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TMI Blog1987 (10) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... six months from the end of the previous year ... or before the 30th day of June of the assessment year, whichever is later; (b) in the case of every other person, before the 30th day of June of the assessment year: Provided that, on an application made in the prescribed manner, the Income-tax Officer may, in his discretion, extend the date for furnishing the return (i) in the case of any person whose total income includes any income from business or profession the previous year in respect of, which expired on or before the 31st day of December of the year immediately preceding the assessment, year, and in the case of any person referred to in clause (b), up to a period not extending, beyond the 30th day of September of the assessment year without charging any interest; (ii) in the case of any person whose total income includes any income from business or profession the previous year in respect of which expired after the 31 st day of December of the year immediately preceding the assessment year, up to the 31st day of December of the assessment year without charging any interest; and (iii) up to any period falling beyond the dates mentioned in clauses (i) and (ii), in which cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessed the appellants under section 143(3) of the Act and determined the total incomes of the appellants and the amounts of tax payable by them. In view of sub-section (4) of section 139, the Income-tax Officer also added to the amount of tax, interest calculated at the rate of six per cent. per annum on the amount of tax which would have been payable if the firms had been assessed as unregistered firms. Being aggrieved by the charging of interest under sub-section (4) read with clause (iii)(a) of the proviso to sub-section (1) of section 139 of the Act, the appellants filed writ petitions before the Gauhati High Court, challenging the charging of interest and the validity of sub-section (4) read with clause (iii)(a) of the proviso to sub-section (1) of section 139 of the Act as violative of article 14 of the Constitution. The Gauhati High Court, as stated already, overruled the challenge and dismissed the writ petitions, except that some writ petitions were allowed in part only as the High Court directed the Income-tax Officers to take into account the advance tax paid by the assessees before calculating the interest. Hence these appeals. The first contention made on behalf of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tting the date extended by the Income-tax Officer under sub-section (1) or sub-section (2) of section 139 of the Act, does not file the return within the extended date, but files the same before the end of the four assessment years concerned ; and (2) the assessee, without filing any application for extension of time, files the return beyond the period mentioned in sub-section (1) or sub-section (2) but before the end of the four assessment years in question. In either case, the provision of clause (iii) of the proviso to subsection (1) of section 139 will apply. In other words, the Income-tax Officer will be entitled to charge interest on the amount of tax in accordance with the provision of clause (iii) of the proviso to sub-section (1) of section 139. Thus, where time has been extended by the Income-tax Officer on an application made in that regard by the assessee and the assessee does not file the return within the time allowed and where no such application has been made by the assessee, but the return is filed by him beyond the time allowed, but before the end of the four years concerned, in either case, the Income-tax Officer will be entitled to charge interest in accordance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proviso to sub-section (1) of section 139 of the Act has without any reasonable justification placed the registered firms in a separate category inasmuch as for the late filing of returns by such firms they are saddled with interest to be calculated on the amount of tax payable by them as unregistered firms. It is submitted that such separate classification of registered firms for the purpose of payment of interest under section 139, does not bear any nexus to the object sought to be achieved by the section and, accordingly, the provision of sub-section (4) read with clause (iii)(a) of the proviso to sub-section (1) of section 139 of the Act is discriminatory and violative of the provision of article 14 of the Constitution and, as such, is void. In support of the contention, the appellants have placed much reliance upon a decision of the Karnataka High Court in M. Nagappa v. ITO [1975] 99 ITR 32. In that case, a learned single judge of the Karnataka High Court has struck down as void the provision of sub-section (4) read with clause (iii)(a) of the proviso to sub-section (1) of section 139. The reason that weighed with the learned judge was that the loss suffered by the Government ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return within the time as prescribed by the Act. Clause (iii)(a) of the proviso to section 139(1) read with sub-section (4) of section 139 in effect only provides for the withdrawal of the privilege of the registered firm to be assessed at a reduced rate because of its non-compliance with the provisions of sub-sections (1) and (2) of section 139 of the Act. In other words, a registered firm is treated as an unregistered firm for purposes of quantification of interest. The contention of the appellants that by treating registered firms as unregistered firms for the charging of interest, the Legislature has placed the registered firms in a separate category is not at all comprehensible. On the other hand, by treating the registered firms as unregistered firms, the Legislature has avoided the discrimination that would have been there if the registered firms were not so treated for the purpose of charging of interest. In other words, if the registered firms bad been charged with interest on the amount of tax assessed at a reduced rate for the late filing of the returns, there would have been discrimination between registered firms and unregistered firms. When a registered firm and an u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the said provision as ultra vires article 14 of the Constitution, is erroneous. Before we part with these appeals, we think we should clarify one situation, namely, where the advance tax duly paid covers the entire amount of tax assessed, there is no question of charging the registered firm with interest even though the return is filed by it beyond the time allowed, regard being had to the fact that payment of interest is only compensatory in nature. As the entire amount of tax is paid by way of advance tax, the question of payment of any compensation does not arise. In C. A. No. 1035 of 1973, it appears that the total tax for the assessment year 1968-69 was assessed at Rs. 16,288. The assessee paid advance tax amounting to Rs. 39,018 in three instalments on September 25, 1967, January 24, 1968, and March 2, 1968. It is apparent that the amount of advance tax paid by the assessee fully covered the amount of tax payable by it. In spite of that, the Income-tax Officer charged the assessee for the said assessment year a sum of Rs. 14,233 as interest under section 139 of the Act for the delayed filing of the return. As has been observed earlier, when the amount of tax due had alrea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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