9911796707
TMI Blog2006 (3) TMI 288X X X X Extracts X X X X X X X X Extracts X X X X ..... interest under section 158BFA alone without any other part of the assessment order under section 158BC under challenge is not appealable and thereby rejecting the appeal. It may please be directed to delete the interest charged under section 158BFA as the inordinate delay in filing return of income was not attributable to the appellant." 3. Rival contentions have been heard and records perused. The facts in brief are that the assessee is an individual and a partner in M/s. Mayur Cotton Industries and also Director of M/s. Mayur Ginning and Pressing (P.) Ltd., Manavadar. There was search action under section 132 of the Act at the assessee's residential and business premises on 8-6-1999. In the consequent block assessment proceedings the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te authority to consider this matter exclusively and to give directions as to whether interest under section 158BFA cannot be charged because the delay in filing the return had been for a reasonable cause and beyond the control of the assessee or that such delay was not attributable to inaction on the part of the assessee." 5. It is crystal clear from the order of the lower authorities that Assessing Officer has mechanically charged interest for delay in filing the Block return while passing order under section 158BC, without controverting the submissions of the assessee with regard to delay on the part of department in supplying copies of the seized material which has caused delay in filing the block return. In the instant case the CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned DR supported the orders of lower authorities and submitted that charging of interest under section 158BFA(1) is mandatory once there is a delay in filing the block return in terms of notice issued under section 158BC. 8. We have considered the rival contentions carefully and gone through the orders of the authorities below and the relevant provisions of law. From the record we find that search and seizure action under section 132 of the Income-tax Act, 1961 had taken place at the appellant's residential premises on 8-6-1999. The assessee was served with the notice under section 158BC of the Act by the Assistant Commissioner of Income-tax, Junagadh Circle, Junagadh (ACIT). Immediately after the search as also after the notice under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the return was attributable to the department, the Assessing Officer charged interest under section 158BFA of the Act in a mechanical manner without controverting the allegations of the assessee for non-supply of relevant materials. Even though there is a provision for charging of interest under section 158BFA(1) of Income-tax Act as and when there is delay in filing of the return, this interest is e charged not for failure of the assessee to pay any tax demand belatedly but it is in the nature of penalty. To attract the penal provisions, there has to be some element of lack of bona fides. There are various provisions in the Income-tax Act for charging of interest in case of failure of the assessee to pay the tax demand well in time, sim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re levying such penal interest, default on the part of the assessee is required to be established. Unless such default is attributable on the part of assessee the revenue cannot penalize the assessee for no fault of him. Since this interest is penal in nature, the department cannot be allowed to say that levy of interest under section 158BFA(1) is automatic. Hon'ble Supreme Court in the case of CIT v. Hindustan Electro Graphites Ltd. [2000] 243 ITR 48 has observed that even charging of additional tax under section 143(1A) which is having imprint of penalty, therefore revenue cannot be heard saying that levy of additional tax under section 143(1A) is automatic. Similarly in case of Hindustan Steels Ltd. v. State of Orissa [1972] 83 ITR 26, H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the penal provisions. Undisputedly in the instant case delay in furnishing the return was due to inaction on the part of department in supplying the copies of the seized material, there is no element of any lack of bona fides on the part of assessee in furnishing the return after receipt of seized material. Under these circumstances it shocks the very conscience if interest is being levied under section 158BFA(1) which is essentially penal in nature, for no fault of the assessee. We are therefore inclined to set aside the conclusions of lower authorities and restore the matter back to the file of the Assessing Officer with specific direction to verify the facts as to when the assessee was provided xerox copies of seized materials and copie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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