Challenge to liability for interest is maintainable in appeal when the assessee denies any interest was legally payable.

An assessee may maintain an appeal where the challenge is not merely to the quantum of interest but to the very liability to interest under the charging provision. The Tribunal applied the principle that a complete denial of liability makes the levy justiciable in appeal, and remitted the matter because the factual basis for the levy had not been examined by the first appellate authority. The issue was restored to the Commissioner (Appeals) for fresh decision on merits.

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Issues: Whether the assessee's appeal against levy of interest under section 217(1A) was maintainable when the assessee denied liability to pay interest altogether.

Analysis: The appeal turned on the distinction between a challenge to the quantum of interest and a complete denial of liability to interest. The Tribunal noted the line of authority that an assessee may contest the levy in appeal where the contention is that no interest was legally leviable at all, including cases where the assessee disputes the very applicability of the charging provision. Since the record did not disclose the circumstances in which interest had been levied and the appellate authority had not examined the point on merits, the issue could not be finally decided without further factual adjudication.

Conclusion: The appeal was competent and the matter was required to be examined on merits by the first appellate authority.

Final Conclusion: The levy of interest issue was restored to the Commissioner (Appeals) for fresh decision on merits, and the appeal was treated as allowed for statistical purposes.

Ratio Decidendi: Where an assessee denies liability to interest altogether, a challenge to levy of interest is maintainable in appeal and must be decided on merits.

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