1985 (5) TMI 23 - HC - Income Tax

Summary

Issues:
1. Impugning a notice demanding interest under section 139 of the Income-tax Act, 1961 for delayed filing of return.
2. Whether an appeal against levying interest under section 139 of the Act is provided for.
3. Power of the Income-tax Officer to charge interest on the amount of tax without an application for extension of time.
4. Charging interest on the tax upon the share of income of a partner of a registered firm treated as an unregistered firm.

Analysis:
The petitioner challenged a notice demanding interest under section 139 of the Income-tax Act, 1961 for late filing of return. The Income-tax Officer had levied interest on the total income, including profits from two firms. The petitioner sought waiver of interest, arguing that no application for extension of time was made to the Income-tax Officer, thus questioning the jurisdiction of charging interest without such an application. Additionally, it was contended that charging interest on the tax of a partner of a registered firm treated as an unregistered firm lacked legal authority.

The court examined whether an appeal against levying interest under section 139 of the Act was permissible, citing precedents. It was established that interest is not a tax but an adjunct of tax assessed, and no appeal lies against an order charging interest under section 139(8) as per previous decisions. Despite no application for extension of time, the court upheld that interest could be charged under section 139(4) without the need for such an application, as clarified in a Full Bench decision.

Regarding the power to charge interest on the tax of a partner of a registered firm treated as unregistered, the court affirmed that both entities are separate for assessment purposes. The liability of partners to be charged interest on their share of income remains even if the registered firm is treated as unregistered only for interest calculation. The court followed the majority decision's interpretation, emphasizing the independent assessment of registered firms and partners under the Act.

In conclusion, the court dismissed the petition, upholding the charging of interest without an application for extension of time and reaffirming the liability of partners of registered firms to be charged interest on their share of income. The judgment aligned with previous decisions and did not find reason to deviate from the established legal interpretation.