Mrs. Daya Vati Vs. Income-tax Officer - Court Judgment

Excerpt:
1. there is a short but interesting point arising in this appeal for the assessment year 1982-83 filed by the assessee. the assessee had raised three contentions before the aac by taking grounds of appeal nos. 1, 2 and 3. ground no. 2 related to the charging of interest under section 217 of the income-tax act, 1961 ('the act') and ground no. 3 to the charging of another interest of rs. 243, which, according to the order of the aac, was interest charged under section 216 of the act.ground no. 1 sought to challenge the action of the ito in taking the determined share from the firm northern traders at rs. 65,997 against the returned amount by the assessee of rs. 54,997. the aac has considered the ground relating to interest under section 216 of rs. 243 to be an appealable ground and decided it. he held the ground relating to charging of interest under section 217 to be not appealable by holding that ground no. 1 merely contained an objection for the sake of objection and was taken in order to make the charging of interest under section 217 to be appealable. in his view when the assessment of the firm in question has been completed on the date of assessment in the case of the partner is made, it is but natural that share income as determined will be adopted irrespective of the fact whether assessment in the case of the firm has been challenged in appeal or not.proceeding on this basis, he concluded that it was obvious that no question of quantum of income is involved in the present appeal and the appeal was directed against the charge of interest simpliciter. the assessee has come in appeal to the tribunal.2. we have heard the submissions of both the sides. the real issue to be decided is whether the aac on the facts and in the circumstances of the case could hold the appeal filed by the assessee as not having any ground in relation to quantum of income assessed along with the challenge to the charging of interest under section 217. the assessee's authorised representative was more concerned with the merits ignoring this vital aspect of whether the appeal is entertainable or not. we will obviously look to the real issue. in our opinion, it is not open to the aac to treat a ground of appeal to be sham or non-existent and then conclude that no appeal would lie against the charging of interest under section 217. the weight in the ground is not the test about any particular ground of appeal having been taken or not. the ground may have no weight but it is still a ground of appeal and if its existence entitles the assessee to a benefit of making his another ground to be appealable, the assessee surely is entitled to that benefit. an appellate authority can allow or reject a ground but cannot take that ground to be sham or non-existent. we do not see any merit in this novel approach of the aac. again it is worth mentioning that the aac has, in fact, adjudicated on the ground to conclude that it lacks in substance. the adjudication having taken place ground will have to be considered as taken and as stated earlier, the assessee can get the benefit in getting the other ground about charging of interest under section 217 entertained. we reverse the decision of the aac on this point and restore it to his file for fresh disposal in accordance with law. it is not correct on the part of the assessee's authorised representative to raise the issue on merits before us for the first time.3. in the result, the appeal of the assessee may be treated to be allowed for statistical purposes only.

Judgment:
1. There is a short but interesting point arising in this appeal for the assessment year 1982-83 filed by the assessee. The assessee had raised three contentions before the AAC by taking grounds of Appeal Nos. 1, 2 and 3. Ground No. 2 related to the charging of interest under Section 217 of the Income-tax Act, 1961 ('the Act') and ground No. 3 to the charging of another interest of Rs. 243, which, according to the order of the AAC, was interest charged under Section 216 of the Act.

Ground No. 1 sought to challenge the action of the ITO in taking the determined share from the firm Northern Traders at Rs. 65,997 against the returned amount by the assessee of Rs. 54,997. The AAC has considered the ground relating to interest under Section 216 of Rs. 243 to be an appealable ground and decided it. He held the ground relating to charging of interest under Section 217 to be not appealable by holding that ground No. 1 merely contained an objection for the sake of objection and was taken in order to make the charging of interest under Section 217 to be appealable. In his view when the assessment of the firm in question has been completed on the date of assessment in the case of the partner is made, it is but natural that share income as determined will be adopted irrespective of the fact whether assessment in the case of the firm has been challenged in appeal or not.

Proceeding on this basis, he concluded that it was obvious that no question of quantum of income is involved in the present appeal and the appeal was directed against the charge of interest simpliciter. The assessee has come in appeal to the Tribunal.

2. We have heard the submissions of both the sides. The real issue to be decided is whether the AAC on the facts and in the circumstances of the case could hold the appeal filed by the assessee as not having any ground in relation to quantum of income assessed along with the challenge to the charging of interest under Section 217. The assessee's authorised representative was more concerned with the merits ignoring this vital aspect of whether the appeal is entertainable or not. We will obviously look to the real issue. In our opinion, it is not open to the AAC to treat a ground of appeal to be sham or non-existent and then conclude that no appeal would lie against the charging of interest under Section 217. The weight in the ground is not the test about any particular ground of appeal having been taken or not. The ground may have no weight but it is still a ground of appeal and if its existence entitles the assessee to a benefit of making his another ground to be appealable, the assessee surely is entitled to that benefit. An appellate authority can allow or reject a ground but cannot take that ground to be sham or non-existent. We do not see any merit in this novel approach of the AAC. Again it is worth mentioning that the AAC has, in fact, adjudicated on the ground to conclude that it lacks in substance. The adjudication having taken place ground will have to be considered as taken and as stated earlier, the assessee can get the benefit in getting the other ground about charging of interest under Section 217 entertained. We reverse the decision of the AAC on this point and restore it to his file for fresh disposal in accordance with law. It is not correct on the part of the assessee's authorised representative to raise the issue on merits before us for the first time.

3. In the result, the appeal of the assessee may be treated to be allowed for statistical purposes only.