9911796707
TMI Blog1984 (5) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Constitution of India and is unconstitutional and void. The consequential assessment orders imposing interest on such basis are also attacked. Under s. 139 of the I.T. Act, every person whose total income during the previous year exceeded the maximum amount which is not chargeable to income-tax, shall furnish a return of his income in the prescribed form and verified in the prescribed manner within the time stipulated therein. A firm is also bound to comply with such requirements. One of the consequences for not filing the return within the specified date is the liability to pay interest specified under s. 139(8)(a) of the Act. Section 139(8)(a) of the Act and the Explanations provide as follows : " 139. Return of income--....... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... June, of the assessment year, whichever is later; (b) in the case of every other assessee, the 30th day of June of assessment year. Explanation 2.-For the purposes of this sub-section, where the assessee is a registered firm or an unregistered firm which has been assessed under clause (b) of section 183, the tax payable on the total income shall be the amount of tax which would have been Payable if the firm had been assessed as an unregistered firm. (b) Where as a result of an order under section 154 or section 155 or section 250 or section 254 or section 260 or section 262 or section 264, the amount of tax on which interest was payable under this sub-section has been reduced, the interest shall be reduced accordingly, and the excess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm. It does not appear that the Legislature was incompetent or acted arbitrarily in enacting such a provision. The benefit of registration was afforded to firms with certain conditions or only in case they fulfil certain requirements enjoined by the statute. That the Legislature was competent to enact thus, seems to be obvious. It is settled law that, in matters of taxation, the court permits a greater latitude to the discretion of the Legislature. In tax matters, the State is allowed to pick and choose districts, objects, persons, methods and even rates for taxation, if it does so reasonably: Vide Khandige Sham Bhat v. Agrl. ITO [1963] 48 ITR 21 (SC), Khyerbari Tea Co. Ltd. v. State of Assam, AIR 1964 SC 925 at p. 941 and Ganga Sugar Corpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... established that a firm is a compendious name of the Partners constituting it. For the purpose of the Income-tax Act, a registered firm has, however, been treated as an entity liable to tax. Although the Legislature has provided a special reduced rate of tax for the registered firms, in the matter of penalty, the Legislature has directed that the penalty imposable on a registered firm shall be the same amount as would be imposable on that firm if that were an unregistered firm. We are unable to subscribe to the view that the above provision Contravenes article 14 of the Constitution. There can be nothing to Prevent the Legislature from giving the benefit of a reduced rate to a registered firm for the Purpose of tax but not in the matter of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Legislature to say that once a registered firm committed a default attracting penalty, it should be deemed or considered to be an unregistered firm for the purpose of its imposition. No question of discrimination under article 14 can arise in such situation. We fully share the view of the High Court that there was nothing to .Prevent the Legislature from giving the benefit of a reduced rate to a registered firm for the Purpose of tax but withhold the same when it committed a default and became liable to imposition of Penalty." (Emphasis supplied) In my opinion, the same reasoning will apply even with regard to levy of interest and in considering the vires of Expln. 2 to s. 139(8)(a) of the I.T. Act. There is a divergence of judicial o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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