ORDER
J. Kathuria, Accountant Member
1. These four appeals – two by the assessee and two by the revenue – pertain to assessment years 1983-84 and 1984-85 and arise out of a consolidated order dated 31-3-1988 passed by CIT(A), Chandigarh. All these matters are being disposed of by a combined order for the sake of convenience.
2. We shall first take up the assessee’s appeals. The assessee is a registered firm which has financial year as its accounting year. The assessee firm is carrying on cloth business. On 23-5-1985, survey under Section 133A of the Income-tax Act was conducted at the business premises of the assessee. During the course of survey operations, Shri Ram Lubhaya Kapoor partner made a surrender of Rs. 2 lakhs on behalf of the assessee firm. This surrender was made on the ground that there may be excess stock at the business premises as compared to the stock as per books of account. A sum of Rs. 1,00,000 was offered for assessment year 1983-84 and another Rs. 1,00,000 for assessment year 1984-85. It was given in writing by letter dated 23-5-1985 that the surrender was made voluntarily and without any pressure. The surrender was conditional in the sense that no penalty under Section 271(1)(c) was to be imposed and no prosecution was to be launched. It was also mentioned in the letter that the assessee’s request for waiver of interest under the Income-tax Rules may also be considered favourably. In the light of this surrender, the Assessing Officer made an addition of Rs. 1,00,000 each for assessment years 1983-84 and 1984-85. The assessee, however, preferred appeals to the learned CIT(A) who confirmed the additions on the ground that the assessee had voluntarily surrendered these amounts during survey operations.
3. Shri K.D. Mohan, the ld. counsel for the assessee, submitted that in fact the surrender was not voluntary and was actually made under pressure. No evidence with regard to this stand of the assessee has, however, been furnished before us. If the surrender was under threat or coercion, nothing prevented the assessee from taking up the matter at the earliest with the superior income-tax authorities. No evidence has been produced before us that the assessee had taken any such steps and ventilated its grievance. The written letter of surrender by the partner of the assessee firm clearly states that the surrender was voluntary and without any threat or force. Under these circumstances, when the surrender was made voluntarily, there cannot be any grievance on the part of the assessee if the Department has acted on the offer of the assessee by accepting it. Both the appeals of the assessee are, therefore, dismissed.
4. Now we come to the revenue’s appeals. The only ground taken in these appeals is that the first appellate authority erred in deleting the interest charged under Section 217 amounting to Rs. 8,713 for assessment year 1983-84 and Rs. 5,831 for assessment year 1984-85.
5. Shri Narender Singh, the ld. Departmental Representative, submitted that the only reason for deleting the interest in the impugned order was that no mention thereof had been made while passing the assessment order. In this regard it was submitted that computation sheet was a part and parcel of the assessment order and since interest under Section 217 had been indicated in the computation sheet, it must be deemed to be a part of the assessment order. Relying on the jurisdictional High Court decision in the case of Karuna Rani Jain v. CIT [1989] 178 ITR 321 : 45 Taxman 335. (Punj. & Har.), it was submitted that determination of the tax payable by the assessee was part of the assessment order though it happened to be on a separate sheet of paper and such an assessment order could not be treated as invalid merely on the ground that the determination of tax was not incorporated in the order whereby the assessable income was assessed but on a separate sheet of paper. It was submitted that on the ratio of this decision, it could not be said that the charging of interest under Section 217 was invalid simply because the interest was charged by way of a separate sheet of paper known as ‘ITNS-150’. As regards merits, it was submitted that even as per the surrender by the assessee in writing, the request for waiver of interest was to be considered favourably by the income-tax authorities. It was pointed out that non-leviabiliry of interest and waiver of interest fell in different spheres. It was explained that while the question of waiver could be considered by the Dy. Commissioner of Income-tax as per Rule 40 of the Income-tax Rules, the non-leviabiliry only could be considered by the ld. CIT(A). It was, therefore, submitted that in the present appeals, the issue was one of waiver and not of non-leviability and the ld. CIT(A) had no jurisdiction to adjudicate upon the matter.
6. Shri K.D. Mohan, on the other hand, submitted that non-mention of charging of interest in the body of assessment order was a flaw which could not be cured by incorporating the interest under Section 217 in ITNS-150. It was also submitted that the ld. CIT(A) could certainly go into the question of interest as the assessee was challenging the leviability of the same. The learned counsel for the assessee relied on the Calcutta High Court decision in the case of CIT v. Bengal Jute Mills Co. Ltd. (No. 1) [1987] 165 ITR 631, for the proposition that the question regarding levy of interest could be raised in appeal before the appellate authority. Relying on the Andhra Pradesh High Court decision in Vittal Reddy v. CIT [1987] 165 ITR 673 : 30 Taxman 252 it was submitted that assessee objecting to assessment could legitimately raise a question regarding levy of interest under Section 217. The ld. counsel also relied on Rajasthan High Court decision in Ramesh Chandra v. CIT [1987] 166 ITR 8 : 31 Taxman 303. for the proposition that where the assessee was filing appeal on several matters, he could certainly raise issues regarding levy of interest under Sections 139 and 217.
7. We have carefully considered the rival submissions as also the facts on record. It is true that there is no direction in the body of the assessment order for charging interest under Section 217. At the same time, it is an admitted position that interest under Section 217 has been charged as per ITNS-150. This clearly shows that interest has not been waived by the Assessing Officer even lmpliedly. The Supreme Court in the case of Central Provinces Manganese Ore Co. Ltd. v. CIT [1986] 160 ITR 961 : 27 Taxman 275, has held that levy of Interest is part of the process of assessment. Moreover, such Interest is mandatory in nature. It is also not penal but compensatory in character. In that view of the matter, charging of interest has to be treated as a mandatory part of the process of assessment. The Supreme Court in the case of Kalyankumar Ray v. CIT [1991] 191 ITR 634 had an occasion to consider the ambit of sheet of paper called ‘Assessment Order’ and separate sheet known as ‘Income-tax Computation Form’, i.e., ITNS-150. In this regard, the Supreme Court observed that “assessment” was one integrated process involving not only the assessment of the total income but also the determination of the tax, the latter being as crucial as the former. The Supreme Court held that the document which incorporated the calculation of tax and which carried the initial of the Assessing Officer should also be treated as part of the assessment order. The relevant observations of the Hon’ble Supreme Court in this regard are as follows:-
ITNS-150 is also a form for determination of tax payable and when it is signed or initialled by the Income-tax Officer, it is certainly an order in writing by the Income-tax Officer determining the tax payable within the meaning of Section 143(3). It may be only a tax calculation form for departmental purposes as it also contains columns and code numbers to facilitate computerisation of the particulars contained therein for statistical purposes, but this does not detract from its being considered as an order in writing determining the tax payable by the assessee. There is no reason why this document, which is also in writing and which has also received the imprimature of the Income-tax Officer, should not be treated as part of the assessment order in the wider sense in which the expression has to be understood in the context of Section 143(3). All that is needed is that there must be some writing initialled or signed by the Income-tax Officer before the period of limitation prescribed for completion of the assessment has expired in which the tax payable is determined. The form usually styled as the ‘assessment form’ need not itself contain the computation of tax as well.
[Emphasis supplied]
8. In view of the foregoing discussion, it must be held that it is not necessary that charging of interest, which is mandatory and compensatory, must be mentioned in the body of the assessment order. Even if the interest is charged as per ITNS-150, the charging of interest would be a part of the assessment order. We, therefore, hold that the mere non-mention of charging of interest under Section 217 in the body of the assessment order would not be enough ground for deleting the interest.
9. As regards appealabiliry of the matter, we must make it clear that waiver of interest and non-leviabiliry of interest are matters which fall in different spheres altogether. While non-leviabiliry of interest falls within the jurisdiction of the appellate authority, the reduction/waiver does not. The question of reduction/waiver can be decided under Rule 40 of the Income-tax Rules which falls within the province and domain of the income-tax authorities. The learned counsel for the assessee has not pointed out as to how interest under Section 217 in the present case was not leviable at all. In our opinion, the interest was certainly leviable as statement/ estimate in lieu of statement/estimate as referred to in Section 209A had not been sent by the assessee.
10. The assessee could certainly prefer a claim for reduction/waiver of interest before the income-tax authorities. We do not know whether such a course was taken by the assessee or not. In its letter dated 23-5-1985, the surrender of Rs. 2 lakhs was made conditionally. One of the conditions was that the request of the assessee regarding waiver of interest under the Income-tax Rules may be considered “favourably”. The assessee, in our view, would be within its right to move a petition before the income-tax authorities for reduction/waiver of interest under Rule 40. That, however, is a matter between the assessee and the income-tax authorities and we as an appellate body cannot intervene or interfere with regard to that matter.
11. In the result, the revenue’s appeals succeed and the order of the ld. CIT(A) deleting the interest charged under Section 217 is hereby reversed and those of the Assessing Officer restored.
12. To sum up, while the assessee’s appeals are dismissed, those of the revenue are allowed.