1980 (12) TMI 41 - HC - Income Tax

Summary

Issues:
1. Interpretation of provisions regarding waiver of penal interest under the Indian Income-tax Act, 1922.
2. Jurisdiction of the Commissioner under section 33B of the Indian Income-tax Act, 1922, to revise the order of the Income-tax Officer.

Analysis:
The case involved a question regarding the waiver of penal interest under section 18A(8) of the Indian Income-tax Act, 1922, for an assessment year. The Commissioner issued a notice under section 33B as the Income-tax Officer had not levied the penal interest. The assessee claimed that the ITO had waived the interest under Rule 48 of the Indian I.T. Rules, 1922. The Commissioner disagreed and set aside the assessment, directing the ITO to charge the interest. The Appellate Tribunal held that the ITO must be deemed to have waived the interest under Rule 48, and the Commissioner had no jurisdiction under section 33B to revise the order.

The provisions of the Indian Income-tax Act required an assessee to file an estimate of tax payable if not previously assessed. Failure to do so could lead to penal interest under section 18A(8). Rule 48 of the Indian I.T. Rules, 1922, allows the ITO to waive interest under certain circumstances, including delays not attributable to the assessee. In this case, the assessment was delayed, and the ITO did not levy penal interest. The Tribunal's decision was supported by a Supreme Court ruling that even in cases of non-payment of advance tax, Rule 48 could be applied.

The argument was made that the Commissioner could revise the order only if it was prejudicial to the revenue. The ITO's failure to mention penal interest was considered technical, as an order could be prejudicial even without explicit mention. The Tribunal's decision was deemed correct as the delay in assessment was not attributable to the assessee, justifying the waiver under Rule 48 or the Commissioner's lack of jurisdiction under section 33B.

The Tribunal's decision was upheld, stating that if the ITO had waived the interest, the Commissioner had no jurisdiction under section 33B. The Commissioner's order setting aside the assessment was deemed invalid as the delay was not attributable to the assessee. The ITO was directed to make a fresh assessment without charging the interest, and the assessee was awarded costs for the reference.

In conclusion, the judgment clarified the application of Rule 48 for waiving penal interest, the Commissioner's jurisdiction under section 33B, and the importance of assessing whether delays in proceedings are attributable to the assessee in determining the levy of penal interest.