Commissioner of Income Tax Vs. Arunachal Saw and Veneer Mills (P) Ltd. - Court Judgment

Excerpt:

- - in the present case, there was a rectification proceeding and in the said proceeding the income of the assessee was found to be above the taxable limit and if no return had been filed on the specified date, for the delay interest ought to have been charged and the ao had rightly charged the interest which was disallowed by the cit(a) as well as the tribunal......under s. 256(1) of the it act, 1961 (for short, 'the act'), the following question has been referred for opinion of this court :'whether, on the facts and in the circumstances of the case, the tribunal has not erred in holding that no interest under ss. 139(8) and 217 of the act can be charged at the time of rectification of the assessment order ?'2. the assessee is a company incorporated under the companies act. for the asst. yrs. 1978-79 to 1980-81, the total income of the assessee was assessed at below the limit of taxable income. as there was a late filing of the return and as the income was below the taxable income, the ao did not charge interest under s. 139(8) and s. 217 of the act in the original assessment. however, a rectification proceeding was initiated after giving due notice and in the said proceeding it was found that the assessee had more income which is taxable under the act and accordingly interest had been charged under ss. 139(8) and 217 of the act. against that an appeal was preferred before the cit (a), who allowed the appeal by saying that interest cannot be charged in the rectification proceedings. being aggrieved, the revenue preferred an appeal.....

Judgment:

D. N. BARUAH, J. :

By this reference, under s. 256(1) of the IT Act, 1961 (for short, 'the Act'), the following question has been referred for opinion of this Court :

'Whether, on the facts and in the circumstances of the case, the Tribunal has not erred in holding that no interest under ss. 139(8) and 217 of the Act can be charged at the time of rectification of the assessment order ?'

2. The assessee is a company incorporated under the Companies Act. For the asst. yrs. 1978-79 to 1980-81, the total income of the assessee was assessed at below the limit of taxable income. As there was a late filing of the return and as the income was below the taxable income, the AO did not charge interest under s. 139(8) and s. 217 of the Act in the original assessment. However, a rectification proceeding was initiated after giving due notice and in the said proceeding it was found that the assessee had more income which is taxable under the Act and accordingly interest had been charged under ss. 139(8) and 217 of the Act. Against that an appeal was preferred before the CIT (A), who allowed the appeal by saying that interest cannot be charged in the rectification proceedings. Being aggrieved, the Revenue preferred an appeal before the Tribunal. The Tribunal dismissed the appeal. Hence, at the instance of the Revenue, the above question has been referred.

We have heard Mr. G. K. Joshi, learned standing counsel appearing on behalf of the Revenue. None appears on behalf of the assessee.

3. Mr. Joshi submits that if the return is filed at a belated stage then the interest is mandatory under s. 139(8) and for other reasons under s. 217 of the Act. In the present case, there was a rectification proceeding and in the said proceeding the income of the assessee was found to be above the taxable limit and if no return had been filed on the specified date, for the delay interest ought to have been charged and the AO had rightly charged the interest which was disallowed by the CIT(A) as well as the Tribunal.

4. Law in this regard is very clear. Sec. 139(8)(a) of the Act says that where the return under sub-s. (1) or sub-s. (2) or sub-s. (4) for an assessment year is furnished after the specified date, or is not furnished, then the assessee shall be liable to pay simple interest at the rate prescribed under that section. Similarly under s. 217 of the Act interest is liable to be paid for conditions specified therein.

5. In this case admittedly as per the assessment proceeding the return was not filed on the due date. In our opinion, the interest is liable to be paid. Therefore, we answer the question in the negative, in favour of the Revenue and against the assessee.