Income-tax---

----Assessment---Advance tax---Interest---Waiver---Assessment made for first time on return filed in response to a notice under S.148 is a regular assessment---Interest can be levied in such a case under Ss. 139 & 217---No case made out for waiver of interest---Interest could not be waived---Indian Income Tax Act, 1961, Ss. 139, 209 & 217---Indian Income Tax Rules, 1962, Rr.40 & 117A---Constitution of India, Art. 226.

The assessment made for the first time on the basis of the return filed pursuant to a notice under section 148 of the Income-tax Act. 1961, is a regular assessment:

Held, dismissing the writ petition, that in the instant case, the assessments were completed only on the basis of the returns filed by the petitioner pursuant to the notice under section 148. Hence, the levy of interest under sections 139(8) and 217 was'. valid. The Commissioner of Income-tax had found that no valid reason had been urged on behalf of the petitioner for waiver of interest levied under section 139(8) or under section 217 of the Act. The Commissioner of Income-tax was justified in rejecting the application for waiver of interest.

Lally Jacob v. ITO (1992) 197 ITR 439 (Ker.) fol

P.C. Chacko for Petitioner.

P.K.R. Menon and N.R.K. Nair for Respondent.

JUDGMENT

The matter arises under the Income Tax Act, 1961. The petitioner, a partnership firm engaged in electrical repair works at Karuvelippady, is an assessee on the files of the Income-tax Officer, C-Ward, Circle I, Ernakulam. For the assessment years 1978-79 to 1982-83, the petitioner filed returns under the Income-tax Act beyond the period prescribed therefore under the Act. The assessing authority did not take any action on the said returns filed by the petitioner. Subsequently, the Income-tax Officer issued notices to the petitioner under section 148 of the Act directing it to file its returns for the years 1978-79 to 1982-83. In compliance with the said notices the petitioner filed separate returns for the aforesaid years. Based on these returns, -the Income-tax Officer completed the assessment for the aforesaid years and levied penal interest under section 139(8) for the non-filing of the return on the due dates and also levied interest under section 217 for non remittance of advance tax and for not filing of estimate in terms of section 209 of the Income-tax Act. The assessment orders for the above five years are evidenced by Exhs. P-1 to P-5. On receipt of the said assessment orders, the petitioner filed five separate applications before the Income-tax Officer, as per rules 40. and 117A of .the Income-tax Rules. The said applications were rejected by the Income-tax Officer without assigning any reason. So, the petitioner preferred revisions before the Commissioner of Income-tax under section 264 of the Income-tax Act. The Commissioner of Income-tax also rejected the applications for the years 1978-79 to 1981-82 and granted partial relief for the assessment year 1982-83. Aggrieved by those orders, the petitioner filed writ petition O.P. No. 8439 of 1988 before this Court and this Court by its judgment: dated October 28,1988, quashed the orders of the authorities and directed the Income-tax Officer to look into the matter afresh and the Income-tax Officer dismissed the applications by a common order. The revision preferred against the said order was also dismissed by the Commissioner of Income-tax. The said order was also challenged by the petitioner before this Court in O.P. No. 1010 of 1991 and this Court passed a consent order, dated October 7, 1991, quashing the order passed by the Commissioner of Income-tax and directed him to pass fresh orders on the merits in accordance with law after giving an opportunity to the petitioner. Thereafter, the matter again carpe up before the second respondent for fresh consideration. At the time of hearing the assessee raised various contentions. The first contention was that the returns of income for all these years were filed beyond the statutory period and such belated returns were invalid in law and so no assessments could be made on the basis of such invalid returns and in that sense the levy of interest was trot correct. In other words, the - contention of the petitioner was that the levy of interest under section 139(8) and under section 217 in assessments pursuant to invalid returns is illegal and should be cancelled. The said contention was rejected by the Commissioner holding that the assessments for the years 1978-79 to 1982-83 were not made pursuant to the belated returns filed by the petitioner, but only. on the basis of the returns filed by the petitioner for the aforesaid years pursuant to the notice issued under section- 148 of the Act, and, therefore, no invalidity can be attached to the assessment orders. A new contention was urged below the Commissioner to the effect that interest under section 139(8) or under section 217 was not leviable in an order of assessment made in pursuance of a notice under section 148. The contention was that the interest under the aforesaid provision can be levied only in a regular assessment as defined in section 2(40) of the Act. According to the appellant, it is only those orders which are passed either under section 143 or under section 144 which could be considered as regular assessment and that it was not permissible to expand the scope of the expression "regular assessment" to include any other order.

The Commissioner observed that in the present case the assessments have been made for all the five years after the issue of a notice under section 148 as the assessee has not filed the return under section 139(1) or under section 139(2) and, therefore, these assessments were' not in fact reassessments under section 147 in the sense that the assessments made originally were not reopened under section 147. The Commissioner further observed that these are assessments made for the first time under section 143 read with section 147, and that a Full Bench of this Court by judgment, dated April 10, 1992, in the case of Lally Jacob v. ITO (1992) 197 ITR 439 (FB) in O. P. No. 23 of 1987-C held that any assessment made for the first time by resort to section 147 is a regular assessment for the purpose of invoking section 217 of the Act. The said contention was accordingly rejected. The assessing authority has considered the question of waive with reference to the provisions of Rules 40 and 117-A of the Rules and found that there is no case for waiver or reduction of interest under section 139(8) or under section 217 of the Act, and that no case was made out before the Commissioner for grant of such relief.

Though learned counsel for the petitioner has argued before me that the respondents were not justified in refusing to grant the relief of waiver/ reduction of interest levied under section 139(8) and under section 217, I do not find any reason to interfere with the orders passed by the authorities below. It is seen that the Commissioner of Income-tax has considered the matter in all its aspects in Exh. P-9 order. As stated by the Commissioner, the assessments in these cases were not made on the basis of the returns filed by the petitioner beyond the time prescribed under the Act and the assessments were completed only on the basis of the returns filed by the petitioner pursuant to the notice under section 148 issued by the first respondent. In that sense the assessments made as per Exhs. P-1 to P-5 are only assessments made for the fist time. This Court in the 'decision in Lally Jacob v. ITO (1992) 197 ITR 439 . (FB) held that the assessment made for the first time on the basis of the returns filed pursuant to a notice under section 148 is a regular assessment, which decision has also be relied on by the Commissioner. The Commissioner has also observed that no valid reason has been urged on behalf of the petitioner for waiver of interest levied under section 139(8) or under section 217 of the Act. In these circumstances, I ant of the view that the Commissioner of Income-tax has rightly rejected the various contentions of the petitioners.

There is no merit in this original petition. It is accordingly dismissed. But in the circumstances of the case, there will be no order as to costs.

M.B.A./3398/FCPetition dismissed