1992 (2) TMI 31 - HC - Income Tax

Summary

Issues Involved:
1. Whether charging interest under section 139(8) of the Income-tax Act implies an extension of time for filing returns.
2. Whether prosecution under section 276CC of the Income-tax Act is maintainable for wilful failure to file the return on time.

Issue-wise Detailed Analysis:

1. Implied Extension of Time by Charging Interest:
The petitioner argued that charging interest under section 139(8) impliedly extended the time for filing the return, thus negating any wilful default. The respondent countered that post-amendment (effective April 1, 1971), the Income-tax Officer had no discretion to not charge interest, and thus, charging interest did not imply an extension of time. The court examined the pre- and post-amendment provisions of section 139 and found that the amendment mandated interest regardless of any extension of time granted by the Income-tax Officer. This change indicated that charging interest was automatic and did not imply an extension of time.

2. Maintainability of Prosecution under Section 276CC:
The petitioner contended that prosecution was not maintainable due to the implied extension of time by charging interest. The court referred to various precedents, including the Supreme Court's decision in CIT v. M. Chandra Sekhar, which dealt with penalty provisions under the old section 139. The court noted that the principle from the Chandra Sekhar case, which allowed for presumed extension of time when interest was charged, was based on the pre-amendment law. Post-amendment, the mandatory charging of interest regardless of time extension nullified this presumption. The court also reviewed other case laws and concluded that the amendment to section 139 removed the Income-tax Officer's discretion to not charge interest, thus making the levy of interest automatic and not indicative of an extension of time.

Conclusion:
The court held that after the amendment of section 139 effective from April 1, 1971, charging interest by the Income-tax Officer cannot be deemed an implied extension of time to file the return, which would exclude wilful default and consequent prosecution. The petition to quash the prosecution was dismissed, affirming that the prosecution under section 276CC for wilful failure to file the return on time was maintainable.