Rams Sarda v. Dy. CIT - Taxpublishers.in

SUBSCRIBE FOR FULL CONTENT


The Tax Publishers2012 TaxPub(DT) 1161 (Rkt-Trib) : (2012) 013 ITR (Trib) 0457 INCOME TAX ACT, 1961 --Appeal [CIT(A)]--Appealable orderAppeal against levy of interest under sections 234A, 234B and 234C--A search was carried out at the premises of the assessee on 21-2-2008 and cash of Rs. 20,30,000 was seized. The assessee treated the said seized cash as advance tax paid and to adjust the same against tax liability. However, the AO did not allow adjustment of cash seized against tax liability nor did he treat the cash seized on 21-2-2008 which was later adjusted against the advance tax liability as advance tax paid on 21-2-2008. The AO charged interest under sections 234A, 234B and 234C by ignoring the cash seized which was adjusted against the advance tax liability, though there was specific request from the assessee to treat the cash seized and adjusted subsequently as the advance tax payment on 21-2-2008 vide his letter dt. 30-7-2009. On appeal, the CIT(A) dismissed the assessee's appeal on the ground that the same is not maintainable.Held: Appeal against levy of interest total or partial under sections 234A, 234B and 234C is part of assessment proceedings and the same is, therefore, appealable order under section 246(1). In the light of the above discussion, under the facts and circumstances the appeal is maintainable against the levy of interest under sections 234A, 234B and 234C. It is well settled position that there was no inherent right of appeal. That right has to be specifically conferred by the statute. It is equally well-settled that if there is a provision conferring a right of appeal it should be construed in a reasonable and liberal manner. The power of the ITO is to make assessment under section 143. It is that assessment which is the subject matter of appeal. The appellate authority, on appeal, has the power to confirm, reduce, increase or annul the assessment. Clause (a) of section 246(1) is in two parts. The first part deals with an order against an assessee where the assessee denies his liability to be assessed. The second part deals with an order of assessment under section 143(3) or section 144. In the second part, there is a restriction, namely, that an appeal against such order shall lie only where the assessee objects to the amount of income assessed or where the assessee objects to the amount of tax determined or where the assessee objects to the amount of loss computed or where the assessee objects to the status under which he was assessed. The very period for which interest is levied under the relevant provision points to the nature of the levy. If that is borne in mind, it will be apparent that the levy of interest is part of the process of assessment. Although section 143 and section 144 do not specifically provide for the levy of interest and the levy was, in fact, attributable to sub-section (8) of section 139 or section 215, it was nevertheless a part of the process of assessing the tax liability of the assessee. Where the ITO considers that there was a case for levying of interest under sub-section (8) of section 139 or under section 215, what he does in practice, was to make an order levying such interest after completing the assessment of the assessee's total income and the tax payable by him. Now, the question is whether orders levying interest under sub-section (8) of section 139 and under section 215 are appealable under section 246 of the IT Act ? Clause (c) of section 246 provides an appeal against an order where the assessee denies his liability to be assessed under the Act or against any assessment order under sub-section (3) of section 143 or section 144, where the assessee objects to the amount of income assessed or to the amount of tax determined or to the amount of loss computed or to the status under which he was assessed. Inasmuch as the levy of interest was a part of the process of assessment, it was open to an assessee to dispute the levy in appeal provided he limits himself to the ground that he was not liable to the levy at all. The court held that the levy of penal interest under section 139 or section 215 was made in the regular assessment order the demand notice issued, pursuant to the assessment order, is for the total amount of liability imposed inclusive of tax and interest. [Para 8] In view of the above observations, it could be held that the expression 'denies the liability to be assessed under the Act' refers only to total denial of liability. The denial may be total as well as partial and the liability to pay interest, would certainly be a partial denial to be assessed under the Act as envisaged by section 246(1) because on acceptance of adjustment or seized amount against advance tax paid/liability created, there is no amount to pay by the assessee. Therefore, there will be no question of levy of interest under sections 234A, 234B and 234C. [Para 11] Charging of interest under sections 234A, 234B and 234C is very much part and parcel of the assessment proceedings and is an order against the assessee to which the assessee denies his liability to be assessed. Therefore, the appeal against charging of interest under those sections is maintainable as in the case of an assessment order. [Para 14] SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2012 TaxPub(DT) 1161 (Rkt-Trib) : (2012) 013 ITR (Trib) 0457

INCOME TAX ACT, 1961

--Appeal [CIT(A)]--Appealable orderAppeal against levy of interest under sections 234A, 234B and 234C--A search was carried out at the premises of the assessee on 21-2-2008 and cash of Rs. 20,30,000 was seized. The assessee treated the said seized cash as advance tax paid and to adjust the same against tax liability. However, the AO did not allow adjustment of cash seized against tax liability nor did he treat the cash seized on 21-2-2008 which was later adjusted against the advance tax liability as advance tax paid on 21-2-2008. The AO charged interest under sections 234A, 234B and 234C by ignoring the cash seized which was adjusted against the advance tax liability, though there was specific request from the assessee to treat the cash seized and adjusted subsequently as the advance tax payment on 21-2-2008 vide his letter dt. 30-7-2009. On appeal, the CIT(A) dismissed the assessee's appeal on the ground that the same is not maintainable.Held: Appeal against levy of interest total or partial under sections 234A, 234B and 234C is part of assessment proceedings and the same is, therefore, appealable order under section 246(1). In the light of the above discussion, under the facts and circumstances the appeal is maintainable against the levy of interest under sections 234A, 234B and 234C.

It is well settled position that there was no inherent right of appeal. That right has to be specifically conferred by the statute. It is equally well-settled that if there is a provision conferring a right of appeal it should be construed in a reasonable and liberal manner. The power of the ITO is to make assessment under section 143. It is that assessment which is the subject matter of appeal. The appellate authority, on appeal, has the power to confirm, reduce, increase or annul the assessment. Clause (a) of section 246(1) is in two parts. The first part deals with an order against an assessee where the assessee denies his liability to be assessed. The second part deals with an order of assessment under section 143(3) or section 144. In the second part, there is a restriction, namely, that an appeal against such order shall lie only where the assessee objects to the amount of income assessed or where the assessee objects to the amount of tax determined or where the assessee objects to the amount of loss computed or where the assessee objects to the status under which he was assessed. The very period for which interest is levied under the relevant provision points to the nature of the levy. If that is borne in mind, it will be apparent that the levy of interest is part of the process of assessment. Although section 143 and section 144 do not specifically provide for the levy of interest and the levy was, in fact, attributable to sub-section (8) of section 139 or section 215, it was nevertheless a part of the process of assessing the tax liability of the assessee. Where the ITO considers that there was a case for levying of interest under sub-section (8) of section 139 or under section 215, what he does in practice, was to make an order levying such interest after completing the assessment of the assessee's total income and the tax payable by him. Now, the question is whether orders levying interest under sub-section (8) of section 139 and under section 215 are appealable under section 246 of the IT Act ? Clause (c) of section 246 provides an appeal against an order where the assessee denies his liability to be assessed under the Act or against any assessment order under sub-section (3) of section 143 or section 144, where the assessee objects to the amount of income assessed or to the amount of tax determined or to the amount of loss computed or to the status under which he was assessed. Inasmuch as the levy of interest was a part of the process of assessment, it was open to an assessee to dispute the levy in appeal provided he limits himself to the ground that he was not liable to the levy at all. The court held that the levy of penal interest under section 139 or section 215 was made in the regular assessment order the demand notice issued, pursuant to the assessment order, is for the total amount of liability imposed inclusive of tax and interest. [Para 8] In view of the above observations, it could be held that the expression 'denies the liability to be assessed under the Act' refers only to total denial of liability. The denial may be total as well as partial and the liability to pay interest, would certainly be a partial denial to be assessed under the Act as envisaged by section 246(1) because on acceptance of adjustment or seized amount against advance tax paid/liability created, there is no amount to pay by the assessee. Therefore, there will be no question of levy of interest under sections 234A, 234B and 234C. [Para 11] Charging of interest under sections 234A, 234B and 234C is very much part and parcel of the assessment proceedings and is an order against the assessee to which the assessee denies his liability to be assessed. Therefore, the appeal against charging of interest under those sections is maintainable as in the case of an assessment order. [Para 14]