1994 (10) TMI 98 - AT - Income Tax

Summary

Issues Involved:
1. Validity of interest charged under sections 139(8) and 217 for belated returns and non-filing of advance tax estimates.
2. Applicability of the Amnesty Scheme to the returns filed by the assessee.
3. Whether the assessments completed under section 147 can be considered as regular assessments.

Issue-wise Detailed Analysis:

1. Validity of Interest Charged Under Sections 139(8) and 217:

The primary contention revolves around whether interest under sections 139(8) and 217 can be levied on returns regularized under section 147. The assessee argued that assessments under section 147 are not regular assessments within the meaning of section 2(40), thus interest under sections 139(8) and 217 cannot be charged. The Dy. CIT(A) agreed with this view and cancelled the interest levied. The Departmental Representative contended that as per Explanation 2 of section 139(8), an assessment made for the first time under section 147 should be regarded as a regular assessment, and thus, interest should be upheld.

2. Applicability of the Amnesty Scheme:

The assessee filed returns under the Amnesty Scheme and claimed immunity and benefits under the scheme. The returns were filed beyond the period specified in section 139 and were regularized by notices under section 148. The assessee's counsel argued that the returns were voluntary and made in good faith, referencing the Kerala High Court's interpretation in A.V. Joy, Alukkas Jewellery vs. CIT. The Departmental Representative argued that the second returns filed on 29th Aug., 1989, and the additional amounts offered on 7th Feb., 1990, were beyond the Amnesty Scheme's deadline of 31st March, 1987, and thus, benefits under the scheme should not apply.

3. Regularity of Assessments Under Section 147:

The Departmental Representative argued that the assessments under section 147 should be considered regular assessments, as per the Kerala High Court's decision in Lally Jacob vs. ITO. However, the assessee's counsel pointed out that the Kerala High Court did not provide an opinion on whether the same meaning applies to reassessments under section 147. The Tribunal noted that the penalty proceedings under sections 271(1)(a) and 273 were dropped, considering the assessee's explanations, suggesting that the same considerations should apply for waiving interest under sections 139(8) and 217.

Conclusion:

The Tribunal upheld the Dy. CIT(A)'s decision to delete the interest charged under sections 139(8) and 217, though for different reasons. The Tribunal noted that the considerations for dropping penalty proceedings under sections 271(1)(a) and 273 should equally apply to the waiver of interest. The appeals filed by the Revenue were dismissed.