COMMISSIONER OF INCOME-TAX VS ARUNACHAL SAW AND VENEER MILLS (P.) LTD.
1999 P T D 552
[225 I T R 363]
[Gauhati High Court (India)]
Before D. N. Baruah and N. S. Singh, JJ
COMMISSIONER OF INCOME-TAX
Versus
ARUNACHAL SAW AND VENEER MILLS (P.) LTD.
Income-tax Reference No.27 of 1995, decided on 23/09/1996.
Income-tax---
----Rectification of mistakes---Interest----Delay in filing return---Levy of interest---Can be charged at the time of rectification proceedings---Indian Income Tax Act, 1961, Ss.139(8), 154 & 217.
Although the assessee did not file its return in time, as the income was below the taxable limit, the Assessing Officer did not charge interest under section 139(8) and section 217 of the Income Tax Act, 1961, in the original assessment. However, after giving due notice, he commenced rectification proceedings and he found that the assessee had taxable income and he charged interest under sections 139(8) and 217. The Commissioner of Income-tax (Appeals) allowed t1ie appeal on the ground that interest could not be charged in rectification proceedings. The Tribunal upheld the order of the Commissioner (Appeals). On a reference:
Held, that interest under sections 139(8) and 217 could be charged at the time of rectification of the assessment order.
G. K. Joshi for the Commissioner.
Nemo for the Assessee.
JUDGMENT
D. N. BARUAH, J.---By this reference, under section 256(1) of the Income Tax Act, 1961, (for short, "the Act"), the following question has been referred for opinion of this Court:
"Whether, on the facts and in the circumstances of the case, the Tribunal has not erred in holding that no interest under sections 139(8) and 217 of the Act can be charged at the time of rectification of the assessment order?"
The assessee is a company incorporated under the Companies Act. For the assessment years 1978-79 to 1980-81, the total income of the assessee was assessed at below the limit of taxable income. As there was a late filing of the return and as the income was below the taxable income, the Assessing Officer did not charge interest under section 139(8) and section 217 of the Act in the original assessment. However, a rectification proceeding was initiated after giving due notice and in the said proceeding it was found that the assessee had more income which is taxable under the Act and accordingly interest had been charged under sections 139(8) and 217 of the Act. Against that an appeal was preferred before the Commissioner of Income-tax (Appeals), who allowed the appeal by saying that interest cannot be charged in the rectification proceedings. Being aggrieved, the Revenue preferred an appeal before the Income-tax Appellate Tribunal. The Tribunal dismissed the appeal. Hence, at the instance of the Revenue, the above question has been referred.
We have heard Mr. G. K. Joshi, learned standing counsel appearing on behalf of the Revenue. None appears on behalf of the assessee.
Mr. Joshi submits that if the return is filed at a belated stage then the interest is mandatory under section 139(8) and for other reasons under section 217 of the Act. In the present case, there was a rectification proceeding and in the said proceeding the income of the assessee was-found to be above the taxable limit and if no return had been filed on the specified date, for the delay interest ought to have been charged and the Assessing Officer had rightly charged the interest which was disallowed by the Commissioner of Income-tax (Appeals) as well as the Tribunal.
Law in this regard is very clear. Section 139(8)(a) of the Act says that where the return under subsection (1) or subsection (2) or subsection (4) for an assessment year is furnished after the specified date, or is not furnished, then the assessee shall be liable to pay simple interest at the rate prescribed under that section. Similarly under section 217 of the Act interest is liable to be paid for conditions specified therein.
In this case admittedly as per the assessment proceeding the return was not filed on the due date. In our opinion, the interest is liable to be paid. Therefore, we answer the question in the negative, in favour of the Revenue and against the assessee.
A copy of this judgment under the signature of the Registrar and the seal of the High Court shall be transmitted to the Income-tax Appellate Tribunal.
M.B.A./1723/FC???????????????????????????????????????????????????????????????????????????????? Order accordingly