Law:

Section:

Section 246, read with section 215, of the Income-tax Act, 1961 (Corresponding to section 30, read with section 18A, of the Indian Income-tax Act, 1922) - Commissioner (Appeals) - Appealable orders - Assessment year 1945-46 - Whether appeal to AAC against levy of penal interest under provisions of section 18A(6) of 1922 Act is competent - Held, no FACTS The assessee carried on business in the manufacture and sale of groundnut oil and cake. In making the assessment for the year 1945-46, the ITO arrived at an assessable income. As the assessee gave a wrong estimate of the income, he directed him to pay penal interest at 6 per cent under section 18A(6) of the 1922 Act upon the amount by which the tax already paid by him fell short of 80 per cent of the tax imposed on the basis of the regular assessment. The assessee preferred an appeal against the order of assessment to the AAC and contended inter alia that the order imposing penal interest was wrong, but that appeal was dismissed. The Tribunal confirmed the order of the AAC on the ground that no appeal lay against an order under section 18A(6) of the 1922 Act. On reference: HELD It is common-place that a right of appeal must expressly be conferred by statute. Section 30 of the 1922 Act which regulates the right of appeal conferred under the 1922 Act does not in express terms provide for an appeal against an order imposing penal interest under section 18A(6) of the 1922 Act. Though the section enumerates in detail the orders made under different sections which are subject to an appeal, section 18A(6) of the 1922 Act is omitted. If the Legislature intended that the order imposing penal assessment under section 18A(6) of the 1922 Act was also subject to an appeal they would have said so in clear terms. The omission is designed rather than accidental. The imposition of penal interest mentioned in section 18A(6) of the 1922 Act is not a part of the process of assessment of the income of the assessee. Penal interest is imposed only to compel an assessee not to under-estimate his income during the current year. A special procedure is prescribed for imposing it and that is regulated by section 18A(6) of the 1922 Act.…

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