1997 (9) TMI 60 - HC - Income Tax

Summary

Issues involved: Challenge to the validity of section 234A of the Income-tax Act, 1961 and levy of interest under various sections.

Validity of section 234A of the Income-tax Act, 1961:
The petitioners challenged the validity of section 234A of the Income-tax Act, 1961, along with the levy of interest under sections 234B and 234C. The court held that section 234A is a regulatory measure to ensure timely filing of income tax returns. It imposes interest as a compensatory measure for delays in filing returns, aiming to compensate the Revenue for potential losses. The court cited previous cases where similar provisions were upheld, emphasizing that section 234A is not arbitrary or violative of constitutional articles. The court concluded that section 234A serves the purpose of maintaining discipline in tax compliance and does not adversely affect taxpayers or their professions.

Challenge to Interest Levy under Section 264:
The petitioners filed applications under section 264 of the Income-tax Act, 1961, challenging the charging of interest under sections 234A, 234B, and 234C. They argued that the delay in filing returns was due to a mistake by their counsel. However, their plea was rejected, and it was held that the interest charges were valid. The Commissioner's power to hear the revisions was also contested but was upheld. The orders passed by the Commissioner were challenged through the writ petition, questioning the validity of section 234A.

Conclusion:
The High Court dismissed the writ petition, finding it without merit. The court upheld the validity of section 234A of the Income-tax Act, 1961, stating that it is not violative of constitutional articles. The petitioners' challenge to the interest levy under section 264 was rejected, and the court ordered no costs to be paid by the petitioners, with any security amount to be refunded to them.