1. S.K. SINGH, J.---Both the references under section 256(1) of the Income Tax Act, 1961, have been made by the Income-tax Appellate Tribunal, Patna Bench, Patna, at the instance of the Commissioner of Income-tax, Bihar II, Ranchi.
2. The question of law raised is as follows: "Whether, on an appeal to the Commissioner of Income-tax (Appeals) against the order of the Income-tax Officer charging interest under section 139(8) of the Income-tax Act, the Commissioner of Income-tax (Appeals) is competent to cancel the same after considering the provisions of rule 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.
5. 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.
6. The apex Court in the case of Central Provinces Manganese Ore Co. Ltd. v. CIT (1986) 160 ITR 961, 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.
7. While approving the judgment in National Products v. CIT (1977) 108 ITR 935 (Kar.) and Bhikhoobhai N. Shah v. CIT (1978) 114 ITR 197 (Guj.), 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 Income-tax Act.
8. That is a matter which can more appropriately be dealt with by the Commissioner in the exercise of his revisional jurisdiction. But, before the revisional jurisdiction of the Commissioner can be invoked in such a case, it is necessary for the assessee to demonstrate before the Income-tax Officer that there is a case for waiving or reducing the levy of interest.
9. Since the statute provides for the waiver or reduction of interest, it is open to the Income-tax Officer before imposing a levy under section 139(8) and to the Inspecting Assistant Commissioner 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 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 assesssee to apply to the Income-tax Officer after such order has been made to show that a reduction or a waiver of interest is justified.
10. In the facts of the aforementioned case as the assessee has made no application to the Income- tax Officer for reduction or waiver of the interest under subsection (8) of section 139 or under section 215, no question arises of the relevant 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 Commissioner of Income-tax.
11. 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. v. CIT (1986) 160 ITR 961, 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.
12. The reference is answered accordingly. .