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TMI Blog1989 (7) TMI 143X X X X Extracts X X X X X X X X Extracts X X X X ..... rm of Cadila Distributors and returned net loss amounting to Rs. 6,95,422 from its sole proprietorship business carried on in the name of Rachem. The return was due on 30th June, 1985 but the same was filed on 27th Sept., 1985 at the total income of Rs. 1,74,860. 4. At the assessment proceedings the respondent claimed assessment in the status of 'individual', but the ITO assessed it in the status of Association of Persons (AOP). While completing the assessment under s. 143(3) of the Act the ITO charged interest under ss. 139(8) and 217 and also initiated proceedings under s. 273 for not filing the statement of advance tax. 5. In appeal the learned CIT(A) accepted respondent's contention that it was entitled to be assessed in the statu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hargeable in this case and secondly that in view of the adverse condition of law and order in the State of Gujarat at the relevant time the CBDT (Board) had advised the field officers not to take penal actions in the matters of late filing of returns or payments of advance taxes. The contention of Mr. M.P. Deodhar, the learned Departmental Representative is that the learned CIT(A) has gone by irrelevant considerations in concealing the charge of interest under s. 139(8). According to Mr. Deodhar the facts of the case were crystal clear in as much as that the return had been, undisputedly, filed late cleariy attracting the provisions of s. 139(8) to this case. Mr. Deodhar further submitted that the advice of the Board related to penal action ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should be given to an assessee before levy of charge and that on his showing reasonable cause in not complying with some statutory directions in the discharge of his obligation he should not be burdened with any charge of interest under s. 139(8) of the Act. In this behalf Mr. Patel relied upon the decisions of the Supreme Court in the case of CIT vs. Kanpur Coal Syndicate (1964) 53 ITR 225 (SC) and of the Rajasthan High Court in the case of CIT vs. Devichand Panmal (1986) 52 CTR (Raj) 34 : (1986) 160 ITR 545 (Raj). 9. After having heard the rival submission of the learned counsel for the parties we are of the opinion that Mr. Deodhar's contentions carry weight. 10. The principles laid down in the cases relied upon by the learned coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l be liable to pay simple interest...". The plain language of s. 139(8) thus clearly suggests that irrespective of the fact whether the date of filing the return has or has not been extended in a given case, the assessee shall be liable to pay simple interest. And the logic behind such direction is not difficult to understand. In the first place, as stated above, interest is not penal but simply compensatory in nature. Secondly the assessee has been given a right to seek reduction or waiver of such interest if certain conditions as provided by the Proviso to s. 139(8) and r. 117A of the Rules, do exist and are established to the satisfaction of the ITO. 12. Proviso to s. 139(8) and cl. (v) of r. 117A of the Rules, to which our attention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al to his interest. Reduction or waiver proceedings may given him another right of appeal to place his grievance before higher authorities. 13. The doctrine of 'reasonable cause' which enumerates the principle of natural justice, has not been cut short in size by s. 139(8). The words "whether or not the ITO has extended the date for furnishing the return', occurring in the language of s. 139(8) are subject to the mandate contained in the proviso to that sub-section. That position clearly suggests that the 'reasonable cause' available to an assessee in filing the return late or making payment of advances taxes may make good defence for an assessee in the reduction or waiver proceedings contemplated by the proviso to sub-s. (8) of s. 139 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ship business and, therefore, they would have naturally been in the know of the likely share income of the respondent. And the income was negligible. It was not near about 9 lakhs falling to the share of the respondent. The payment of taxes under s. 140A in time and the filing of estimate in subsequent year, considered sufficient by the CIT(A) for ignoring the mistake committed by the respondent, are hardly convincing. Once active participation and involvement of respondent in the income earning activities of the registered firm is not ruled out (and it can hardly be ruled out in the instant case) no justification can be found in the conduct of the respondent in not filing the estimate or statement required by s. 209A to be filed. In the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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