1976 (3) TMI 97 - AT - Income Tax

Tribunal allows additional appeal grounds on interest levy, leaves issue open for ITO determination

The Tribunal declined to refer questions of law to the High Court, finding no referable issue. It allowed additional grounds of appeal by the assessee on ... - Issues:1. Whether additional grounds of appeal regarding the levy of interest under section 139 can be raised in a regular appeal against the assessment order.2. Whether the assessee has the right to appeal against the levy of penal interest for belated filing of income tax return.3. Whether the Tribunal has the authority to direct the Income Tax Officer (ITO) to examine the claim of the assessee in accordance with rule 117-A of the Income Tax Rules, 1962.4. Whether the levy of interest under section 139(1) can be sustained only if the assessee has applied for an extension of time before the ITO.Analysis:1. The Tribunal was requested by the Revenue to refer certain questions of law arising from a consolidated order to the High Court for opinion. The Tribunal declined to do so as it found no referable question of law. The Tribunal had entertained additional grounds of appeal by the assessee regarding the levy of interest under section 139. The Tribunal directed the ITO to examine if the assessee had sufficient cause for late filing and consider reducing or waiving the interest under rule 117-A of the IT Rules, 1962. The Tribunal's observation that interest under section 139(1) can be sustained only if an application for extension of time was made is not a finding but an observation. The Tribunal allowed the ground regarding levy of interest to be contested, ultimately leaving the matter to the ITO for determination along with other issues. The Tribunal concluded that no referable question of law arose, rejecting the Revenue's reference applications.2. The main contention of the assessee was that income from salt production should be exempt under section 10(1) as agricultural income. The Tribunal rejected this contention, and the assessee did not file a reference application on this finding. However, the assessee filed additional grounds of appeal contesting the levy of interest under section 139. The Tribunal allowed these additional grounds and directed the ITO to examine the matter. The Tribunal clarified that the levy of interest can be contested if an appeal is made against the assessment order, a view consistently followed by the Tribunal and accepted by the Revenue. The Tribunal's direction to the ITO to examine all aspects of the levy of interest indicates that the matter is not conclusively decided by the Tribunal, leaving it for the ITO to determine.3. The Tribunal's decision not to refer the questions raised by the Revenue to the High Court was based on the finding that no referable question of law existed. The Tribunal considered the questions raised by the Revenue as technicalities and declined to make the reference. The Tribunal emphasized that the matter regarding the levy of interest under section 139(1) was left open for determination by the ITO, indicating that the Tribunal did not make a final decision on the issue. The Tribunal's decision to reject the reference applications indicates that it found no legal basis to refer the questions to the High Court.This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the Tribunal's decision on each matter.