1971 PLP 97 (PTD)

VEERASWAMI, J.‑This petition under Article 226 of the Constitution is to quash an order of the first respondent, the Central Board of Revenue, dated April 26, 1962. The petitioner is a private limited company and for the assessment year 1959‑60, it was charged to a penal interest of Rs,. 9,176'09 under section 18‑A(6) and (7) of the Income‑tax Act,. 1922. That order was dated September 1, 1960. On August 30, 1961, an applica tion was filed before the Commissioner of Income‑tax to revise the order of the Income‑tax Officer relating to the penal interest but it was dismissed by him on November 30, 1961, on a technical ground. He posed for his decision two points : (1) in regard to the validity of 'the revision petition and (2) whether the levy of penal interest was justified on the facts and circumstances of the case. On his view on the first point, he did hot decide the second. He thought that a revision under proviso (c) to section 33‑A(2) of the Act would not lie to him. In taking that view he purported to follow C. Gnanasundara Nayagar v. Commissioner of Income‑tax ((1961) 41 I T R 375). In our opinion, the view of the Commissioner cannot be maintained. It is true that C. Gnanasundara Nayagar v. Commis sioner of Income‑tax, held that an order of assessment could not be revised by the Commissioner on an application by the assessee under section 33‑A(2) of the Act. But that does not decide the point in the present case. Boddu Seetharamaswamy v. Commissioner of Income‑tax ((1955)28 I T R 156), is directly in point. There Subba Rao, C. J., as he then was, and Bhimasankaram, J., held that section 30 of the Indian Income‑tax Act which regulated the rights of appeal conferred under the Act did not provide for an appeal to the Appellate Assistant Commissioner against an order imposing penal interest under section 18‑A(6). The learned Judges also pointed out that such imposition of penal interest was not a part of the process of assessment of the income under section 23 so as to make the order appealable under section 30 for the reason that the tax and the penal interest were added together and collected in the same manner. The learned Judges followed an earlier view of the Allahabad High Court in Pt. Deo Sharma v. Commissioner of Income‑tax ((1953) 23 I T R 226), With respect, we are in entire agreement with that view. The point is that penal interest could in no sense be regarded as a part of the total income of the assessee who is assessed under section

23. The fact that the penal interest is added to the tax, since it fines a place in the order of assessment, can make no difference to the true character of penal interest. As the expression itself indicates, it is a penalty levied on account of underassess ment of the estimated income for purposes of payment of advance tax. Section 30 which provides for appeals against specific orders makes no mention of section 18‑A(6). We consider, therefore that the revision petition filed before the Commissioner was competent and did lie. On that view, the petition is allowed. We may mention that the affidavit in support of the petition covers the merits of the levy of penal interest. But inasmuch as the Commissioner himself did not go into that matter on the view he took as to the maintainability of the revision petition, we do not propose to deal with it either. The result is the Commissioner will have to dispose of the revision petition afresh on its merits. We may also observe that, though the Commissioner's order was taken up on a petition to the Central Board of Revenue, the latter has disposed of the matter on the view that it had no authority to interfere with the Commissioner's order. That order being not on the merits, it does not even require to be quashed formally. No costs.