CENTRAL PROVINCES MANGANESE ORE CO. LTD. versus COMMISSIONER OF INCOME TAX

Citation: [1986] 3 S.C.R. 140 · Decided: 15-07-1986 · Supreme Court of India · Bench: R.S. PATHAK · Disposal: Dismissed

Judgment (excerpt)

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CENTRAL PROVINCES MANGANESE ORE CO. LID. 
v. 
COMMISSIONER OF INCOME TAX 
B 
JULY 15, 1986. 
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[R.S. PATHAK AND SABYASACHI MUKHARJI, JJ.] 
J
Income-tax Act, 1961-Ss. 139(8), 215, 246 & 264/rr. l 17A(v) and 
40( 1) & (5) of Income-tax Rules, 1962: Order levying interest-Whether 
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appealable-Revision petition during pendency of appeal-Whether 
maintainable. 
Where an assessee failed to furnish the income-tax return within 
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the prescribed period or did not furnish it at all, sub-s. (8) of s. 139 of 
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the Income-tax Act, 1961 as it stood at the relevant time, provided for 
levy of interest on him. The second proviso to that sub-section em-
powered the Income-tax Officer to reduce or waive the interest payable. 
Where the advance tax paid by the assessee under s. 2U on the basis of 
his own estimate was less than seventy-five per cent of the tax deter-
mined on the basis of regular assessment, sub-s. (1) of s. 215, as it then 
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stood, provided for levy of interest, while sub-s. ( 4) thereof provided for 
reduction or waiver of interest payable by the assessee, under certain 
circumstances. Clause (c) of s. 246 provides an appeal against an order 
where the assessee denies his liability to be assessed under the Act or 
against any assessment order under sub-s. (3) of s. 143 ors. 144, where 
the assessee objects to the amount of income assessed or to the amount 
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of tax determined or to the amount of loss computed or to the status 
under which he is assessed. Clause (b) of sub-s. (4) of s. 264 specifically 
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directs that the Commissioner shall not revise any order under s. 264 where -
that order is pending on an appeal before the Appellate Assistant 
Commissioner. 
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Interest was levied against the appellant-assessee under sub-s. (8) 
of s. 139 for delay in furnishing its return, and under s. 215 for making 
payment of advance tax under s. 212 at a figure less than 75 per cent of 
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the assessed tax. It preferred an appeal under cl. (c) ofs. 246 before the 
Appellate Assistant Commissioner raising objection to the total income 
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assessed and also including grounds objecting to the interest charged 
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under ss. 139 and 215. On being advised that orders under ss. 139 and 
C.P. MANGANESE ORE CO. v. C.l.T. 
141 
215 were not appealable, it filed two revision petitions before the Com-
missioner under s. 264 objecting to the levy of interest under s. 139(8) 
ands. 215 respectively. On being informed that by reason of cl. (b) of 
sub-s. (4) ofs. 264 the Commissioner was powetless to interfere so long 
,is the appeal was not withdrawn, the appellant made au application to 
lbe Appellate Assistant Commissioner requesting permission to with-
ttraw tbe grounds relating to levy of interest. Subsequently the Commis-· 
sioner dismissed both revision petitions on the view that it was not 
sufficient for the appellant to withdraw only those grounds raised in the 
appeal which related to the levy of interest, and thiit the appellant 
should have withdrawn the entire appeal. 
Writ petitions filed by the appellant in the High Con rt assailing 
the orders of the Commissioner were rejected in limine. 
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On the question: Whether orders levying interest under sub-s. (8) 
of s. 139 and under s. 215 are appealable under s. 246 of the Act. 
Dismissing the appeals by special leave, the Court, 
HELD: I. I Inasmuch as the levy of interest is a part of the pro-
cess 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. [147A-B] 
1.2 The levy of interest under sub-s. (8) of s. 139 and under s. 215 
is not in the nature of a penalty. It is levied by way of compensation 
because by reason of the omission or default the Revenue is deprived of 
the benefit of the tax for the period during which it has remained 
unpaid. Although s. I43 and s. I44 do not specifically provide for the 
levy of interest and the levy is in fact attributable to sub-s. (8) of s. 139 
or s. 215, it is nevertheless a part of the process of assessing the tax 
liability of the assessee. I 1460-G I 
2. I The question whether a case is made out for waiver or reduc-
tion of the interest levied under sub-s. (8) of s. I39 or under s. 215 
cannot be the subject of au appeal under cl. (c) of s. 246 of the Income-
tax Act. That is a matter which can more appropriately be dealt with by 
the Commissioner of Income-tax in the exercise of his· revisional juris-
d

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