1984 (11) TMI 170 - AT - Income Tax

Summary

Issues Involved:
1. Levy of interest under Section 139(8) for late submission of the return.
2. Waiver of interest under Rule 117A.
3. Treatment of the firm as an unregistered firm for the purposes of levy of interest under Section 139(8).

Issue-wise Detailed Analysis:

1. Levy of Interest under Section 139(8) for Late Submission of the Return:
The assessee filed its return of income for the assessment year 1980-81 on 17th November 1980, whereas it was due by 30th June 1980 under Section 139. The Income Tax Officer (ITO) initially omitted to charge interest under Section 139(8) due to oversight. To rectify this omission, the ITO initiated proceedings under Section 154 to charge interest for the late submission. The assessee objected, arguing that the omission was a deliberate exercise of discretion by the ITO and not an oversight. However, the ITO held that the levy of interest was mandatory and rectified the assessment to charge interest amounting to Rs. 965.

2. Waiver of Interest under Rule 117A:
The assessee argued that the ITO had the power to waive the interest under the proviso to Section 139(8) read with Rule 117A, especially since the interest chargeable was less than Rs. 1,000. The Appellate Assistant Commissioner (AAC) did not accept this view, stating that a waiver should be preceded by an examination of the circumstances under which the return was belatedly filed. The AAC held that there were no materials on record to conclude that the ITO had deliberately exercised discretion for waiver. The AAC relied on the Gujarat High Court's decision in CIT vs. Ramjibhai Hirjibhai & Sons, which held that there could be no presumption of waiver when the ITO omitted to charge interest initially.

3. Treatment of the Firm as an Unregistered Firm for Levy of Interest:
The assessee contended that the firm should not be treated as an unregistered firm for the purpose of calculating interest under Section 139(8). However, Explanation 2 to Section 139(8) specifies that for the purposes of this sub-section, if the assessee is a registered firm, the tax payable on the total income shall be the amount that would have been payable if the firm had been assessed as an unregistered firm. The Tribunal upheld the AAC's decision, confirming that interest has to be charged on the tax payable treating the firm as an unregistered firm.

Conclusion:
The Tribunal, after careful consideration of the facts and circumstances, upheld the ITO's rectification under Section 154 to charge interest under Section 139(8). It was concluded that the non-levy of interest initially was due to an omission and not a deliberate exercise of the power of waiver. The Tribunal also confirmed that the firm should be treated as an unregistered firm for the purposes of calculating interest under Section 139(8). The appeal filed by the assessee was dismissed, and the order of the AAC was confirmed.