COMMISSIONER OF INCOME-TAX VS S. ANTONY
2002 P T D 1718
[242 I T R 363]
[Madras High Court (India)]
Before R. Jayasimha Babu and Mrs. A. Subbulakshmy, JJ
COMMISSIONER OF INCOME-TAX
versus
S. ANTONY
T.C No.1253 of 1987 (Reference No. 762 of 1987), decided on /01/.
th
September, 1998. Income-Tax---
----Return---Advance tax---Assessment---Interest---Delay in filing returns---Failure to pay advance tax---Meaning of "regular assessment'- Assessment for first time under S.147---Interest can be levied under Ss.139(8) & 217---Indian Income Tax Act, 1961, Ss. 139 & 217.
Words and Phrases---Meaning of "regular assessment".
The assessment made for the first time though not on the basis of return voluntarily filed in the manner required by the statutory provision and within the time prescribed therein is a regular assessment. The word "assessment" as defined in the Act includes reassessment.
The assessee was an individual carrying on real estate business. As he did not file any return for the assessment year 1976-77, the Income-tax Officer issued a notice to him under section 148, in response to which a return was filed admitting an income of Rs.28,410. The assessment was completed under section 143(3) read with section 147(x) of the Income Tax Act, 1961, and in the assessment order interest was also charged under sections 139(8) and 217 for delay in filing the return and also for non-payment of advance tax in accordance with. law. The Commissioner of Income-tax (Appeals) deleted the interest and this was upheld by the Tribunal. On a reference: '
Held, that in this case no reassessment had been done. The Income-tax Officer had issued a notice calling for a return and thereafter the return had been filed. The assessment so made for the first time was in fact a regular assessment and the applicability of sections 139 and 217 of the Act, were not excluded in respect of such an assessment. Interest could be levied under sections 139 and 217.
K. Gopalaswami Mudaliar v. Fifth Addl. ITO (1963) 49 ITR 322 (Mad.) applied.
CIT v. Pratap Singh of Nabha (1982) 138 ITR 27 (Delhi); Deviprasad Kejriwal v. CIT (1976) 102 ITR 180 (Bona.); Lally Jocob v. ITO (1992) 197 ITR 439 (Ken.) and National Agricultural Cooperative Marketing Federation of India Ltd. v. Union of India (1981) 130 ITR 928 (Delhi) fol.
Charles D' Souza v. CIT (1984) 147 ITR 694 (Kar.) ref.
C.V. Rajan for the Commissioner. Nemo. for the Assessee.
JUDGMENT
R. JAYASIMHA; BABU, J.----The question referred to us at the instance of the Revenue is as to whether on the facts and in the circumstances of the case, the Appellate Tribunal was correct in law in holding that the interest under sections 139(8) and 217 was not leviable in respect of an assessment made under section 147. The assessment year is 1976-77.
The assessee is an individual carrying on real estate business. As he did not file any return for the assessment year 1976-77, the Income-tax Officer issued a notice to him under section 148, in response to which a return was filed admitting an 4ncome of Rs.28,410. The assessment was completed under section 143(3) read with section 147(a) of the Income-tax Act and in the assessment order interest was also charged under sections 139(8) and 217 for delay in filing the return and also for non-payment of advance tax in accordance with law.
On appeal preferred by the assessee the interest so levied was ordered to be deleted by the Commissioner who relied on a decision of the Karnataka High Court reported in Charles D' Souza v. CIT (1984) 147 ITR 694. The Tribunal affirmed the view of the Appellate Assistant Commissioner and, therefore, this reference.
This Court in the case of Gopalaswami Mudaliar v. Fifth Addl. ITO (1963) 49 ITR 322 while dealing with section 34 of the 1922 Act which corresponds to section 147 of the 1961 Act held that where the assessee fails to submit any return of income during the relevant assessment year and an assessment is for the first time made on him under section 34(1)(a) of the 1922 Act read with section 23, interest under section 18A(6) will be charged for failure on the assessee's part to pay advance tax in accordance with section 18A(3).
The law laid down by this Court in that decision is applicable to the facts of this case as well although that decision was rendered under the 1922 Act the principle laid down there, namely, that the assessment made for the first time though not on the basis of a return voluntarily filed in the manner required by the statutory provision and within the time prescribed therein is a regular assessment when made the first time, is applicable to an assessment made under the 1961 Act as well, there is no express prohibition in the Act for treating such an assessment as a regular assessment. The word "assessment" as defined in .the Act includes reassessment. In this case no reassessment had been done. The Income-tax Officer had issued a notice calling for a return and thereafter, the return had been filed. The assessment so made for the first time was in fact a regular assessment and the applicability of sections 139 and 217 of the Act are not excluded in respect of such an assessment.
Though the Karnataka High Court in the case of Charles D' Souza v. CIT (1984) 147 ITR 694, has taken a different view and that view has been followed by the Tribunal, having regard to the principle enunciated by this Court in the case of Gopalaswami Mudaliar (1963) 49 ITR 322, with which we are in respectful agreement we must hold that the Tribunal was in error in holding that the assessment made in this case for the first time was not a regular assessment and that interest was not leviable. We may also add one more reason for reaching such a conclusion. It could not have been the policy of the Act to treat persons who neglected their obligation to file the return within the time in a more favourable way than those who by complying with law have filed their returns voluntarily, whether within the time allowed by law or belatedly. The assessee in this case had neglected to file the return and the return was filed only after the notice was issued. In the return filed the assessee admitted the assessable income and tax was levied thereon. The assessee though having a taxable income, had tailed to pay the advance tax and had also committed delay in filing the return. The interest charged for such failure was in accordance with the policy as also the provisions of the Act.
The levy of interest on such assessment made for the first time under section 147 has been held by the High Courts of Delhi, Bombay and Kerala to be valid, as in the view taken by those High Courts also such an assessment is a regular assessment The decision of the Delhi is to be found in the case of National Agricultural Cooperative Marketing Federation of India Ltd. v. Union of India (1981) 130 ITR 928 and CIT v. Pratap Singh of Nabha (1982) 138 ITR. 27 (Delhi). The decision of the Bombay High Court is in the case of Deviprasad Kejriwal v. CIT (1976) 102 ITR 180 and that of the Full Bench of the Kerala High Court is in the case of Lally Jacob v. ITO (1992) 197 ITR 439.
We, therefore, answer the question referred to us in favour of the Revenue and against the assessee.
M.B.A./702/FC Reference answered.