Law:

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Section 246 [as it stood before 10-7-1978] of the Income-tax act, 1961 - Appellate assistant commissioner - Appeal to - Scope of clause (c) of section 246 - Whether ITO's order levying penal interest under section 139 for late filing of return is appealable - Held, no Facts For the assessment year 1967-68 relevant to the accounting year ended 31-3-1967 the ITO framed the assessment on 28-2-1972 and levied penal interest of Rs. 1,992 under section 139(1) on the assessee-HUF. The said interest was included in the demand notice served under section 156. On appeal, the assessee challenged the legality of the penal interest so levied. The AAC rejected assessee's appeal in limine on the ground that no appeal lay on this point. However, on second appeal, the Tribunal held that the assessee was competent to file an appeal. On reference : Held It is a well settled principle of law that the right of appeal is a creature of the statute. If the statute provides the right of appeal, the appeal is competent. The provisions of section 246(c) clearly show that the assessee can file an appeal against an order where the assessee is liable to be assessed under the Act or against any assessment order under section 143(3) or section 144 where the assessee objects to the amount of income assessed or to the amount of tax determined or to the amount of loss computed or to the status under which he is assessed. This provision does not specify that an appeal shall lie against an order passed under section 139(8) simpliciter. If the assessee has challenged the order under appeal on any of the grounds mentioned in section 246(c) and consequently the liability to pay penal interest is also challenged, the appeal would be competent. This is so because the question of interest is directly linked with the quantum of tax in view of the provisions of section 139(8). If the appeal does not fall within the ambit of section 246(6), the appeal against an order passed under section 139(8) simpliciter will not be competent. In such case, revision under section 264 may be maintainable. Hence, the assessee was not competent to file the appeal from the ITO's order levying interest under section 139(1).…

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