ORDER, ADMISSIBILITY–Interest under s. 220(2).
Ratio :
Addition on account of interest payable under section 220(2), not being a part of order under section 251, is not appealable.
Held :
Charging of interest under section 220(2) is statutory and it is automatic. The mere fact that the interest which the assessee is liable to pay under the statute, namely, under section 220(2) is added on to the amount of tax and other interest amounts mentioned in the order under section 251, does not make it a part of the said order of assessment, so as to confer a right of appeal to the assessee under section 246(1)(c) to agitate the question of interest under section 220(2).
Application :
Also to current assessment years.
Income Tax Act 1961 s.220(2)
Income Tax Act 1961 s.246
Income Tax Act 1961 s.251
ORDER
D.S. Meenakshisundaram, Vice President
1. The only point of dispute in this appeal is about the maintainability of the assessee’s appeal to the CIT(A) against the levy of interest by the ITO under Section 220(2) of the Income Tax Act, 1961.
2. The facts leading to the present appeal are the following. McGrogor & Balfour (India) Ltd., the appellant herein, is an Indian company. For the assessment year 1978-79 for which the previous year ended on 31-10-1977 the ITO passed an order dated 15-5-1981 under Section 143(3)/144B of the Act “purely as a precautionary measure”. In this order, the assessee’s total income was determined at Rs. 3,39,424 against which the appellant went in appeal and the CIT(A) by his order dated 16-12-1986 in Appeal No. 157/CIT(A)VI/81-82 partly allowed the assessee’ s appeal, allowing a relief to the extent of Rs. 5,970. The ITO passed an order dated 12-2-1987 under Section 251 revising the original assessment order dated 15-5-1981 pursuant to the said appellate order of the CIT(A). In this order, he determined the assessee’s total income at Rs. 3,33,454 and the tax due from the assessee at Rs. 1,92,568. The ITO added a sum of Rs. 17,325 as interest levied under Section 139(8) and another sum of Rs. 71,225 as interest levied under Section 217(1 A) of the Act. Thereafter, the ITO added a sum of Rs. 2,08,014 as interest due under Section 220(2) of the Act. The calculation given by the ITO in his order dated 12-2-1987 is set out below :-
Add: Intt. Under Section 220(2) w.e.f.
1-7-1981 to 30-9-1981
i.e. 39(m) @ 12% on
Rs. 2,81,100 Rs. 1,09,629
and
1-10-1984 to 31-1-1987
i.e. 28(m) @ 5% on
Rs. 2,81,100 98,385 Rs. 2,08,014
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Thus, the ITO arrived at a sum of Rs. 4,89,132 as the amount payable by the assessee on account of tax and interest levied under various sections and issued a demand notice and challan for the same. On receipt of this order the assessee preferred an appeal objecting to the levy of interest under Section 220(2) of the Act. This appeal was dismissed by the C1T(A), holding that no appeal would lie against the charging of interest under Section 220(2) of the Act. Aggrieved by this order of the CIT(A), the appellant has come up on further appeal to the Tribunal.
3. After hearing Shri B.R. Bhattacharya, the learned counsel for the appellant and Shri R.N. Tripathi, the learned Departmental Representative we do not see any reason to interfere with the order of the CIT(A) which, in our view, is perfectly valid and in order. The learned counsel for the appellant does not dispute the fact that the appellant’s only objection in the appeal to the CIT(A), was to the addition of interest of Rs. 2,08,014 levied under Section 220(2) of the Act and to nothing lose. According to the learned counsel, the order under Section 251 is an appealable order and as the levy of interest under Section 220(2) of the Act formed part of the order under Section 251 the appellant was entitled to file an appeal against the levy of such interest also under Section 246(2)(a) read with Section 246(1)(c) of the Act. No doubt, the order passed under Section 251 of the Act is an appealable order and this position is well settled as early as Kooka Sidhwa & Co. v. CTT [1964] 54 ITR 54 (Cal.) which was followed by the same High Court in the case of Chloride India Ltd. v. CIT [1977] 106 ITR 38 and referred to by the CIT(A) in paragraph 2 of his order. However, it does not mean that the interest charged under Section 220(2) of the Act is part of the order under Section 251 of the Act which can be agitated in such an appeal. It is well settled that the right of appeal against an order has to be specifically conferred by express words contained in the statute. As rightly held by the CIT(A), Section 246(1)(c)/ 246(2)(a) do not confer any such right of appeal against the charging of interest under Section 220(2) of the Act. On the contrary, a perusal of the various clauses contained in Section 246(1) of the Act would show that there is no right of appeal provided for against the charging of interest under Section 220(2) of the Act. In this connection, it may be mentioned that there is a specific provision providing for an appeal against an order imposing a penalty under Section 221 for default in the payment of tax under Section 246(1)(i) of the Act. We may mention that the charging of interest under Section 220(2) is statutory and it is automatic, as no discretion is left to the ITO in the matter of charging of the said interest under the said provision of law. The only authority empowered either to reduce or waive the amount paid or payable by an assessee is the Chief Commissioner or Commissioner, as the case may be, under Section 220(2A) of the Act. Therefore, the mere fact that the interest of Rs. 2,08,014 which the assessee is liable to pay under the statute, namely, under Section 220(2) of the Act is added on to the amount of tax and other interest amounts mentioned in the order under Section 251 does not make it a part of the said order of assessment, so as to confer a right of appeal to the assessee under Section 246(1)(c) to agitate the question of interest under Section 220(2) of the Act. In fact, the assessee’s prayer in its petition dated 23r 11 -1987 to the CIT, WB-VI, Calcutta for waiver of such interest under Section 220(2) of the Act seems to be not yet disposed of by the CIT as, we find, the CIT has directed only adjustment of the tax paid by the sterling company against the tax due from the assessee-company, as could be seen from the letter dated 17-8-1988 written by the Assistant Commissioner of Income Tax, Comp. Circle 9(5), Calcutta to the assessee-company at page 20 of the paper book. We are, therefore, satisfied that there is no merit in the objection raised by the appellant in the present appeal against the order of the CIT(A) holding that no appeal would lie against the interest charged under Section 220(2) of the Act. We agree with the CIT(A) in his reasoning and conclusion and we are of the view that the assessee is knocking at the wrong door and not pursuing the remedy open to it which it has already pursued by its petition dated 23-11-1987. In this view of the matter, it is unnecessary to consider the assessee’s further objection stated to have been taken by means of an additional ground before us.
4. In the result, the order of the CIT(A) is confirmed and the appeal is dismissed.