Appealability of interest levy: challenge to penal interest is maintainable where the assessee disputes liability under the assessment.

An appeal against interest charged under section 215 is maintainable where the assessee disputes the liability to the levy itself; a bare objection to the levy without challenging liability will not support a separate appeal. Section 246(c), however, is broad enough to permit challenge to interest charged under section 139 in a valid appeal against the assessment order, including objections to both liability and quantum. On the facts described, the assessee had contested the levy of interest under section 215 and also challenged additions and disallowances that increased income and led to consequential interest under section 139, so the objections were maintainable in appeal.

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Issues: Whether an appeal lies against the charging of penal interest under sections 215 and 139 of the Income-tax Act, 1961.

Analysis: The appealability of an order charging interest under section 215 depends on whether the assessee disputes liability to the levy itself; if the only grievance is against the levy without disputing liability, a separate appeal does not lie. In contrast, section 246(c) is wide enough to permit challenge to charging of interest under section 139 in a valid appeal against the assessment order, both as to liability and quantum. Where the assessee had disputed the levy of interest under section 215 and also challenged additions and disallowances that resulted in enhanced income and consequential levy of interest under section 139, the objections were maintainable in appeal.

Conclusion: An appeal lies to the Appellate Assistant Commissioner against the charging of penal interest under sections 215 and 139 in the circumstances of the case, and the issue is answered in favour of the assessee.

Final Conclusion: The reference was disposed of by holding that the assessee could maintain an appeal against the levy of penal interest connected with the assessment.

Ratio Decidendi: A challenge to interest charged as part of the assessment is appealable where the assessee contests the liability to levy itself, and section 246(c) permits such a challenge in a competent appeal against the assessment order.

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