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Section 246 of the Income-tax Act, 1961 - Appellate Assistant Commissioner/ Commissioner (Appeals) - Appealable orders - Whether where liability to be assessed to tax including interest under section 139(1) was to some extent disputed, an appeal against levy of interest would be competent - Held, yes Facts The assessment for the relevant assessment year was completed under section 143(3) on a total income of Rs. 83,778. The assessee challenged the addition of Rs. 48,000 included therein and also the interest charged under section 139(1). The addition of Rs. 48,000 was deleted by the AAC, but he refused to interfere as regards levy of interest under section 139(1) on the ground that no appeal lay against the levy of interest under section 139(1). The Tribunal, on further appeal by the assessee, accepted the assessee's contention and held that the appeal was competent against the levy of interest under section 139(1). On reference by the revenue: Held In CIT v. Daimler Benz A.G. [1977] 108 ITR 961 (Bom.) (FB) it was, inter alia, observed that where liability to be assessed to advance tax is challenged or to some extent is disputed or denied, an appeal to the AAC would lie, for, such contention, if it succeeds, must result in reduction of penal interest, but an assessee has no right of appeal merely against the quantum of penal interest charged. In the instant case, the total income of the assessee was reduced by a sum of Rs. 48,000. It could not, therefore, be denied that the liability to be assessed to tax including interest under section 139(1) was to some extent disputed and, therefore, the appeal against the levy of interest under section 139(1) was competent. Accordingly, the order of the Tribunal was to be upheld. Case referred to CIT v. Daimler Benz A.G. [1977] 108 ITR 961 (Bom.) (FB). G.S. Jetley, Mrs. Manjula Singh and K.C. Sidhwa for the Applicant. K.B. Bhujle for the Respondent. JUDGMENT Sugla J. - The question of law referred to this Court in this reference at the instance of the revenue is : "Whether, on the facts and in the circumstances of the case, an appeal to the AAC against the levy of interest under section 139 of the Income-tax Act, 1961, is…

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