C.S.P.SINGH, J. - (1.) TRIBUNAL , Allahabad Bench has referred the following question of law for our opinion :- "Whether on the facts and in the circumstances of the case the Tribunal was legally correct in holding that the AAC was entitled to adjudicate upon and give direction to the ITO for excluding the interest for the period from 24th July, 1956 to 22nd April, 1958 in view of the provisions of S. 18A (6) of the IT Act, 1922 ?
(2.) THIS reference relates to the asst. yr. 1956-57 the relevant accounting period being the year ending on 31st Oct, 1955. In response to a notice under S. 23(2) of the IT Act, 1922 (hereinafter referred to as the Act), the assessee filed a return declaring an income of Rs. 1,61,576/-. This return was filed on the 24th July, 1956. It transpire that the first assessment of the Company was completed for the asst. yr. 1953-54 on 28th Feb., 1958, and the provisional assessment was completed on 6th Aug., 1956. For the assessment year in question the assessee had not furnished an estimate of tax payable as required by S. 18A(3) of he Act. The ITO while completing the assessment charged interest under S. 18A(6) of the Act on the ground that the assessee-company had neither filed any estimate nor paid the estimated amount of tax. The assessee filed an appeal against the assessment order and one of the grounds taken by him before that AAC of Income-tax was that the levy of interest under S. 18A(6) was unwarranted. The AAC while deciding the appeal held that as the order was not appealable he could not interfere with it. A second appeal was filed by the assessee before the Tribunal and the Tribunal vide its order dt.18th Aug., 1965 remanded the case. On remand the AAC went into two questions, one of them being as to the imposition of penal interest under S. 18A(6). relying on r. 48 of the Rules, the AAC held that no interest should be charged for the period between 24th July, 1956 to 22nd April, 1958 as the delay in making the final assessment was due to the Department and the ITO had taken no steps to decide the matter. An appeal was preferred against this order by the Department which failed. Shri Deoki Nandan, appearing on behalf of the Department urged that the question as framed envisages two controversies (i) as to whether the AAC of Income-tax was not entitled to adjudicate in the matter of levy of interest under S. 18A (3) and secondly whether the direction given by the AAC of Income-Tax for excluding the period from 24th July, 1956 to 22nd April, 1958 for the purpose of levy of interest was justified. It papers that this is so. Now so far as the first aspect of the question is concerned, the Tribunal has held that it was not open to the Department in the appeal out of which the reference arose, to urge that the AAC had no jurisdiction to decide on the validity of the levy of penal interest. The reason given by the Tribunal is that in the first place the Department had not taken any such ground in the memo of appeal specifically challenging the jurisdiction of the AAC of Income-Tax to decide this point and secondly that they had not taken any step to have the direction given by the Tribunal in its a earlier order dt. 18th Aug., 1965, directing the AAC of Income-tax to decide the issue of imposition of penal interest set aside. In the earlier appeal which resulted in remand it had been urged on behalf of the Department, that the AAC could not go into the validity or otherwise of imposition of interest under S. 18A(6) as no appeal lay in respect of the same. The attention of the Tribunal was drawn to a decision of this Court in the case of Pandit Deo Sharma vs. CIT, 23 ITR 226 wherein the view had been taken that no appeal lay to the AAC against an order levying interest under S. 18A(6). The Tribunal distinguished that case on the ground that while in the appeal before them, the assessment involved did not relate only to charge of interest under S. 18A(6) in the case of Pandit Deo Sharma appeal had been filed against an order of the ITO levying interest under S. 18A(6). On these observations the Tribunal gave specific directions to the AAC to decide the question of imposition of penal interest, which was as follows : "In the result the appeal of the assessee fails except in so far as the disallowance of Rs. 5,822/- in respect of cost of steam pump and failure to decide the issue of the imposition of penal interest. On which points the appeal is set aside to be decided afresh by the AAC." Now in view of this clear direction given by the Tribunal we do not think it is open to the Department to urge now that the AAC has no jurisdiction to decide on the validity of the levy of interest on remand. the remand order clearly directs the AAC to decide the question of penal interest. The grievance of the Department should have been ventilated earlier when the Tribunal made the remand. It is now too late to take up this issue. In this view the Tribunal was right in refusing to go into this controversy after the remand order had become final.
(3.) AS regards to second aspect of the question there appears to be no merit, in the Department's case. The case is fully covered by r. 48 and if the AAC in discretion granted relief to the assessee which has been upheld by the Tribunal we do not see how we can hold that it was erroneous on the part of the Tribunal to have sustained it.;