Tribunal rules in favor of assessee on interest charge issue under IT Act

The Tribunal allowed the appeal of the assessee against the order of the CIT(A) for the assessment year 1995-96. The main issue revolved around the charging of interest under section 201(1A) of the IT Act. The Tribunal held that a separate order or inclusion in the assessment order was necessary for charging such interest. As the interest was not specifically ordered in the assessment, the Tribunal ruled in favor of the assessee, setting aside the lower authorities' orders and deleting the interest charged under section 201(1A).

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Issues: Appeal against order of CIT(A) for asst. yr. 1995-96, Charging of interest under s. 201(1A) of IT Act

The judgment pertains to an appeal filed by the assessee against the order of the learned CIT(A) for the assessment year 1995-96. The first issue raised by the assessee was general in nature and did not require adjudication. The third ground was withdrawn during the hearing. The main issue to be decided was Ground No. 2, concerning the confirmation of the levy and charging of interest under section 201(1A) of the IT Act by the CIT(A). The assessee contended that the interest charged was bad in law and on the facts of the case.

Upon hearing the rival submissions and examining the record, it was noted that the CIT(A) had upheld the charging of interest under section 201(1A) after directing the Assessing Officer (AO) to treat the TDS payment as advance-tax. The assessee's representative argued that the interest charged was legally flawed as there was no specific order for it in the assessment order. The representative relied on legal precedents to support the argument that a speaking order was necessary for charging interest under section 201(1A). The Tribunal agreed with this contention, citing the requirement for a separate order for charging interest under section 201(1A) or inclusion in the assessment order itself. As per the provisions of section 246A(1)(ha), a separate appeal was allowed before the CIT(A) under section 201 of the Act. Consequently, the Tribunal set aside the orders of the lower authorities and deleted the interest charged under section 201(1A), thereby allowing the appeal of the assessee.

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