ITAT allows assessee's appeal on interest levy under Income Tax Act

The ITAT allowed the assessee's appeals against the levy of interest under section 220(2) of the Income Tax Act for various assessment years, emphasizing the appealability of the interest charged based on the Bakelite case principles. The ITAT directed reconsideration by the CIT(A) for all relevant issues, including adjusting advance tax paid and challenging the interest levied for AY 1995-96. The ITAT's decision was pronounced on 23rd October 2019.

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Issues:
Appeal against levy of interest u/s 220(2) of the Income Tax Act for AYs 1990-91 to 1995-96. Appeal against order charging interest u/s 220(2) for AY 1995-96. Appeal against consequential order adjusting advance tax paid for AY 1995-96. Appeal against dismissal of appeal challenging interest levied u/s 220(2) for AY 1995-96.

Analysis:
The case involved appeals by the assessee against the levy of interest u/s 220(2) of the Income Tax Act for AYs 1990-91 to 1995-96. The assessee contended that the interest was appealable under section 246 of the Act, citing the decision in Bakelite Highlam Ltd. vs. CIT. The CIT(A) and the DR supported the orders, relying on the decision in ANZ Grindlays Bank PLC vs. CIT. The ITAT considered the arguments and referred to the Bakelite case, emphasizing that an order giving effect to an appellate decision is as much an assessment order as a regular assessment. The ITAT concluded that the interest charged had been waived by the CIT(A) and directed a reconsideration by the CIT(A) based on the principles outlined in the Bakelite case.

The second issue pertained to an appeal against the order charging interest u/s 220(2) for AY 1995-96. The ITAT noted that the AO had passed a consequential order adjusting the advance tax paid by the assessee for that year. The ITAT referred to the Bakelite case to establish that the interest charged was appealable. Consequently, the ITAT set aside the issue for the CIT(A) to reconsider and decide on merits.

The third issue involved an appeal against the consequential order adjusting the advance tax paid for AY 1995-96. The ITAT directed the AO to follow the ITAT's directions and not grant double credit or waive interest levied under various sections of the Act. The ITAT reiterated the appealability of the interest charged u/s 220(2) based on the Bakelite case and set aside the issue for the CIT(A) to reexamine.

The final issue concerned the dismissal of the appeal challenging the interest levied u/s 220(2) for AY 1995-96. The CIT(A) had held that such an order was not appealable under section 234A of the Act. The ITAT, however, disagreed and referred to the Bakelite case to establish the appealability of the order. Consequently, the ITAT directed the CIT(A) to reconsider the issue on its merits.

In conclusion, the ITAT allowed the appeals of the assessee for all the relevant assessment years, emphasizing the appealability of the interest charged u/s 220(2) based on the principles outlined in the Bakelite case. The ITAT's decision was pronounced on 23rd October 2019.

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