1986 (3) TMI 58 - HC - Income Tax

Interest under section 217 is appealable with other grounds of appeal

The High Court of Madhya Pradesh held that the charging of interest under section 217 is appealable along with other grounds of appeal. The court ruled in ... Appealability of interest charged under an assessment - interest under section 217 forming part of the order of assessment - powers of the appellate authority to adjudicate the assessment including interestAppealability of interest charged under an assessment - interest under section 217 forming part of the order of assessment - Whether the levy of interest under section 217 could be gone into on appeal along with other grounds arising out of the order of assessment - HELD THAT: - The Tribunal held that levy of interest under section 217 could not be the subject-matter of appeal before the Commissioner (Appeals). Having considered the facts, this Court disagreed and held that the question of liability to pay interest under section 217 forms part of the order of assessment and therefore can be dealt with in a valid appeal against that assessment. The Court followed the principle in CIT v. Mangal Brothers where it was observed that when there is a valid and competent appeal against an assessment order, the appellate authority is not restricted from dealing with matters forming part of that assessment. Applying that principle, the Court concluded that the Tribunal was not right in law in excluding the levy of interest under section 217 from the scope of the appeal.Levy of interest under section 217 is part of the order of assessment and is appealable; the Tribunal's contrary view is rejected.Final Conclusion: The reference is answered in the negative and in favour of the assessee; the Tribunal was not right in holding that interest under section 217 could not be gone into on appeal, and parties shall bear their own costs. The High Court of Madhya Pradesh ruled that the Tribunal was wrong in holding that the charging of interest under section 217 is not appealable along with other grounds of appeal. The court decided in favor of the assessee, stating that the question of interest under section 217 is part of the assessment order and can be appealed. The reference was answered in the negative against the Revenue.