Appeal not allowed for interest levy under Income-tax Act. Statutory provision interpretation key.

The court held that no appeal lies to the Appellate Assistant Commissioner from any order passed by the Income-tax Officer levying interest under sections 139 and 217 of the Income-tax Act, 1961. The decision was based on the interpretation of relevant provisions and previous case law, emphasizing that appeals must be expressly provided for by statute. The assessee was directed to pay the costs of the reference to the Commissioner.

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Issues Involved:
1. Whether an appeal lies to the Appellate Assistant Commissioner from any order passed by the Income-tax Officer levying interest under sections 139 and 217 of the Income-tax Act, 1961.

Detailed Analysis:

1. Appealability of Orders Levying Interest under Sections 139 and 217:
- The core question referred for opinion was whether an appeal lies to the Appellate Assistant Commissioner from any order passed by the Income-tax Officer levying interest under sections 139 and 217 of the Income-tax Act, 1961.
- The assessee, a firm carrying on business as contractors, was assessed for the year 1965-66. The Income-tax Officer directed the charging of interest under sections 139 and 217. The assessee appealed against this, but the Appellate Assistant Commissioner held that no appeal lay against the charging of interest under these sections.
- The Tribunal, relying on the Bombay High Court decision in Commissioner of Income-tax v. Jagdish Prasad Ramnath, held that an appeal would be maintainable if the question of penal interest is taken up along with other grounds of appeal against the assessment itself. Consequently, the Tribunal remitted the appeal back to the Appellate Assistant Commissioner for the limited question of considering the ground of penal interest.

2. Provisions of Section 246 and Right of Appeal:
- Section 246 of the Income-tax Act, 1961, provides for appeals to the Appellate Assistant Commissioner and specifies which orders are appealable. Clause (c) allows appeals where the assessee denies his liability to be assessed under the Act, and clause (m) allows appeals against orders under section 216. However, no provision is made for appeals against orders under sections 139 or 217.
- The court emphasized that an appeal is not a matter of right and must be conferred by the statute. Since section 246 does not provide for appeals against orders levying interest under sections 139 or 217, no appeal lies against such orders.

3. Interpretation of Penal Interest and Appeal Rights:
- The court referred to the decision in Commissioner of Income-tax v. Jagdish Prasad Ramnath, where it was held that penal interest must follow upon the regular assessment. Therefore, the appeal should be against the regular assessment, and in such an appeal, the assessee could contest issues that might reduce the quantum of penal interest.
- The court also noted the distinction made by the legislature between penalties and interest, and the absence of a provision for appealing against the payment of penal interest.

4. Consideration of Supreme Court and Other High Court Decisions:
- The court discussed the decisions in C. A. Abraham v. Income-tax Officer, Kottayam, and Commissioner of Income-tax v. Bhikaji Dadabhai & Company, which were argued to have overruled the Jagdish Prasad Ramnath case. However, it was held that these Supreme Court decisions did not affect the principle that no appeal lies against orders levying penal interest.
- The court also considered the decision in Mathuradas B. Mohta v. Commissioner of Income-tax, where it was held that interest determined under section 18A(8) was a tax, and thus appealable. However, this was distinguished based on the definition of "tax" in the 1961 Act.

5. Definition of "Tax" and "Assessment" in the 1961 Act:
- Under the 1961 Act, "tax" is defined in section 2(43) to mean income-tax chargeable under the Act. This definition does not include penal interest.
- The court concluded that the appeal contemplated by section 246(c) pertains to the denial of liability to be charged to tax, not penal interest. Therefore, no appeal lies against orders charging penal interest under sections 139 or 217.

Conclusion:
- The court answered the referred question in the negative, holding that no appeal lies to the Appellate Assistant Commissioner from any order passed by the Income-tax Officer levying interest under sections 139 and 217 of the Act.
- The assessee was ordered to pay the costs of the reference to the Commissioner.

Final Judgment:
- Question answered in the negative.

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