9911796707
TMI Blog1997 (9) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... valid return. The assessment was made on the total income of Rs. 5,44,820. Thereafter the petitioner moved an application under section 146 of the Income-tax Act requesting for the cancellation of the said assessment order. The Income-tax Officer cancelled the said assessment order. Thereafter, the petitioner in pursuance of the aforesaid notice under section 148 dated March 31, 1978, filed the return of income of Mr. Scheither Walter on March 31, 1979, declaring an income of Rs. 4,40,930. The tax as per return as per the provisions of section 140A of the Act amounting to Rs. 3,16,119 was paid by the agent on his behalf on March 30, 1979. On March 28, 1980, respondent No. 3 passed an assessment order declaring his income at Rs. 4,42,281 under section 147 of the Income-tax Act. Along with the assessment order penalty notice under sections 271(1)(a) and 273(b) were issued separately. It was also noted that the interest under sections 139(8) and 217(1) is also charged. By a subsequent demand notice a demand under sections 139(8)(a) and 217 was issued for a total sum of Rs. 2,12,855, i.e., Rs. 1,01,536 under section 139(8) and Rs. 1,11,319 under section 217(1) of the Income-tax Act. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all be payable by the assessee upon the amount equal to the assessed tax as defined in sub-section (5) of section 215." The other relevant provision in sub-clause (6) of section 215 of the Act which was introduced some time in the year 1985 by the Taxation Laws (Amendment) Act, 1984, with effect from April 1, 1985. The said provision of section 215(6) reads as under : "215. (6) Where, in relation to an assessment year, an assessment is made for the first time under section 147, the assessment so made shall be regarded as a regular assessment for the purposes of this section and sections 216, 217 and 273." The definition clause of "regular assessment" is also relevant for appreciating the argument of 'the Revenue's counsel. The said provision reads as follows : "2. (40) 'regular assessment' means the assessment made under subsection (3) of section 143 or section 144 ;" Rule 40(2) may also be considered for the purposes of appreciating the arguments put forward by the assessee as well as by the Revenue's counsel. The said rules 40(2) and 117A(i) and (iv) are as under : "40. The Income-tax Officer may reduce or waive the interest payable under section 215 or section 217 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-tax Officer has been given power to reduce or waive the interest under rule 117A if a return of income is furnished by a person who has been treated under section 163 as an agent or where a return of income has been furnished under section 148 of the Act. Under the aforesaid circumstances, there should have been waiver and deduction of interest in the instant case and the Income-tax Officer should have exercised his discretion judicially. Mr. Rakesh Kumar Agarwal, learned junior standing counsel, drew my attention to section 2(40) of the Income-tax Act and submitted that the assessment made under section 144 is also treated as regular assessment as such charging of interest under section 139(8)(a) or section 217(1) cannot be faulted. Counsel for the Department argued that the said assessment was made under section 144 of the Act and the assessment order passed on March 28, 1980, shows that the same was passed under section 144 of the Act. I have carefully considered the submissions made by the petitioner and the respondents and I hold that if an assessment order is made under section 144 it should be treated as a regular assessment, but the question in this case is whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urn in response to the notice under section 148 of the Act. Vashumal Harimal (Firm) v. CST [1995] MPLJ 42 Note). (b) It was not a case of regular assessment and, as such, it was not proper to go under the umbrella of section 143 of the Act to justify the levy of interest. As it was not a case of regular assessment, but an assessment made in pursuance of the notice under section 148 of the Act, we hold that the Tribunal was not right in law in holding that the interest under section 139(8) of the Act was leviable." It was further held that it was not a case of regular assessment and as such it was not proper to go into the provisions of sub-section (6) of section 215 of the Act. In another decision of the Gauhati High Court in the case of CIT v. Triple Crown Agencies [1993] 204 ITR 377 which reads as under: "A reading of the provisions in sections 139, 143, 147 and 148 of the Act would make it clear that the assessment or reassessment contemplated under section 147 is quite different in nature and content from the assessment under section 143. Assessment or reassessment under section 147 can be made only after issue of a notice under section 148. The provision in section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew was followed in later decisions, namely, CIT v. Padma Timber Depot [1988] 169 ITR 646 (AP), Prakash Lal Khandelwal v. ITO [1989] 180 ITR 604 (Patna) and CIT v. United Machinery a id Appliances [1993] 200 ITR 569 (Cal). A later decision of the Kerala High Court in P. A. Abdul Muthalif Rowther v. ITO [1976] 102 ITR 694 takes a view different from the view taken by an earlier decision of the same High Court in Gates Foam and Rubber Co. v. CIT [1973] 90 ITR 422, but without referring to the earlier decision. We are unable to agree with the view taken in P. A. Abdul Muthalif Rowther's case [1976] 102 ITR 694 (Ker) for the reasons already indicated by us. Learned counsel for the Revenue has drawn our attention to the substituted Explanation 2 to sub-section (8) of section 139, according to which an assessment made for the first time under section 147 shall be regarded as a regular assessment for the purposes of section 139(8). This Explanation has been substituted with effect from April 1, 1985, by the Amendment Act of 1984. The attempt made by the Explanation is to widen the scope of the expression 'regular assessment' used in sub-section (8) by bringing within its ambit assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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