1996 (12) TMI 11 - HC - Income Tax

Summary

Issues:
1. Validity of assessments based on belated returns.
2. Levy of interest under sections 139(8) and 217 in assessments pursuant to notice under section 148.
3. Interpretation of "regular assessment" under section 2(40) of the Act.
4. Consideration of waiver or reduction of interest under sections 139(8) and 217.

Detailed Analysis:
1. The petitioner, a partnership firm engaged in electrical repair works, filed returns under the Income-tax Act beyond the prescribed period for the assessment years 1978-79 to 1982-83. The Income-tax Officer completed assessments based on the belated returns and levied penal interest under sections 139(8) and 217. The petitioner contended that assessments on belated returns were invalid, thus challenging the levy of interest. The Commissioner held that assessments were not based on belated returns but on returns filed pursuant to a notice under section 148, thus rejecting the contention of invalidity.

2. A new contention was raised regarding the levy of interest under sections 139(8) and 217 in assessments made after a notice under section 148. The petitioner argued that such interest can only be levied in a "regular assessment" as defined in the Act. The Commissioner noted that assessments were made for the first time under section 143 read with section 147, not as reassessments under section 147. Referring to a previous judgment, the Commissioner held that assessments made for the first time under section 147 qualify as regular assessments for invoking section 217, rejecting the petitioner's contention.

3. The assessing authority considered the question of waiver or reduction of interest under rules 40 and 117A of the Rules. It was found that there was no case for waiver or reduction of interest under sections 139(8) and 217, and no valid reason was presented for granting relief. The Commissioner upheld this decision, stating that the assessments were not based on belated returns but on returns filed pursuant to the notice under section 148, qualifying as regular assessments for the purpose of interest levy.

4. The court, after considering arguments from the petitioner's counsel, found no justification to interfere with the orders passed by the authorities below. The Commissioner had thoroughly examined the matter and concluded that the assessments were valid and interest was correctly levied under the Act. The court upheld the Commissioner's decision, dismissing the original petition due to lack of merit and without costs.

In conclusion, the court upheld the validity of assessments based on returns filed pursuant to a notice under section 148 and rejected the petitioner's contentions regarding the levy of interest under sections 139(8) and 217. The court found no reason to interfere with the Commissioner's decision and dismissed the petition accordingly.