COMMISSIONER OF INCOME TAX Vs. SHARMA CONSTRUCTION COMPANY

JUDGEMENT

(1.) IN this matter, at the instance of the revenue, the following question has been referred for our opinion by the Tribunal !

(2.) THE facts giving rise to this reference are as follows. The assessee is a firm carrying on business as contractors. The relevant assessment year is assessment 1965 -66. The profits were estimated in the regular assessment proceedings for 1965 -66 and at the time of passing the order of assessment, the Income -tax Officer directed : 'Charge interest under sections 139 and 217.' The Income -tax Officer proceeded with the assessment on the basis that the firm was an association of persons as the registration had been refused for the preceding year, that is, assessment year 1964 -65. The Tribunal ultimately granted registration with effect from July, 1963, for the assessment year 1964 -65. This has been stated at the Bar before us but that statement of fact has no bearing on the question that we have to consider.

(3.) THE Tribunal decided the appeal on merits and granted certain deductions but while disposing of the appeal, the Tribunal did not consider ground No. 6 in the memorandum of appeal. By a subsequent application the attention of the Tribunal was drawn to this omission and as there was a mistake apparent on the record, the Tribunal took up the consideration of this ground and disposed it of. The Tribunal relying of the decision of the Bombay High Court in Commissioner of Income -tax v. Jagdish Prasad Ramnath held that an appeal would be maintainable if the question of penal interest is also taken up along with the other grounds of appeal against the assessment itself. The Tribunal held that in the instant case the assessee challenged the charging of penal interest along with the other grounds of appeal against the assessment. They, therefore, held that the appeal was maintainable. Since the Appellate Assistant Commissioner had not considered the question of penal interest on merits, the Tribunal directed that the appeal before the Appellate Assistant Commissioner should be restored to his file regarding this ground of penal interest alone and the appeal was remitted back to the Appellate Assistant Commissioner for the limited question for considering the ground of penal interest charged under sections 139 and 217 of the Income -tax Act, 1961. Thereafter, at the instance of the revenue, the question hereinabove set out has been referred to us for our opinion.