HIGH COURT OF PATNA 

K. K. Vidyarthi & S. K. Sharan, for the Revenue : K. N. Jain & Vikash Jain, for the Assessee 

JUDGMENT 

S. K. SINGH, J. : 

Both the references under section 256 (1) of the IT Act, 1961, 33 have been made by the Tribunal, Patna Bench, Patna, at the instance of the CIT, Bihar II, Ranchi. 

2. The question of law raised is as follows : 

"Whether, on an appeal to the CIT(A) against the order of the ITO charging interest under section 139 (8) of the IT Act, the CIT(A) is competent to cancel the same after considering the provisions of r. 117A ?" 

3. As the point of law involved to be answered in both the references are the same and the assessee in both the references being the same, only the assessment order being for different years, both the references were heard together and with the consent of the parties are being answered by a common judgment. 

4. Learned counsel appearing on behalf of the Revenue Department has contended that assailing of interest could only be permissible, if the assessment order is also under challenge. However, Mr. K. N. Jain, learned senior counsel appearing for the respondent-assessee, has disputed the same contending that the appeal only against the interest is also maintainable. It has further been submitted that there are divergent views expressed by the different High Courts but the matter has been finally set at rest by the apex Court holding that against the interest in isolation also appeal is maintainable provided the appellant limits himself to the ground that he is not liable to the levy at all. 

5. The apex Court in the case of Central Provinces Manganese Ore Co. Ltd. vs. CIT (1986) 58 CTR (SC) 112 : (1986) 160 ITR 961 (SC) : TC 6R.796, had answered the said point of law and had decided that charge of interest in isolation was not appealable unless the assessee not liable to levy of the same at all. 

6. While approving the judgment in National Products vs. CIT 1976 CTR (Kar) 179 : (1977) 108 ITR 935 (Kar) : TC 6R.771 and Bhikhoobhai N. Shah vs. CIT 1978 CTR (Guj) 172 : (1978) 114 ITR 197 (Guj) : TC 6R.687, the apex Court came to the conclusion that the question whether a case is made out for waiver or reduction of the interest levied under section 139 (8) or under section 215 cannot be the subject of an appeal under section 246(c) of the IT Act. That is a matter which can more appropriate be dealt with by the CIT in the exercise of his revisional jurisdiction. But, before the revisional jurisdiction of the CIT can be invoked in such a case, it is necessary for the assessee to demonstrate before the ITO that there is a case for waiving or reducing the levy of interest. 

Since the statute provides for the waiver or reduction of interest, it is open to the ITO before imposing a levy under section 139 (8) and to the IAC before doing so under section 215 to issue notice to the assessee and hear him in the matter. In cases where the jurisdictional fact attracting the levy cannot be disputed, for example, that the return has been furnished under section 139 with delay, it will be a question 33 merely of satisfying the relevant authority that there are circumstances calling for a reduction or waiver of the interest. If an opportunity to do so has not been made available to the assessee before the order levying interest is made, it will be open to the assessee to apply to the ITO after such order has been made to show that a reduction or a waiver of interest is justified. 

7. In the facts of the aforementioned case as the assessee has made no application to the ITO for reduction or waiver of the interest under sub-section (8) of section 139 or under section 33, section 215, no question arises of the relevant 33 authority having denied improperly a reduction or waiver of the interest and that being so, no revision petition can be maintained in that regard by the assessee before the CIT. 

8. For the reasons as stated above and in view of the judgment of the apex Court in the case of Central Provinces Manganese Ore Co. Ltd. vs. CIT (supra), it is held that against the interest in isolation no appeal is maintainable. It is nevertheless a part of the process of assessing the tax liability of the assessee. Inasmuch as the levy of interest is a part of the process of assessment, it is open to an assessee to dispute the levy in appeal provided he limits himself to the ground that he is not liable to the levy at all. 

The reference is answered accordingly.

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