2013 (3) TMI 487 - HC - Income Tax

High Court allows Tax Appeal, upholds maintainability under Income Tax Act, directs Tribunal on interest cancellation.

The High Court allowed the Tax Appeal, upheld the maintainability of the appeal before the Tribunal under section 253 of the Income Tax Act, and directed ... Order u/s 220(2) - Appealable order - Interest u/s. 220(2) - Section 246A of the I.T.Act provides the list of appealable orders before the learned CIT(A) - Held that:- We are of the opinion that the order of Tribunal calls for interference in as much as CIT(Appeals) had entertained the appeal which was not maintainable and yet passed an order in favour of the assessee. Tribunal on the ground mentioned in its order had not entertained the Appeal of the Revenue and consequently therefore it had not gone into the merits of the issue of cancellation of the interest chargeable u/s. 220(2) and thus, the order of CIT(A) of waiving interest continues to favour assessee. Appeal preferred by the Revenue before the Tribunal, in our opinion since was maintainable u/s. 253 of the Act for being an appeal directed against the order of CIT(A). Remanding the matter back to the Tribunal for adjudication upon the issue on merits, after giving due opportunities to both the sides to put forth their respective cases. This Tax Appeal resultantly is allowed. Issues:1. Maintainability of the appeal before the Tribunal under section 260-A of the Income Tax Act, 1961.2. Interpretation of appealable orders before the CIT(A) under Section 246A of the Income Tax Act.3. Authority to reduce or waive interest payable by the assessee under Section 220(2A) of the Income Tax Act.Issue 1: Maintainability of the appeal before the Tribunal:The appellant-Revenue challenged the order of the Income Tax Appellate Tribunal (Tribunal) under section 260-A of the Income Tax Act, 1961. The Assessing Officer had initially levied interest under section 220(2) of the Act, which was later revised. The CIT(Appeals) deleted the interest, leading the Revenue to appeal before the Tribunal. The Tribunal dismissed the appeal on the ground that the order under section 220(2) was not appealable before the CIT(A). The Tribunal held that the appeal to the Tribunal against orders of the CIT(A) is maintainable, but an order under section 220(2) is not appealable before the CIT(A). The High Court noted that the Tribunal did not examine the merits of the issue of cancellation of interest, and the order of the CIT(A) waiving the interest continued to favor the assessee. The High Court held that the appeal before the Tribunal was maintainable under section 253 of the Act as it was directed against the order of the CIT(A).Issue 2: Interpretation of appealable orders before the CIT(A) under Section 246A:The Tribunal based its decision on the interpretation of appealable orders before the CIT(A) as provided under Section 246A of the Income Tax Act. It held that the order under section 220(2) of the Act is not appealable before the CIT(A). The Tribunal referred to a case from the Madras High Court, which stated that if an order is not appealable before the first appellate authority, further appeal to the Tribunal becomes redundant. However, the High Court disagreed with the Tribunal's interpretation and held that the appeal before the Tribunal was maintainable under section 253 of the Act.Issue 3: Authority to reduce or waive interest payable by the assessee under Section 220(2A):The High Court highlighted the provisions of Section 220 of the Income Tax Act, which provides for the payment of an amount by the assessee and the levying of interest under sub clause (2) if the amount is not paid within the stipulated period. It also mentioned that the Chief Commissioner or Commissioner can reduce or waive the amount of interest payable by the assessee in certain situations. The High Court found that the order of the CIT(A) canceling the interest was still in favor of the assessee due to the Tribunal not entertaining the Revenue's appeal. Therefore, the High Court held that the appeal before the Tribunal was maintainable and remanded the matter back to the Tribunal for adjudication on the merits.In conclusion, the High Court allowed the Tax Appeal, upheld the maintainability of the appeal before the Tribunal, and directed the Tribunal to adjudicate on the issue after giving both sides the opportunity to present their cases.