1991 (3) TMI 60 - HC - Income Tax

Court orders interest payment by Tax Department under Income-tax Act; criticizes delay; upholds Tribunal decision.

The High Court held that the appeal against the non-payment of interest under section 214 of the Income-tax Act was competent. The Court criticized the ... Appeal To AAC Issues:Competency of the Appellate Assistant Commissioner to entertain an appeal regarding the grant of interest under section 214 of the Income-tax Act, 1961.Analysis:The case involved a departmental reference regarding the assessment of the assessee for the year 1972-73. The Income-tax Officer treated the assessee-company as not substantially interested to the public based on the articles of association. The Appellate Assistant Commissioner and the Tribunal had already decided on this issue, which was not part of the current reference.The main issue in the reference was the non-payment of interest under section 214 of the Income-tax Act, 1961, by the Income-tax Officer despite a refund being due to the assessee. The Appellate Assistant Commissioner, in response to the appeal filed by the assessee, directed the Income-tax Officer to pay the interest claimed.The Department contended in the appeal before the Tribunal that the appeal against non-payment of interest was not competent. They relied on a Full Bench judgment which interpreted the expression 'denying his liability to be assessed under the Act' in a specific manner. However, the Tribunal, following precedents, confirmed the Appellate Assistant Commissioner's order.The counsel for the Revenue argued that the appeal was not competent as per the Full Bench judgment's interpretation. On the other hand, the counsel for the assessee relied on subsequent judgments to support the competency of the appeal against the levy of interest under section 214.The High Court observed that the Department was liable to pay interest under section 214, and there was no valid reason to contest the direction for payment of interest. The Court criticized the Department for not fulfilling its obligation to grant interest on the excess payment of advance tax.The Court noted that the appeal filed by the assessee had multiple grounds, and the non-payment of interest was just one of them. They considered the various expressions used in the relevant sections to determine the competence of the appeal.Referring to previous judgments, the Court concluded that the appeal against the levy of interest under section 214 was indeed competent in this case. They upheld the Tribunal's decision and answered the question in favor of the assessee based on the precedent set by previous judgments.In conclusion, the Court found in favor of the assessee regarding the competency of the appeal against the non-payment of interest under section 214. The decision was based on the interpretation of relevant legal provisions and previous judgments, emphasizing the Department's obligation to pay interest on excess advance tax.