1978 (3) TMI 93 - HC - Income Tax

Application For Extension, Assessment Order, Concessional Rate, Derived From Export, Import Entitlements, Industrial Company, Late Filing, Original Assessment, Total Income

Summary

Issues:
1. Imposition of interest under the proviso to section 139(1) for assessment year 1962-63.
2. Justification for the Commissioner to direct the Income-tax Officer to levy interest under the proviso to section 139(1).

Analysis:
The judgment pertains to a reference under section 256(1) of the Income-tax Act, 1961, by the Income-tax Appellate Tribunal regarding the imposition of interest under the proviso to section 139(1) for the assessment year 1962-63. The assessee, a registered firm engaged in rice milling business, filed its return of income late by 7 months, 6 days. The Income-tax Officer did not charge interest under section 139(1) for the late filing, leading to a notice by the Commissioner of Income-tax under section 263(1) to rectify the omission. The Commissioner directed the Income-tax Officer to levy the interest. The Appellate Tribunal upheld this order, considering the failure to charge interest as prejudicial to revenue's interests.

The main legal issue revolves around the interpretation of section 139(4) of the Income-tax Act, 1961, which deals with the time limit for furnishing returns. The assessee argued, citing a Delhi High Court case, that the provision regarding interest under clause (iii) of the proviso to sub-section (1) of section 139 is dependent on the Income-tax Officer's extension of the return filing date. However, the court disagreed, stating that sub-section (4) makes the interest provision applicable if the return is furnished before the assessment is made, without requiring a specific extension by the Income-tax Officer. The court relied on judgments from other High Courts to support its interpretation.

Ultimately, the court held that the failure to charge interest under sub-section (4) of section 139, in conjunction with clause (iii) of the proviso to sub-section (1), was prejudicial to revenue's interests. Therefore, the Commissioner of Income-tax was justified in directing the Income-tax Officer to levy the interest. The court answered both questions in favor of the revenue and against the assessee, with no order as to costs.