Advance-tax liability disputes can support an appeal, while mere objections to penal interest excess do not; dividend relief was also allowed.

A challenge to the very liability to be assessed to advance tax falls within the phrase "denying his liability to be assessed under this Act" in section 30(1), so an appeal lies where the assessee disputes advance-tax liability itself or the amount determined. A mere complaint that penal interest is excessive, should be reduced, or waived does not by itself confer a right of appeal. On dividend relief, section 15C was treated as applicable on the basis that the dividend warrant showed 27% as exempt, and the assessee was entitled to relief on that footing.

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Issues: (i) Whether an appeal lay to the Appellate Assistant Commissioner against an order levying penal interest where the assessee denied its liability to be assessed to advance tax at all; (ii) Whether relief under section 15C was available on dividend received from Telco on the basis that 27% of the dividend was exempt as declared in the dividend warrant.

Issue (i): Whether an appeal lay to the Appellate Assistant Commissioner against an order levying penal interest where the assessee denied its liability to be assessed to advance tax at all

Analysis: The phrase "denying his liability to be assessed under this Act" in section 30(1) was construed to cover not merely objections to the quantum of penal interest, but also a challenge to the underlying liability to advance tax itself. An assessee who contends that it was not liable to advance tax at all, or that the amount of advance tax determined was wrong, falls within that phrase. However, a mere grievance about excessiveness, reduction, or waiver of penal interest does not by itself create a right of appeal. The earlier Bombay decisions were harmonised on this basis, and the contrary views were not accepted.

Conclusion: The appeal was competent on this ground, and the answer to the first question was in favour of the assessee.

Issue (ii): Whether relief under section 15C was available on dividend received from Telco on the basis that 27% of the dividend was exempt as declared in the dividend warrant

Analysis: The second referred question was treated as concluded by the prior Bombay decision already covering the point. On that footing, the Revenue accepted that the assessee was entitled to the relief claimed on the basis of the exempt portion shown in the dividend warrant.

Conclusion: Relief under section 15C was available to the assessee on the basis that 27% of the dividend was exempt as declared in the dividend warrant.

Final Conclusion: The reference was answered in favour of the assessee on both questions, confirming both the maintainability of the appeal against penal interest where liability to advance tax was denied and the entitlement to the claimed dividend relief.

Ratio Decidendi: A challenge to the very liability to be assessed to advance tax falls within the statutory phrase "denying his liability to be assessed under this Act", but a challenge only to the amount of penal interest does not.

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