S.K. JHA, J.:

These two cases were taken up together as parties and the questions involved in them are common. They were primarily referred to a Full Bench in view of the two inconsistent decisons in the case of CIT vs. Daimler Benz, A.G. 1977 CTR (Bom) 568 (FB): (1977) 108 ITR 961 (Bom) (FB) , a judgment of the Full Bench of the Bombay High Court, and the case of CIT vs. Geeta Ram Kali Ram (1980) 15 CTR (All) 67 (FB) : (1980) 121 ITR 708 (All) [LQ/AllHC/1979/400] (FB) , a judgment of the Full Bench of the Allahabad High Court.

2. Before I embark upon the question of correctness of either of these two decisions, It is worthwhile to mention the facts as borne out by the statement of case which again, is common in both the cases. These are references under s. 256(1) of the IT Act, 1961 (hereinafter to be referred to as "The Act" by the Tribunal, ‘A' Bench, Patna, (hereinafter to be called "The Tribunal"), and the following questions of law have been framed for the opinion of this Court :

"1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in refusing to admit the additional ground claiming that the assessee's income for the asst. yrs. 1963-64 and 1964-65 was exempt under s. 11 of the IT Act, 1961

2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that there was no appeal provided against the charging of interest under s. 217 of the Act and in declining to adjudicate upon the correctness of charging of interest under that section "

3. The relevant facts may be extracted from the statement of the cases. These are two reference applications made under s. 256(1) of the Act by the assessee-corporation and common questions of law for the asst. yrs. 1963-64 and 1964-65 arise out of the Tribunal's consolidt. order dt. 15th Sept. 1973. The assessee, as has already been stated above, is the Bihar State Road Transport Corporation. In respect of both the years, the original grounds of appeal were only in relation to the charging of interest under s. 217 of the Act. Subsequently, however additional grounds of appeal were filed by the assessee at the time of hearing of the appeals themselves, out of which question No. 1, as pointed out above, arises.

4. It was contended on behalf of the Revenue opposing the admission of the additional grounds that they did not arise out of the order of the AAC and they were not questions of law and could not be decided without ascertaining certain basic facts. It was also submitted that the assessee had come at a very late stage of the appeal before the Tribunal to file the additional grounds in question for which there was no justification.

5. The Tribunal held that the additional grounds in question did not arise out of the orders of the ITO or the AAC, and in this connection some cases were referred to by the Tribunal. It further found that a ground could be raised before the Tribunal only if it was a pure question of law going to the root of the matter and did not involve any investigation into facts. In this connection the Tribunal relied upon a decision of the Supreme Court in the case of Moti Ram vs. CIT (1958) 34 ITR 646 (SC) [LQ/SC/1958/61] . The Tribunal was of the view that in deciding the issue involved in the additional grounds it was necessary to find several facts regarding the objects of the corporation and the business actually carrried on, the position of accounts, application of income, etc. The Tribunal referred to the provisions of s. 11 of the Act, whereunder exemption is granted to certain nature of income to the extent to which such income is applied to charitable purposes in India. It further held that whether a trust is charitable or not could be determined only on the basis of evidence before the Court. Such questions are, therefore, questions of fact and law and the first step for deciding such questions is to have the facts of the case in detail. The Tribunal further found that new grounds had been raised for the first time before the Tribunal and they could not be admitted on the facts and in the circumstances of the instant case.

6. With regard to the second question framed for our opinion, the assessee had raised the original ground before the Tribunal that the AAC had erred in confirming the charge of interest under s. 217 r/w s. 212(3) of the Act. It was pleaded that the assessee's claim had been rejected without considering the merits, and on the facts of the case, the interest should have been waived or reduced. It was contended on behalf of the Revenue that the charging of interest under s. 217 was not appealable before the AAC and, therefore, the consideration of this matter by the AAC was not correct. The Tribunal referred to the provisions of s. 246 and held that the charging of interest under s. 217 had not been made appealable under that section. It further referred to the provisions of ss. 215 and 217 of the Act in order to show that although the charging of interest under s. 216 was made appealable under s. 246(m), there was no such specific provision for appeal with respect to charging of interest under ss. 215 and 217 in so far as there was a provision for waiver or reduction of the amount of interest which were to be governed by the statutory rules framed under the Act. These are the only facts on which the present references have been made.

7. I shall first take up point No. 1 with regard to the admissibility of the additional grounds. I have no hesitation in coming to the conclusion that the additional grounds raised in relation to the applicability of s. 11 of the Act could not be so raised by the assessee at the time of hearing of the appeal by the Tribunal. Decisions are numerous that where a new ground entails the investigation into questions of fact, which were never raised before, there is no question of applying a particular provision of law which needs for its applicability certain foundational facts. No foundational facts were pleaded by the assessee at any point of time in regard to the assessee being covered by the provisions of s. 11 of the Act either before the ITO or before the AAC. No such fact was therefore, investigated. In the case of Moti Ram vs. CIT (supra), It was held by the Supreme Court that the Tribunal has full jurisdiction and it is in its discretion to refuse permission to an appellant to raise for the first time before it new questions of fact which cannot be investigated without taking further evidence. Even if the Tribunal has already given permission to the appellant to produce affidavits and other evidence pertaining to the new question of fact, It is open to it not to accept them if it decides not to allow the appellant to raise new questions of fact. The instant cases stand on a worse footing. The Tribunal having held that no foundation of facts having been laid for the purpose of the attaction of s. 11 of the Act, It did not think it proper/or legal to allow the assessee to raise such a ground at the hearing of the appeal before it. In the case of Manji Dana vs. CIT (1966) 60 ITR 582 (SC) it was held by the Supreme Court that whether the discretion of the Tribunal under r. 12 of the Appellate Tribunal Rules, 1946, has been properly exercised in a given case in refusing to allow a question not set forth in the memorandum of appeal to be raised, would not normally be a question of law. Where, in a given case, therefore, no fact has been brought on the record to attract the operation of s. 11 of the Act, It cannot be said that the Tribunal had acted illegally and, in the circumstances of the case, It has to be held that it is not a question of law. In the case of CIT vs. Karamchand Premchand Private Ltd. (1969) 74 ITR 254 (Guj) [LQ/GujHC/1968/128] , the Gujarat High Court held that where in an appeal to the AAC by an assessee against an order of assessment the assessee has not questioned the decision of the officer on a point decided and the AAC has not in his order considered that point, the assessee is not entitled to question the decision of the officer on the point in an appeal to the Tribunal against the order of the AAC and the Tribunal is not entitled to allow the assessee to agitate the question under the guise of granting leave under r. 11 of the IT (Appellate Tribunal) Rules, 1963. All these cases are a pointer in one direction that, on the facts and in the circumstances of the case, the assessee was not entitled to raise those new grounds as a question of law for which the foundational facts or, for that matter, any relevant fact were not brought on the record either before the ITO or before the AAC. I, therefore, am constrained to hold that the Tribunal was right in not allowing the additional grounds with regard to the exemption claimed by the assessee under s. 11 of Act to be raised before it.

8. Coming now to the only other question as to whether the charging of interest under s. 217 was appealable or not, on the facts and in the circumstances of the cases, I shall hold that it was appealable. The consensus of judicial opinion is to the effect, in so far as I have been able to see it, that, where the charging of interest forms a composite part of the assessment order itself and where the quantum of the assessed tax is under challenge, the charging of interest under s. 217 cannot be bifurcated and has to be held to be appealable along with the assessment matter. In the instant cases, the order of the ITO in the assessment matter shows that while assessing the tax he has also passed an order that "penalty proceedings under s. 271(1)(c) and s. 273(b) have been initiated. Charge penal interest under s. 217." There is no doubt, therefore, that the interest has been ordered to be charged while passing the assessment order itself. In my view, the judgment of the Full Bench of the Bombay High Court in CIT vs. Daimler Benz, A.G. (supra) correctly, if I may say so with great respect, lays down the law. This was a case under the Indian IT Act, 1922, Dealing with the provisions of s. 18A and s. 30 of that Act, which are in pari materia with the corresponding provisions of the 1961 Act, It was held by the Full Bench that s. 30 of the Act (1922 Act) contains provisions with regard to appeals to the AAC against certain orders of the ITO. No appeal has been specifically provided thereunder against an order made either under s. 18A(6) or under s. 18A(8), but sub-section (1) of s. 30, inter alia, provides that any assessee denying his liability to be assessed under the Act may appeal to the AAC against an order of the ITO and the question whether the assessee fell within the phrase "denying his liability to be assessed under this Act" embraces within itself the question in regard to the charging of interest. It was held in the context of that case that if, in respect of such decisions, which are implicit in his action in resorting to s. 18A of the 1922 Act, the assessee feels that the ITO has gone wrong, he would be an assessee desiring to "deny his liability to be assessed under this (1922) Act" and, therefore, It would be unfair to deny him the right of appeal to the AAC. It does appear that if after resorting to s. 18A(1), the ITO were to proceed against the assessee by way of charging penal interest on him, either under s. 18A(6) or under s. 18A(8) for some defualt on his part and the assessee were minded to challenge merely the quantum of penal interest charged on him, he would have no right of appeal to the AAC inasmuch as the assessee in that event would not fall within the phrase "assessee denying his liability to be assessed under this Act" occurring in s. 30(1) of the 1922 Act. On a proper construction of the relevant phrase occurring in s. 30(1) of that Act, It had to be held that in the former type of cases an appeal would lie to the AAC whereas no appeal would lie merely against the quantum of interest charged by the ITO on the assessee. An assessee can prefer an appeal to the AAC against his regular assessment and urge all contentions which, if accepted, must result in the ITO holding that there was no liability to pay advance tax, and therefore, there was no liability to penal interest, or, even in an appeal preferred against an order charging penal interest, It would be open to him to raise a contention that the income in respect of which tax is imposed and in respect of which interest is calculated for the purpose of s. 18A(8) was not income which fall under the head covered under s. 18A or he could contend that the income calculated by the ITO as income of the assessee for the relevant year was not the proper income and that there was no income at all or the income was less than the income calculated. It is clear, therefore, that if the assessee raises an objection to the regular assessment purported to be made by the ITO by an order in which there is a direction to charge penal interest under s. 217, It is merely incidental and, as a necesary corollary, to the factum of the interest not being chargeable in view of the fact that the assessment of tax made is the subject-matter of challenge before the appellate Court. Decisions are numerous on the point in support of this contention on behalf of the assessee, namely, the case of CIT vs. Sharma Construction Co. (1975) 100 ITR 603 (Guj) [LQ/GujHC/1974/103] , a decision of the Gujarat High Court, CIT vs. Mahabir Parshad & Sons (1980) 17 CTR (Del) 161 [LQ/DelHC/1980/144] : (1980) 125 ITR 165 (Del) a decision of the Delhi High Court, which has exhaustively dealt with the point, and CIT, vs. Raghubir Singh & Sons (1980) 18 CTR (P&H) 107 : (1980) 125 ITR 256 (P&H) , a decision of the Bench of the Punjab and Haryana High Court. I may add that I am in full agreement with Divan, C.J. in the case of Sharma Construction Co. (supra), that when an appeal is filed against a regular assessment, It would be open to an assessee to take all the points which may legitimately not only reduce the taxable income or the tax to be paid or with regard to the proper head under which the income should fall but also reduce the quantum of penal interest but no right of appeal has been given to the assessee simply against the quantum of penal interest.

9. The reasons given by the Allahabad High Court in the Full Bench decision in the case of CIT vs. Geeta Ram Kali Ram (supra), seem to be fallacious, if I may say so with great respect. That decision has not taken note of the distinction between cases in which the quantum of the tax assessed or, for that matter, the liability to that assessment is under challenge before the appellate Court against an order of the Assessing Officer who has passed a composite order making the assessee liable for penal interest also. I, therefore, do not agree with the decision of the Allahabad High Court and I am in full agreement with the decision aforementioned, namely, of the Bombay, Delhi, Punjab and Haryana and Gujarat High Courts. As I have repeatedly held above, the instant case is not one of such nature where only the quantum of penal interest was under challenge before the appellate authority, It was so in the context of the amount of tax assessed and, therefore, fell within the four corners of the proposition of law enunciated by the Gujarat High Court.

10. I accordingly answer the first question referred to us against the assessee and in favour of the Revenue and hold that the Tribunal was correct in refusing to permit the assessee to take the additional grounds on the question of applicability of s. 11 of the Act.

11. In so far as the second question is concerned, I would answer the question in favour of the assessee and against the Department and hold that, on the facts and in the circumstances of the case, It was permissible for the assessee to raise the question of penal interest under s. 217 of the Act before the Tribunal.

12. Since the answers have been equally divided, I shall make no order as to costs.

NAZIR AHMAD, J.:

I agree.

PRABHA SANKER MISHRA, J.:

I agree.