INCOME TAX OFFICER Vs. AJAY SANJAY HUF
LAWS(IT)-1989-5-5
INCOME TAX APPELLATE TRIBUNAL
Decided on May 29,1989

Appellant
VERSUS
Respondents

JUDGEMENT

R.M. Mehta, Accountant Member - (1.)THESE appeals pertaining to the same assessee for the same asst. year and involving common facts are disposed of by means of a consolidated order. The relevant facts pertaining to both these appeals may be stated as under:
(1) The assessee in this case filed a return on 29-6-1981 declaring total income of Rs. 1,01,357 in the status of HUE

(2) The I.T.O. completed the assessment on 12-3-1984 on an income of Rs. 1,03,254 in the status of A.O.P. and on a protective basis.

(3) This assessment order was subsequently cancelled by the CIT (Appeals) vide order dated 25-9-84.

(4) The I.T.O. gave appeal effects to the order of the CIT(A) vide order dated 10-10-85 and allowed a refund of Rs. 60,124 comprising of Rs. 53,449 as tax and Rs. 6,675 as interest under Section 244.

(5) The assessee thereafter moved an application under Section 154 to the ITO on 7-11-85 requesting him to allow interest under Section 214.

(6) The I.T.O. vide letter dt. 11 -3-86 rejected the assessee's application for grant of interest under Section 214.

(7) The assessee filed an appeal before the CIT( A) against the rejection order of the ITO dt. 11-3-86. The CIT(A) vide order dt. 2-9-86 held that the appeal was maintainable. He further directed the ITO to re-consider the assessee's claim on account of interest in view of the decision of the Hon'ble Gujarat High Court in the case of Bardolia Textile Mills v. ITO [1985] 151 ITR 389.

(8) The ITO with a view to implement the order of the CIT(A) dt. 2-9-86 passed an order on 10-2-87 rejecting the assessee's claim for interest under Section 214.

(9) The C.I.T.(A) vide order dated 10-6-87 rejected the assessee's appeal filed against the order of the I.T.O. dated 10-2-87.

(2.)On the basis of the aforesaid facts we first take up for consideration the Revenue's appeal which is I.T.A. No. 2970/Ahd./l986. The following effective grounds are raised:
(1) The learned CIT(A) has erred in law and on facts in holding that appeal is maintainable against an intimation given to the assessee regarding not entitlement of interest under Section 214 of the Act.

(2) The learned CIT(A) has erred both in law and on facts in holding that interest under Section 214 is allowable up to date of order giving effect to appellate order.

The learned D.R. at the outset submitted that there was no formal order passed by the I.T.O. rejecting the assessee's claim for interest under Section 214 and the CIT(A) was not justified in entertaining the appeal filed by the assessee. According to the D.R. the letter dated 11-3-86 addressed by the ITO to the assessee was not an order but a mere intimation. It was further stated that the levy of interest under Section 214 was not an appealable matter and even if it was presumed that the letter dt. 11-3-86 did constitute a formal order the same was not appealable. On merits it was submitted that the CIT(A) erred in directing the ITO to allow interest to the assessee vis-a-vis the decision of the Hon'ble Gujarat High Court supra. According to the D.R. the aforesaid decision was not applicable to the facts of the assessee's case.

(3.)THE learned counsel for the assessee on the other hand submitted that what was sought to be challenged before the CIT(A) was the rejection of the claim for interest under Section 214. According to him the letter dt. 11-3-86 addressed by the ITO to the assessee was in response to the application under Section 154 made on 7-11-85 and for all intents and purposes the aforesaid letter dt. 11-3-86 was an order under Section 154 and an appealable order. He further proceeded to contend that since the action of the ITO had the effect of seducing the amount of refund payable to the assessee an appeal lay to the CIT(A) against the aforesaid action of the ITO. In support of his arguments the learned counsel relied on the following authorities:
(1) Bakelite Hylam Ltd. v. CIT [1988] 171 ITR 344 (AP).

(2) CIT v. Perfect Pottery Co. Ltd. [1988] 173 ITR 545 (MP).



Click here to view full judgement.
Copyright © Regent Computronics Pvt.Ltd.