filed against other grounds. the reason is that the order rejecting the claim of interest under section 214 is not an order of assessment and, therefore, no appeal lies against such order. case law analysis : triplicane urban co-operative society ltd. v. cit (1980) 126 itr 125..........under sections 214(2) and 214(1a). the common facts are that the ito originally adopted the share income of the assessees from the firm mohamed ismail & co. provisionally subject to revision on ascertaining of correct share income from the firm. the ito revised the order under section 155 of the act in order to adopt the correct share income of the firm. for the assessment years 1972-73 and 1973-74, the ito also passed order under section 155 to give effect to the order of revision under section 264 of the act passed by the commissioner. as a consequence certain refunds were found due to the assessees. thereafter, the ito rectified the order under section 155, read with section 154, in order to give credit to the actual amount of tax paid which resulted in additional refund......
Judgment:
ORDER

Per Shri T. V. K. Nataraja Chandran, Accountant member -These appeals belonging to partners of Mohamed Ismail & Co., Ranipet are consolidated for the sake of convenience and disposed of together as the issues involved in these appeals are common. These appeals are directed against the separate orders passed by the AAC dated 15-12-1982 wherein he has upheld the claims of the assessees for grant of interest under section 214(2) and 244(1A) of the Income-tax Act, 1962 (the Act) which was not granted by the ITO.

2. The assessees are partners in Mohamed Ismail & Co. Ranipet. The common issue involved in these appeals is whether appeal lies before the AAC against the order of the ITO not granting interest under sections 214(2) and 214(1A). The common facts are that the ITO originally adopted the share income of the assessees from the firm Mohamed Ismail & Co. provisionally subject to revision on ascertaining of correct share income from the firm. The ITO revised the order under section 155 of the Act in order to adopt the correct share income of the firm. For the assessment years 1972-73 and 1973-74, the ITO also passed order under section 155 to give effect to the order of revision under section 264 of the Act passed by the Commissioner. As a consequence certain refunds were found due to the assessees. Thereafter, the ITO rectified the order under section 155, read with section 154, in order to give credit to the actual amount of tax paid which resulted in additional refund. However, the ITO has not granted any interest under section 244(1A) and 214(2) although claimed by the assessees on the ground that the matter was pending in appeal and, therefore, he declined to entertain the claims. In respect the assessment year 1978-79, the ITO revised his original assessment adopting provisional share income by giving effect to the order of the Commissioner by which certain refunds were found due to the assessee. However, the ITO has not granted any interest under section 214(2) or section 244(1A). In fact his orders are silent on this aspect.

3. On appeal, the AAC accepted the claim of the assessee regarding interest under section 244(1A) for these years under appeal but granted interest under section 214(2) for the assessment year 1978-79 while for the assessment years 1972-73 and 1973-74 he rejected the claim simply on the ground that there was no proof on record for payment of advance tax for these years. The revenue has taken common ground urging that the AAC erred in entertaining the appeal in view of the ratio of the Madras High Court in the case of Triplicane Urban Co-operative Society Ltd. v. CIT : [1980]126ITR125(Mad) and grant of interest under section 244(1A) was also not warranted and, therefore, sought that the order of the AAC should be set aside and that of the ITO restored.

4. The learned departmental representative has reiterated the common grounds taken by the revenue in these appeals and relied on the decision of the Madras High Court cited supra. The learned counsel for the assessee filed a copy of the order of the Tribunal, Madras Bench A in the case of a firm and the partners for the assessment years 1972-73 to 1975-76 and 1978-79 wherein the Tribunal held that the appeals were maintainable and upheld the order of the Commissioner (Appeals) entertaining the appeals filed by the assessee claiming interest under sections 214(2) and 244(1A).

5. We have duly considered the rival contentions and the facts of the case. Taking, for instance, the appeals relating to the assessment years 1972-73 and 1973-74 in the case of partner, A. Mohamed Sayed Omer Basha, it is seen that the original orders were passed by the ITO adopting provisional share income initially and, thereafter order under section 155 dated 28-12-1977 adopting correct share income from the firm which resulted in additional demands. Therefore, there was no question of determining any refund or the interest payable, if any, thereon. Thereafter, the ITO passed another order under section 155 dated 16-4-1982 to give effect to the order of revision under section 264 passed by the Commissioner dated 27-2-1982 reducing the share income of the partner substantially which resulted in refund of Rs. 6,006 but no interest has been granted. Again the ITO rectified his order under section 155 dated 30-8-1982 in order to give credit to the correct amount of tax paid at Rs. 19,728 as against Rs. 12,126 taken originally resulting in additional refund of Rs. 7,602. In this order, the ITO has left a note that as the appeal was pending the interest under sections 244(1A) and 214(2) claimed by the assessee has not been considered. Thus, the grievance of the assessee pertained to non-grant of interest under section 214(2) and/or 244(1A). Therefore, the appeals filed by the assessees were directed only to claim the interest under sections 214(2) and 244(1A) and no appeal has been provided under section 246 against such claims. Several Courts, including the Madras High Court have held that no appeal is provided against non-grant of interest under section 214 as such although the assessee could raise that question if appeal has been filed against other grounds. The reason is the order rejecting the claim of interest under section 214 is not an order of assessment and, therefore, no appeal lies against such order. In our view section 246(1) (f) does not provide for entertaining of appeal against section of the ITO declining to grant interest under section 214 or 244 inasmuch as a plain reading of that section shows that appeal has been provided only against order under section 154 or section 155 having the effect of enhancing the assessment or reducing the refund or an order refusing the claim made by the assessee under either of the said sections. Factually, there was no enhancement assessment or reduction of refund in this case and the claim of the assessees obviously did not lead to either section 154 or section 155 but relate to sections 214 and 244. Even section 246(1) (c) is not applicable to the case of the assessees. Therefore, the ratio of the madras High Court in the case of Triplicane Urban Co-operative Society Ltd. (supra) applies squarely to the case of the assessee and, consequently, we have to hold that the appeals were not maintainable before the AAC as they were confined only to the claim of interest which is not permissible under law. There is no dispute about the merits of the case insofar as the facts are concerned, namely, the excess payment to advance tax over the tax ultimately determined in the regular assessment which includes the order giving effect to the appellate order of the AAC or the revisional order of the Commissioner. Even the decision of the madras High Court in the case of Rayon Traders (P.) Ltd. v. ITO : [1980]126ITR135(Mad) will support the claim for payment of interest under section 214(2) when once it is found that the advance tax paid was in excess of tax determined payable on regular assessment. We are not concerned with this issue at all in these appeals. Since the issue is confined to the maintainability of the appeals we have confined our attention to this limited issue and after considering all the facts and circumstances of the cases, we have to uphold the grounds taken by the revenue and, consequently, set aside the orders of the AAC and restore the orders of the ITO.

6. In the result, the appeals are allowed.


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