JUDGMENT
1. This reference under Section 256(1) of the Income-tax Act, 1961, is at the instance of the Revenue to decide the following question of law :
“Whether, on the facts and in the circumstances of the case, the Tribunal was justified in directing the Appellate Assistant Commissioner of Income-tax to entertain., an appeal against levy of interest under Section 139(8) of the Income-tax Act, 1961 ?”
2. The relevant assessment year is 1973-74. The Income-tax Officer completed the assessment on an income of Rs. 1,01,290 and directed recovery of penal interest from August 16, 1973, to the date of filing of the return in response to the notice. The amount of penal interest was computed at Rs. 13,195. The assessee filed a quantum appeal to the Appellate Assistant Commissioner and therein also assailed the imposition of interest charged under Section 139(8) of the Act. The Appellate Assistant Commissioner held that the appeal was nor competent against the imposition of interest under Section 139(8). On the assessee’s further appeal to the Tribunal, it was held that the appeal was tenable also in respect of the penal interest levied on the assessee and, accordingly, the Appellate Assistant Commissioner was directed by the Tribunal to rehear the appeal. Aggrieved by the view taken by the Tribunal, the Revenue sought this reference for deciding the above question of law.
3. It is well settled and no longer in controversy that at least in the quantum appeal against the order of assessment, the assessee can also assail the levy of penal interest in addition to assailing the liability to be taxed according to the assessment order. Reference is made to CIT v. Associated Stone Industries (Kotah) Ltd. [1981] 130 ITR 868 (Raj), CIT v. Devichand Pan Mal [1986] 160 ITR 545 (Raj) and Banner Disposal Autoparts v. CIT [1987] 163 ITR 690 (Raj). Following these decisions of this court, the reference has to be answered against the Revenue.
4. Consequently, the reference is answered against the Revenue and in favour of the assessee by holding that the Tribunal was justified in directing the Appellate Assistant Commissioner to entertain the appeal which was also against the levy of interest under Section 139(8) of the Act.
5. No order as to costs.