1992 (4) TMI 75 - AT - Income Tax

Summary

Issues:
Justification of the direction not to charge interest under ss. 139(8) and 217 of the IT Act, 1961 in the case involving an assessment made under s. 147(a) of the Act.

Analysis:

1. The appeal and cross objection were directed against the order of the Dy. CIT(A) regarding the direction not to charge interest under ss. 139(8) and 217 of the IT Act, 1961. The case involved a special survey conducted by the Department at the assessee's business premises, revealing taxable income but no filed return. The Assessing Officer initiated proceedings under s. 147(a) and charged interest under ss. 139(8)/217 when the return was filed.

2. The Dy. Commissioner(A) accepted the assessee's contention that the assessment made under s. 147 was not a "regular assessment," hence interest under ss. 139(8)/217 was not justified. Relying on precedents, the Dy. Commissioner(A) directed not to charge interest. The Revenue appealed, arguing that the amended provisions justified interest since the return was filed after the amendments came into force.

3. The Tribunal held that the amended provisions of Expln. 2 to s. 139(8) and s. 215(6) applied, treating the assessment made under s. 147 as a "regular assessment" for the purpose of charging interest under ss. 139(8) and 217. The retrospective application of the amendments was upheld, dismissing the argument that they should be effective only from a later assessment year.

4. The Tribunal distinguished previous decisions that did not consider the impact of the amended provisions, emphasizing that the amendments materially changed the definition of "regular assessment" for interest levy purposes. The Tribunal also differentiated the current case from the assessee's previous cases where the retrospective effect of the amendments was not clearly established.

5. Ultimately, the Tribunal concluded that the case warranted the levy of interest under ss. 139(8) and 217 based on the amended provisions of Expln. 2 to s. 139(8) and s. 215(6), which were applicable in this instance. The Revenue's appeal was allowed, and the assessee's cross objection was dismissed.