Calcutta H.C : Whether the Tribunal was justified in directing the CIT (A) to decide on a ground of appeal relating to charging of interest under s. 139(8) of the IT Act, which did not arise out of the order under s. 154 passed by the ITO ?

Counsel Appeared

M.L. Bhattacharya, for the Revenue : None, for the Assessee

DIPAK KUMAR SEN, J.:

It is on record that an order of rectification passed by the ITO under s. 154 of the IT Act, 1961, was cancelled by the CIT (A). The order of the CIT (A) was sustained by the Tribunal on further appeal by the Revenue. Under the order of rectification, the ITO had added interest under s. 139 (8) in computing the total income. The assessee had also preferred an appeal before the CIT (A) against the levy of interest.

The assessee preferred a cross-objection before the Tribunal contending, inter alia, that the assessee’s grievance against charging of interest under s. 139(8) of the IT Act, 1961, had not been dealt with by the AAC. The Tribunal allowed the appeal of the assessee for statistical purposes and restored the matter to the CIT (A) on the limited issue directing the CIT to deal with the grievance of the assessee against charging of interest.

In this application under s. 256(2) of the IT Act, 1961, the CIT, West Bengal-I, seeks a direction from this Court on the Tribunal to refer the following question as a question of law arising out of its order for the opinion of this Court : “Whether the Tribunal was justified in directing the CIT (A) to decide on a ground of appeal relating to charging of interest under s. 139(8) of the IT Act, which did not arise out of the order under s. 154 passed by the ITO ?”

In our view, the question has become academic inasmuch as the entire order of rectification has been cancelled by the CIT(A), which was subsequently sustained by the Tribunal. Necessarily, the interest which was included in the total income under the order of rectification cannot now stand.

The grounds of appeal relating to the charging of interest was valid as in the order under s.154 because the order specifically provided for payment of such interest. In any event, the entire order having been cancelled, the matter has now become of academic interest. We agree with the order of the Tribunal rejecting the appeal of the Revenue under s. 256(2) of the IT Act, 1961.

This application is dismissed. There will be no order as to costs.

MONJULA BOSE, J.:

I agree.

[Citation : 175 ITR 511]