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

CIVIL APPEAL No. 1338/1974Supreme Court[1986] 3 S.C.R. 14015 July 1986Bench: 2 JudgesAuthor: R.S. PATHAK, SABYASACHI MUKHERJI10 pages
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What were the facts?

The assessee, Central Provinces Manganese Ore Co. Ltd., was levied interest under Section 139(8) for delayed return filing and under Section 215 for short payment of advance tax. The assessee filed an appeal before the Appellate Assistant Commissioner (AAC) objecting to the total income assessed and the interest charged. Subsequently, the assessee filed revision petitions before the Commissioner of Income Tax (CIT) challenging the interest levies. The CIT dismissed the revision petitions, holding that the entire appeal before the AAC should have been withdrawn, not just the grounds relating to interest. The assessee's writ petitions challenging the CIT's orders were rejected by the High Court. The assessee then appealed to the Supreme Court.

What did the Supreme Court hold?

The Supreme Court held that while the levy of interest under Section 139(8) and Section 215 is part of the assessment process and can be disputed on the ground of non-liability, the question of whether a case is made out for waiver or reduction of such interest cannot be the subject of an appeal under Section 246(c). Such matters are more appropriately dealt with by the Commissioner in his revisional jurisdiction. However, before invoking revisional jurisdiction, the assessee must first demonstrate to the Income-tax Officer that there is a case for waiver or reduction. Since the assessee had not made any application to the Income-tax Officer for waiver or reduction of interest, no revision petition was maintainable on that ground. The Court affirmed the CIT's orders but on different reasoning and left it open for the assessee to apply to the Income-tax Officer for waiver or reduction of interest within six weeks.

What were the issues?

1. Whether orders levying interest under Section 139(8) and Section 215 of the Income-tax Act, 1961 are appealable under Section 246(c) of the Act. Assessee's Contention: The assessee argued that the interest levies were objectionable and could be challenged in appeal. They initially included these grounds in their appeal before the AAC and later sought to withdraw them to pursue revision petitions. They relied on the principle that if an order is appealable, grounds related to it can be part of the appeal. Revenue's Contention: The judgment does not explicitly record the revenue's arguments. However, the Commissioner's stance, which was upheld by the High Court and the Supreme Court, implies that the revenue contended that the revision petitions were not maintainable if an appeal was pending, and that the withdrawal of only specific grounds was insufficient.

Which sections of the Income-tax Act were involved?

Section 139(8),Section 215,Section 246,Section 264

AI-generated summary — verify with the full judgment below

A 1 CENTRAL PROVINCES MANGANESE ORE CO. LID. v. COMMISSIONER OF INCOME TAX B JULY 15, 1986. ' [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 ' c appealable-Revision petition during pendency of appeal-Whether maintainable.

Where an assessee failed to furnish the income-tax return within -~ the prescribed period or did not furnish it at all, sub-s. (8) of s. 139 of D 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 E 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 d

The order continues below.

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