Income-tax---

----Advance tax---Return---Interest---Waiver of interest---Two brothers partners in the same firm---Waiver of interest in case of one partner and rejection of application of other partner---Not valid---Indian Income Tax Act, 1961, Ss. 139 & 217---Constitution of India, Art.226.

Two brothers Y and U had invested certain sums by way of capital in a firm. Both of them filed returns of income, showing only agricultural income. Notice had been issued for the assessment years 1987-88 and 1988-89. The Assessing Officer determined their taxable income and proceeded to charge interest under sections 139(8) and 217, of the Income Tax Act, 1961. They filed applications for waiver of interest. In the case of Y, interest charged under section 139(8) was waived but, in the case of U, interest charged under section 139(8) was sustained and not waived. Similarly, in the case of U, interest charged under section 217 of the Act was sustained for a period of one year and the balance was waived but, in the case of Y, no such relief was granted. On a writ petition against the orders:

Held, that the circumstances in the case of the two petitioners were similar but interest under section 139(8) was waived in the case of one petitioner but sustained in the case of the other: Similarly, interest under section 217 was charged for one year only in the case of one petitioner whereas in the case of the other petitioner, interest wag charged for the entire period. There was no sufficient reason nor any justification to adopt two different courses in the cases of the two petitioners. In the case of Y, interest, charged under section 217 of the Act for the assessment year 1988-89 had to be sustained for the period of one year, and, the balance amount of interest had to be waived as was done by the Deputy Commissioner of Income-tax in the case of U for' the assessment year 1987-88. In the case of U, interest charged under section 139(8) of the Act for the assessment year 1987-88 had to be waived as was done in the case of Y for the assessment year 1988-89.

B.K. Jhingan for Petitioner.

R.P. Sawhney, Senior Advocate and Rajesh Bindal for Respondents.

JUDGMENT

N.K. AGRAWAL, J.---These are two writ petitions (Civil Writ Petitions Nos. 13865 and 13599 of 1996) filed by two brothers, namely, Muhammad Yousuf and Muhammad Rehmat Ullah, respectively, under Article 226 of the Constitution for quashing the orders passed by the Commissioner of Income-tax, Patiala, for the assessment years 1988-89 and 1987-88. Since the facts and questions arising in both the petitions are identical, these are being decided together.

Both the petitioners herein had invested, as partners, certain money by way of capital in a partnership-firm, Azad Rice Mills. Malerkotla. The Assessing Officer issued notices under section 147 read with section 148 of the Income Tax Act, 1961 (for short, "the Act"), on the ground that certain taxable income had escaped assessment. Both the petitioners filed returns of income, showing only agricultural income. Notices had been issued for the assessment years 1987-88 and 1988-89. Since the present writ petitions relate to a question regarding waiver of interest for the assessment years 1987-88 and 1988--89 the facts relevant to those orders are being examined.

Muhammad Yousuf (in CWP No.13865 of 1996) was assessed to tax under section 143(3) of the Act by a common assessment order, dated March 28, 1994, for the assessment years 1987-88 and 1988-89. Taxable income was determined by the Assessing Officer at Rs.1,04,000 for the assessment year 1988-89 on the basis of investment of Rs.89,000 made by the petitioner in the partnership firm and Rs.15,000 estimated to be the income from undisclosed sources utilized in meeting the household expenses. The Assessing Officer, after determining the taxable income as aforesaid, proceeded to charge interest under sections 139(8) and 217 of the Act. The petitioner, Muhammad Yousuf, filed an appeal` against the assessment order with the plea that his sole and exclusive source of income was agriculture. The Deputy Commissioner of Income-tax dismissed the petitioner's plea and upheld the assessment for 1988-89. Thereafter, the petitioner filed an application for the waiver of interest charged under section 139(8) and the Deputy Commissioner waived interest, vide order, dated May 25, 1995. However, the petitioner's application for waiver of interest charged under section 217 of the Act was rejected. The petitioner filed a revision application under section 264 of the Act before the Commissioner of Income?-tax, seeking waiver of interest charged under section 217 for the assessment year 1988-89. The petitioner raised a plea that, in the case of his brother, Muhammad Rehmat Ullah, interest charged under section 217 had been waived in similar circumstances and, therefore, similar view must be taken in the case of the petitioner also. The plea, however, did not find favour with the Commissioner of Income-tax and the petitioner's revision application came to be rejected.

In the case of Muhammad Rehmat Ullah (in CWP No. 13599 of 1996), assessments were framed, after issuing notice under section 147 read with section 148 of the Act, by a common assessment order, dated March 28, 1994, for the assessment years 1987-8$ and 1988-89. Taxable income was determined by the Assessing Officer of the assessment year 1987-88 at Rs.1,05,000. Interest was also charged under sections 139(8) and 217 of the Act. In appeal, assessment made at Rs.1,05,000 for the assessment year 1987-88 was upheld by the Deputy Commissioner of Income-tax vide order, dated March 16, 1995. The Deputy Commissioner rejected the petitioner's plea that the petitioner derived income from agriculture only and the income was not taxable. The petitioner thereafter filed an application before the Deputy Commissioner for waiver of interest charged under section 217 of the Act. The Deputy Commissioner sustained interest fox one year and waived the balance amount charged under section 217 of the Act. The application for waiver of interest charged under section 139(8) had earlier been rejected by the Assessing .Officer. The petitioner filed a revision application before the Commissioner of Income-tax under section 264 .of the Act but that was rejected.

In the present writ petitions, orders quashing the assessee applications, seeking waiver of interest, have been challenged.

Shri B.K. Jhingan, learned counsel for the petitioners, has argued that contrary views were taken by the taxing authorities while dealing with the applications of the two brothers seeking waiver of interest and that was not fair and justified. In the case of Muhammad Yousuf, interest charged under section 139(8) was waived but, in the case of Muhammad Rehmat Ullah, interest charged under section 139(8) was sustained and not waived. Similarly, in the case of Muhammad Rehmat Ullah, interest charged under section 217 of the Act was sustained for a period of one year and the balance was waived but, in the case of Muhammad Yousuf, no such relief was granted. Since the facts and circumstances in the cases of both the petitioners, who were brothers, were identical and both had been assumed to be deriving income from other sources, there was no sufficient reason to take divergent views while dealing with the applications seeking waiver of interest.

Interest under section 139(8) of the Act is chargeable if an assessee files return after the due date or fails to file the return. Interest is charged on the amount of tax which is found payable by the assessee at the time of assessment. Interest under section 217 is chargeable if an assessee fails to file the statement or the estimate of advance tax and does not pay the advance tax. Interest is to be computed on the amount of assessed tax.

As has already been noted, the circumstances in the cases of the two petitioners were similar but interest under section 139(8) was waived in the case of one petitioner but sustained in the case of the other. Similarly, interest under section 217 was charged for one year only in the case of one petitioner whereas, in the case of the other petitioner, interest was charged for the entire period. There appears no sufficient reason or any justification to adopt two different courses in the cases of the two petitioners.

In the result, both the writ petitions are allowed. In the case of Muhammad Yousuf, interest charged under section 217 of the Act for the assessment year 1988-89 is sustained for the period of one year and the balance amount of interest is waived as was done by the Deputy Commissioner of Income-tax in the case of Muhammad Rehmat Ullah for the assessment year 1987-88. In the case of Muhammad Rehmat Ullah, interest charged under section 139(8) of the Act for the assessment year 1987-88 is waived as was done in the case of Muhammad Yousuf for the assessment year 1988-89. No order as to costs.

M.B.A./4079/FC???????????????????????????????????????????????????????????????????????????????? Petition allowed.