Challenge to interest levy in quantum appeal is maintainable alongside dispute over assessed tax liability.

In a quantum appeal against an assessment order, the assessee could challenge the levy of interest under section 139(8) of the Income-tax Act, 1961, because settled law treated such penal interest as part of the matters open in an appeal against assessment. The same High Court's earlier decisions had already recognised the maintainability of a challenge to interest in the quantum appeal. The Tribunal was therefore justified in directing the Appellate Assistant Commissioner to entertain the appeal against the interest levy, and the challenge was decided in favour of the assessee.

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Issues: Whether, in a quantum appeal against an assessment order, the assessee could also challenge the levy of interest under section 139(8) of the Income-tax Act, 1961.

Analysis: The issue was governed by settled law that in an appeal against an assessment, the assessee is entitled to assail not only the assessed tax liability but also the levy of penal interest. Existing decisions of the same Court had already recognised the maintainability of such a challenge in the quantum appeal.

Conclusion: The Tribunal was justified in directing the Appellate Assistant Commissioner to entertain the appeal against the levy of interest under section 139(8) of the Income-tax Act, 1961, and the answer is against the Revenue and in favour of the assessee.

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