Law:

Section:

Section 246, read with section 215 of the Income-tax Act, 1961 [Corresponding to section 30, read with section 18A(6) of Indian Income-tax Act, 1922] - Commissioner (Appeals) - Appealable orders - Assessment year 1945-46 - Whether even if penal interest is part of tax, no appeal lies against levy of such interest under section 18A(6) of 1922 Act - Held, yes Words & Phrases : Expression 'denying his liability to be assessed under the Act' occurring in section 30 of the Indian Income-tax Act, 1922 FACTS The AAC dismissed the assessee's appeal against levy of interest under section 18A(6) of 1922 Act holding that no appeal lay against the levy of interest under section 18A(6). The Tribunal upheld the order of the AAC. On reference, it was urged that penal interest is nothing but a tax and an order imposing penal interest is a part of the assessment order and, as such, an appeal would lie against the imposition of penal interest by virtue of the clause "denying his liability to be assessed under this Act" occurring in section 30 of the 1922 Act. HELD The jurisdiction of the AAC has been defined in section 30 of the 1922 Act. That section sets out the various orders which have been made appealable. An order under section 18A(6) or section 18A(8) of the 1922 Act, does not find a place in section 30 of the 1922 Act. Therefore, no appeal lies against such an order. The powers of the AAC are not plenary. He can entertain appeals only against the matters mentioned in section 30 of the 1922 Act. The levy of interest under section 18A(6)/18A(8) of the 1922 Act, which is popularly called penal interest, is not one of the matters mentioned in section 30 of 1922 Act. It follows that there is no express provision providing for an appeal against penal interest. Penal interest cannot be said to be a tax determined under section 23 of the 1922 Act, which alone has been made appealable under section 30 of the 1922 Act. The levy of interest comes after the tax under section 23 of the 1922 Act has been determined. The Act has made a clear distinction between tax, penalty and interest, as is clear from section 29 of the 1922 Act. There is an appeal against tax and penalty but no…

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