1974 (2) TMI 20 - HC - Income Tax

Advance Tax, Assessment Proceedings, Assessment Year, Failure To Send Estimate, Original Assessment

Summary

Issues Involved:
1. Quashing of reassessment orders.
2. Levy of penal interest under section 217 of the Income-tax Act, 1961.
3. Application of sections 139(1), 139(3), and 148 of the Income-tax Act, 1961.

Issue-wise Detailed Analysis:

1. Quashing of Reassessment Orders:
The petitioner sought to quash the reassessment orders evidenced by exhibits P-1 to P-6. The reassessment was conducted under section 148 read with section 139 of the Income-tax Act, 1961. The petitioner contended that the reassessment orders were unsustainable in law. The court examined sections 139 and 148, emphasizing that section 148(1) allows the Income-tax Officer to serve a notice containing requirements similar to those under section 139(2). The court noted that reassessment proceedings under sections 147 and 148 are initiated because income has escaped assessment, and these proceedings can occur long after the period contemplated by section 139. The court held that section 148 should be understood to treat reassessment proceedings as assessment proceedings and proceed accordingly under section 139 and other provisions of the Act. Consequently, the court found the reassessment orders justified and proper.

2. Levy of Penal Interest under Section 217:
The petitioner challenged the levy of penal interest under section 217 of the Income-tax Act, 1961. The court examined sections 217 and 212, highlighting that section 217 applies to persons referred to in section 212(3), which pertains to individuals not previously assessed by way of regular assessment. The petitioner argued that, since they had been assessed on October 31, 1967, the levy of penal interest was unjustified. However, the court pointed out that the relevant date for determining whether the petitioner had been previously assessed was March 1, 1966, as per section 212(3). Since the petitioner had not been assessed by that date, the court concluded that the levy of penal interest was valid.

3. Application of Sections 139(1), 139(3), and 148:
The petitioner's counsel argued that sections 139(1) and 139(3) apply only when the return is filed within the assessment year, and section 139(4) applies when the return is filed beyond the assessment year. They contended that section 148, which renders sections 139(1) and (2) applicable "so far as may be," would not apply if the return was not filed within the assessment year. The court disagreed, stating that section 148 allows reassessment proceedings to be treated as assessment proceedings, thereby enabling the application of section 139 and other relevant sections. The court emphasized that reassessment proceedings are initiated due to income escaping assessment and can occur long after the period contemplated by section 139. Therefore, the court held that the application of sections 139(1) and (3) was justified in the reassessment proceedings.

Conclusion:
The court dismissed the writ petition, upholding the reassessment orders and the levy of penal interest under section 217 of the Income-tax Act, 1961. The court found that the application of sections 139(1), 139(3), and 148 was proper and justified in the reassessment proceedings. The writ petition was dismissed with no order as to costs.