2000 (8) TMI 260 - AT - Income Tax

Tax Appeals Tribunal: Interest charges deleted for 1986-87 & 1988-89, partly allowed for 1987-88.

The Tribunal allowed the appeals for the assessment years 1986-87 and 1988-89, deleting the charge of interest under sections 139(8) and 215. For the ... Maintainability Issues Involved:1. Charging of interest under sections 139(8) and 215 in reassessment framed under section 148.2. Maintainability of appeal against the levy of interest.Detailed Analysis:1. Charging of Interest under Sections 139(8) and 215 in Reassessment:The primary issue in these appeals is the charging of interest under sections 139(8) and 215 of the Income Tax Act in reassessments framed under section 148 for the assessment years 1986-87, 1987-88, and 1988-89. The assessee contended that such interest could only be charged in regular assessments framed under sections 143 or 144, not in reassessments. The assessee cited case laws including CIT vs. Mannalal Nirmal Kumar and CIT vs. Khodey Brewing and Distilling Industries Ltd. to support their argument.The Department argued that no appeal lies against the levy of interest alone unless it is challenged along with other grounds. They cited ANZ Grindlays Bank PLC vs. CIT and Central Provinces Manganese Ore Co. Ltd. vs. CIT to assert that interest is compensatory in nature and chargeable due to withholding of tax by the assessee. The Department also highlighted that the law had been amended effective from 1st April 1985, allowing for the increase or reduction of interest in accordance with the increase or reduction in the amount on which interest is payable.The Tribunal considered the rival contentions and relevant material on record. It noted that the Hon'ble Supreme Court had held in Central Provinces Manganese Ore Co. Ltd. vs. CIT that the matter of charging interest under sections 139(8) or 215 is not appealable unless the assessee is not liable to levy such interest at all.2. Maintainability of Appeal Against Levy of Interest:The Tribunal analyzed whether an appeal disputing merely the levy of interest or its quantum without disputing the amount of advance tax would lie before the Tribunal under section 253. It referred to the provisions of section 253(1)(a) of the IT Act, which allows for an appeal to the Tribunal against an order of the first appellate authority passed under section 250. The Tribunal concluded that an appeal before the Tribunal in respect of charging of interest under sections 139(8) or 215 is maintainable, whether with or without any other ground pertaining to the assessability or quantum.Judgment on Specific Assessment Years:- Assessment Years 1986-87 and 1988-89 (ITA Nos. 255/Jp/94 and 257/Jp/94): The AO did not charge interest under sections 139(8) and 215 in the original/regular assessments. Therefore, the charge of interest in the reassessments for these years was not tenable in law. The Tribunal deleted the charge of interest under sections 139(8) and 215 for these years.- Assessment Year 1987-88 (ITA No. 256/Jp/94): Interest under section 139(8) was not charged in the original/regular assessment, so it could not be charged in the reassessment. However, interest under section 215 was charged in the original/regular assessment, making its charge in the reassessment maintainable. The Tribunal upheld the charge of interest under section 215 but noted that the quantum of interest chargeable under section 215 could not be increased based on additions made in the reassessment.Conclusion:The appeals for the assessment years 1986-87 and 1988-89 were allowed, deleting the charge of interest under sections 139(8) and 215. The appeal for the assessment year 1987-88 was partly allowed, maintaining the charge of interest under section 215 but disallowing any increase in the quantum of interest based on reassessment additions.