1972 (11) TMI 17 - HC - Income Tax

Delay in filing of returns of the income - levy of interest justification - It is conceded that the interest demanded is not arbitrary and was payable. The Income-tax Officer appears to have made a mistake on the earlier occasion which he has rectified after the appellate order. As it appears consequent upon the appellate decision the interest has been worked out. All the writ applications are accordingly dismissed

Summary

Issues:
Delay in filing income tax returns, levy of interest under section 139 of the Income-tax Act, challenge to interest levy on grounds of non-extension of time, incorrect interest rate, and enhancement of interest demand.

Analysis:
The judgment by the High Court of Orissa involved three connected applications under Article 226 of the Constitution, filed by a partner of a firm and the firm itself. The applications challenged the levy of interest under section 139 of the Income-tax Act due to delays in filing income tax returns for various assessment years. The first point raised by the petitioners was that since no extension of time was sought under section 139(1) of the Act, interest should not be levied. The court rejected this argument, citing that under section 139(4)(a), interest is payable for late returns even without obtaining an extension. The court distinguished a previous Andhra Pradesh case where no return was filed at all, emphasizing that in the present case, interest was levied under a different provision.

Regarding the second point raised by the petitioners, challenging the interest rate of 9% per annum instead of 6%, the court found that the Income-tax Officer correctly applied the amended rate of interest. The petitioners relied on a Madhya Pradesh High Court decision, but the Orissa High Court disagreed with that interpretation, holding that the amended rate of interest applied to continuing defaults post-amendment. The court emphasized that the amended provision governed the situation after its enactment.

The third point raised by the petitioners concerned the enhancement of interest demand by the Income-tax Officer. The court noted that the interest demanded was not arbitrary and was payable, with the Officer rectifying a previous mistake after an appellate order. The court found that the interest had been recalculated following the appellate decision, indicating a proper assessment. Consequently, all writ applications were dismissed, but no costs were imposed on the petitioners considering the circumstances of the case. Both judges, R. N. Mishra and K. B. Panda, concurred with the decision to dismiss the applications.