Firm's Appeal Dismissed on Interest Charges Under Income-tax Act

The case involved a firm facing interest charges under section 139 of the Income-tax Act, 1961. The Appellate Assistant Commissioner remitted the interest, but the department appealed to the Income-tax Appellate Tribunal, arguing that no appeal lies against interest charges under section 139. The Tribunal agreed, dismissing the assessee's cross-objection. The judgment clarified that interest is part of the assessment process and follows tax assessment under section 139, with no separate appeal provision against interest charges. The court ruled that no appeal lies before the Appellate Assistant Commissioner against interest charges under section 139, deciding in favor of the department.

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Issues involved: The judgment deals with the issue of whether an appeal lies before the Appellate Assistant Commissioner against the charge of interest u/s 139 of the Income-tax Act, 1961.

Summary:
The case involved an assessee, a firm, who filed a return of income for the assessment year 1965-66, which was initially not signed by a partner but by an employee. A valid return was later filed, and interest was charged by the Income-tax Officer u/s 139 for the delay. The Appellate Assistant Commissioner remitted the interest, but the department appealed before the Income-tax Appellate Tribunal, arguing that no appeal lies against the charging of interest u/s 139. The Tribunal agreed and dismissed the cross-objection by the assessee.

The counsel for the assessee contended that the levy of interest u/s 139 is part of the assessment proceeding, allowing an appeal u/s 246(c) of the Act. However, it was noted that sub-clause (c) of section 246 does not provide for an appeal against the levy of interest. The judgment highlighted that interest is an adjunct to tax assessed, and no separate order for interest is necessary as it follows the assessment under section 139.

The judgment compared provisions related to interest under different sections of the Act, emphasizing that while appeals are allowed for certain interest-related orders, no appeal provision exists against the levy of interest u/s 139. The judges concluded that no appeal lies to the Appellate Assistant Commissioner against the charging of interest u/s 139, answering the question of law in the affirmative and against the assessee.

In a separate opinion, Justice B. N. Sarma agreed with the decision.

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