Y.V. Anjaneyulu, J.
1. The Income-tax Appellate Tribunal made this reference under section 256(1) of the Income-tax Act, 1961 ('the Act', for short). The reference relates to the Income-tax assessment year 1976-77 and the following two questions are referred for the consideration of this court :
'1. Whether, on the facts and in the circumstances of the case, the initial assessment made in pursuance of proceeding initiated under section 147 is a regular assessment for the purpose of charging interest under section 139 and under section 21
2. Whether, on the facts and in the circumstances of the case, an appeal against charging of interest under section 139 and 217 is maintainabl ?'
2. The relevant facts may be noticed. The petitioner carries on business in the purchase and sale of timber. For the assessment year 1976-77 for which the previous year ended on March 31, 1976, the petitioner filed a return declaring an income of Rs. 8,990 on June 1, 1979. The Income-tax Officer held that the return filed by the assessee on June 1, 1979, could not be considered as a return under section 139 of the Act, inasmuch as it was not filed within the time limit specified in section 139. The Income-tax Officer therefore, issued a notice under section 148 on the basis that the petitioner failed to file its return of income within the time allowed under section 139. Responding to the notice under section 148, the assessee informed the Income-tax Officer that the return already filed on June 1, 1979, might be treated as one filed in response to the notice by the Income-tax Officer issued under section 148. That is how the Income-tax Officer regularised the assessment proceedings as observed by his in the assessment year. The Income-tax Office made an addition to the income returned of Rs. 11,800 on account of deficiency in gross profit and completed the assessment on a total income of Rs. 20,790. Tax was demanded treating the assessee as an unregistered firm. The Income-tax Officer also claimed interest of Rs. 884 under section 139 of the Act and Rs. 1,274 under section 217 of the Act. The aggregate of the tax and interest demanded by the Income-tax Officer amounted to Rs. 4,828.
3. The assessee filed an appeal before the Appellate Assistant Commissioner of Income-tax. The contention before him was that the levy of interest under sections 139 and 217 of the Act by the Income-tax Officer was not authorised by the provisions of the Act and was illegal. The specific claim was the assessment made by the Income-tax Officer is not an assessment under section 143(3) or section 143(4) of the Act but is an assessment under section 143(3) read with section 147(a) of the Act. In that view, it was claimed that the assessment made by the Income-tax Officer cannot be held to be a 'regular assessment' with the result that on interest can be levied either under section 139 or under section 217 of the Act. The Appellate Assistant Commissioner of Income-tax accepted the aforesaid contention and canceled the levy of interest by the Income-tax Officer.
4. The Revenue filed an appeal before the Income-tax Appellate Tribunal against the order of the Appellate Assistant Commissioner. Two contentions were raised before the Tribunal. The first contention was that on appeal lies against the order of the Income-tax Officer levying interest under section 139 and section 217 and the Appellate Assistant Commissioner was, therefore, in error in entertaining the appeal. The second contention alternatively raised was that the levy of interest was legal, inasmuch as the assessment completed by the Income-tax Officer was a 'regular assessment' for the purpose of section 139 and section 217 of the Act. In a fairly elaborate and well-reasoned order, the Tribunal rejected both the contentions of Revenue and upheld the order of the Appellate Assistant Commissioner. Aggrieved by the Tribunal's order, the Commissioner of Income-tax sought a reference under section 256(1) of the Act of the two question in para 1 (Page 648) supra.
5. We may deal with the second question first. We may refer to the decision of the Supreme Court in Central Provinces Manganese Ore Co. Ltd. v. CIT : [1986]160ITR961(SC) . The Supreme Court held that 'the levy of interest is part of the process of assessment. Although sections 143 and 144 do not specifically provide for the levy of interest and levy is, in fact attributable to section 139 or section 215, it is nevertheless a part of the process of assessing the tax liability of the assessee. Inasmuch as the levy of interest is a part of the process of assessment, it is open to an assessee to dispute the levy in appeal provide the limits himself to the ground that he is not liable to the levy at all'. In the present case, the assessee claimed that he is no liable to the levy of interest under section 139 and section 217 of the Act at all. According to him, these provisions do not authorise the levy of interest in the facts and circumstances of the assessee's case. Thus, there is total denial of liability to interest. In the circumstances, the assessee is entitled to dispute the levy of interest in the appeal filed by him. The Revenue's contention that the appeal filed by the assessee is not maintainable cannot be accepted. We accordingly answer the second question in the affirmative, that is to say, in favour of the assessee and against the Revenue.
6. As regards question No. 1, learned standing counsel for the Revenue initially stated that this question is covered by a decision of this court is Nizam's Religious Endowment Trust v. ITO : [1981]131ITR239(AP) , on which the Tribunal placed reliance. He, however, quickly reliance from that stand and urged that the question is not covered by the decision of this court above referred to and preferred to urge certain matters for consideration.
7. The Income-tax Officer charged interest under section 139 on the ground that the assessee did not file its return within the time provided under section 139 of the Act. He had also levied interest under section 217 of the Act on the ground that the assessee failed to furnish an estimate of the advance tax payable for the assessment year under consideration. It has been pointed out that the return for the assessment year under consideration was filed by the assessee on June 1, 1979. Treating the said return as not valid, the Income-tax Officer initiated proceedings under section 148, the Act. Obviously, on the request assessee to the treat the said return as one filed on response to the notice issued under section 148, the Income-tax Officer observed that the return filed by the assessee was 'regularised' by issue of a notice under section 148. On these facts, it must be held that the assessment is made by the Income-tax Officer under section 143(3) read with section 147 of the Act. The question for consideration is whether interest under section 139 and section 217 could be levied when the assessment is made under section 143(3) read with section 147.
8. Section 139 authorised the levy of interest on the amount of tax payable on the total income as determined on 'regular assessment'. Similarly, section 217 of the Act authorised by the levy of interest where on making a 'regular assessment', the Income-tax Officer finds that the assessee has not filed and estimate of advance tax payable as required by section 212(3) of the Act. It would, therefore, be seen that the condition precedent for the levy of interest under section 139 as well section 217 of the Act is that the assessment made should be a 'regular assessment', as defined in section 2(40) of the Act. It states :
''regular assessment' means the assessment made under section 143 or section 144.
The definition contained in section 2 of the Act shall prevail unless the context otherwise requires. The assessee's contention is that the assessment made by the Income-tax Officer cannot be regarded as a 'regular assessment' inasmuch as it is not merely an assessment under section 143(3) but is an assessment under section 143(3) read with section 147 of the Act. It is urged that on interest can be levied for the above reason. As already indicated, this contention of the assessee was accepted by the Appellate Assistant Commissioner of Income-tax as well as by the Tribunal.
Learned standing counsel for the Revenue, Sri M. Suryanarayana Murthy, basically urged that the so called 'regularisation' of the assessment proceedings by the Income-tax Officer by issue of a notice under section 148 was unnecessary and the Income-tax Officer could very well have completed the assessment under section 143(3) on the basis of the return filed on June 1, 1979, without taking recourse to section 148. Learned standing counsel, therefore, urged that the assessment made by the Income-tax Officer must be regarded as one made under section 143(3) only, notwithstanding the superfluous exercise by the Income-tax Officer of issuing a notice under section 148 receiving the return on June 1, 1979. According to standing counsel, an assessee can file his return at any time and based on such a return, the Income-tax Officer can always make an assessment. Learned standing counsel found fault with the Income-tax Officer in this case for the treating the return filed by the assessee on June 1, 1979, as an invalid return and regularising the proceedings by the issuance of a notice under section 148 of the Act.
If the aforesaid contention had been urged by counsel less familiar with the provisions of the Income-tax Act, we would have disregarded it and not taken note of it. Coming as it does from standing counsel for the Revenue with considerable standing at the Bar, we are startled at the proposition of law sought to be made out. Not only did learned standing counsel argue the matter at considerable length supporting the above proposition but he also sought to rely on a decision of the Supreme Court in State of Assam v. Deva Prasad Barua : [1970]75ITR18(SC) . It is therefore, necessary to examine the tenability of the contention raised.
A return could be voluntarily filed before June 30, or July 31, as the case may be, of the relevant assessment year, under section 139 of the Act. Where however, the Income-tax Officer serves a notice under section 139 upon the assessee calling for a return of income, the assessee has to file the return, responding to the notice served, within 30 days from the date of service of the notice, or within such time as the Income-tax Officer may extend the date for furnishing the return from time to time. Where a return is not filed within the time allowed under section 139 or under section 139, a return can still be filed by assessee could file a return at any time before the end of the period specified in clause (b) of sub-section (4). In the present case, the assessee did not file a return under section 139 nor was any notice issued under section 139 calling upon the assessee to file a return so that the return filed by the assessee cannot be regarded as one filed under section 139. The return under section 139 for the assessment year 1976-77 could be filed by the assessee under sub-clause (iii) of clause (b) within two years from the end of the assessment year that is to say, on or before March 31, 1979. The assessee filed the return only on June 1, 1979, and, therefore, the return filed cannot be regarded as one filed under section 139 either. It was for this reason that the Income-tax Officer regarded the return filed by the assessee on June 1, 1979, as an invalid return and rightly took proceedings under section 148 for regularising the assessment proceedings. Learned standing counsel, however, contends that even though the return is filed after the time limit enunciated under section 139(4)(b)(iii), still the return filed by the assessee is a valid return and there was no need for the Income-tax Officer to ignore the existence of such a return when once it is filled. Without taking recourse to section 148 of the Act, contends learned standing basis of the return filed on June 1, 1979. The proposition made by learned of the return filed on June 1, 1979. The proposition made by learned standing counsel is wholly unacceptable and has no support either in law or in the decision of any court Indeed, we have not come across any case where such a startling proposition of law has been canvassed by the Revenue.
A return filed by an assessee after the expiry of the time limit specified in section 139 is non est in law and it is not open to the Revenue to take note of such a return and proceed to make an assessment. We may refer to the decision of the Calcutta High Court in CIT v. Smt. Minabati Agarwalla : [1971]79ITR278(Cal) , where the matter was considered in great detail. In that case, the assessee filed returns for the assessment years 1953-54 to 1961-62 voluntarily on August 9, 1961. Based on those returns, the Income-tax Officer completed the assessments on August 16, 1961. The Commissioner of Income-tax took action under section 33B of the Act and canceled all the assessments and directed the Income-tax Officer to make fresh assessments after making proper enquiries. On appeal against the order of the commissioner, the Tribunal held that in so far as the returns for the assessment years 1953-54 to 1956-57 were concerned, since they had been filed on August 9, 1961, that is, beyond the period of four years from the end of the relevant assessment years, those returns were not valid returns under section 22(3) of the Act and accordingly modified the Commissioner's order by canceling the assessments. On these facts the High Court held that the returns filed by the assessee for the assessment years 1953-54 to 1956-57 on August 9, 1961, were invalid and that no fresh assessments could be made on the basis of the Commissioner's order under section 33B of the Indian Income-tax Act, 1922. We may point out that the relevant time, a return under section 22(3) of the Indian Income-tax Act, 1922 (which is analogous to section 139 of the Income-tax Act, 1961), could be filed by an assessee before the assessment is made, within four years from the end of the assessment year. Thus, the returns for the assessment years 1953-54 to 1956-57 could be filed by the assessee on or before March 31, 1958, March 31, 1959, March 31, 1960 and March 31, 1961, respectively. As the returns were filed only on August 9, 1961, they were regarded as invalid returns and the High Court held that no assessments could be made on the basis of those returns. The decision of the Calcutta High Court demonstrates the inaccuracy of the argument advanced by learned standing counsel for the Revenue.
We may refer to the decision of the Punjab and Haryana High Court in Auto & Metal Engineers v. Union of India . That was a case where for the assessment year 1972-73 the assessee filed a return on May 12, 1975. The last date for furnishing the return for that assessment year under section 139 was July 31, 1972. The last date for filing the return under section 139(4) was March 31, 1975. Inasmuch as the return was filed on May 12, 1975 after the expiry of the time limit specified in section 139(4), the Income-tax Officer ignored that return and issued notice to the assessee under section 147(a)/148 of the Act. The assessee filed a write petition challenging the notice on grounds, inter alia, that the return had already filed and was pending and that the assessment for 1972-73 had become time-barred. The High Court held that the return filed on May, 12, 1975, having been filed beyond time the Income-tax Officer was not unjustified in treating the same as non est. The High Court rejected the ground that the notice under section 147 could not be issued because the return filed already by the assessee was pending. The facts of this case clearly fit into the facts obtaining in the case of assessee before us and demonstrate the fallacy in the argument of learned standing counsel.
We may refer to another decision of the Calcutta High Court in CIT v. Bissessar Lal Gupta : [1976]105ITR684(Cal) , which provides authority for the proposition that where an assessee files a return, suo motu, beyond the period specified in section 139(4), on assessment could be made for that assessment year. This answers adequately the argument advanced by standing counsel that the Income-tax Officer could have made the assessment on the basis of the return filed on June 1, 1979, which was clearly beyond the period specified in section 139(4)(b)(iii).
We may refer to yet another decision and that is of the Allahabad High Court in Smt. Parbati Devi v. CIT : [1970]75ITR625(All) . That was a case where the assessee filed a voluntary return of her income for 1953-54 on February 28, 1966. According to the law, at the relevant time, the return for the assessment year 1953-54 could be filed under section 139(4) on or before March 31, 1958. The Income-tax Officer made an assessment on April 1, 1966, on the basis of the return filed by the assessee on February 28, 1966. The assessee challenged the assessment made by the Income-tax Officer on April, 1966, in a writ petition. The High Court upheld the contention on the ground that the voluntary return not having been, filed within a period of four years as provided in section 139(4), there was no valid return which could support the assessment order. The fact that the petitioner had agreed to file a voluntary return as a result of a compromise did not bar her contention that the return filed was barred by time. The High Court accordingly quashed the assessment. The following observations of the High Court at page 628 are relevant :
'According to sub-section (4) of section 139, a return has to be filed within four years from the end of the relevant assessment year. According to this provision, the return had to be filed within four years from March 31, 1954. In the instant case, the voluntary return was filed by the petitioner in the year 1966. The voluntary return was filed beyond the period of limitation mentioned in sub-section (4) of section 139 of the Act.
We have seen that under section 153(1)(c) of the Act, assessment may be made within one year from the date of the filing of a return under sub-section (4) of section 139 of the Act. This provision contemplates a valid return under sub-section (4) of section 139 of the Act. In the present case, the voluntary return filed by the petitioner was beyond limitation, and was, therefore, invalid. If the return was itself invalid, the return could not support an assessment order under section 153(1)(c) of Act. The assessment itself would be beyond limitation.'
In the case before us, the voluntary return was filed beyond the period specified in section 139(4) and no assessment could be made on the basis of that return.
9. Finally, we may refer to the decision of the Supreme Court in CIT v. Kulu Valley Transport Co. P. Ltd. : [1970]77ITR518(SC) . We do not wish to refer in detail to the facts of this case. It is enough if we refer to the finding of the Supreme Court at page 530 :
'Moreover, it is common ground that a voluntary return cannot be filed beyond the period specified in section 34(3) of the Act.' (Indian Income-tax Act, 1922)
10. The analogous provision in the 1961 Act is section 153(1)(c) which specifies the two year period from the end of the assessment year as the period in which an assessment could be made for the assessment year commencing on or after 1969-70. Thus, any return filed after March 31, 1979, for the assessment year 1976-77 would be a return filed beyond the period specified in section 153(1)(c) and it is not open to the assessee to file such a return.
11. We do not consider it necessary to multiply authorities on this point, as we do not find that a contrary view was taken by any court, nor was a contention urged to that effect by the Revenue in any case. The law, as far as we can see, is fairly settled without leaving any scope for advancing a contention of the nature that learned standing counsel for the Revenue advanced in the present case. We would refer to the decision of the Supreme Court upon which learned standing counsel relied and reported in State of Assam v. Deva Prasad Barua : [1970]75ITR18(SC) . That was a case arising under the Assam Agricultural Income-tax Act, 1939. The assessment year involved in this case is 1955-56. A general notice was issued under section 19(1) of the Act calling for a return on April 13, 1955, for that assessment year. A notice under section 19(2) of the Act - analogous to section 139(2) of the Income-tax Act, 1961 - was also issued on September 16, 1955, calling for a return for the assessment year 1955-56. The assessee in that case did not respond to either of the notices. However, a return was filed by the assessee on May 31, 1958. Section 19(3) of the Assam Agricultural Income-tax Act, 1939 (analogous to section 139(4) of the Income-tax Act, 1961), provides that if any person has not furnished a return within the time allowed by or under subsection (1) or sub-section (2), he may furnish a return at any time before the assessment is made and any return so made shall be deemed to be made in due time under the section. The assessee contended that the assessment made by the Agricultural Income-tax Officer under section 20 of the Act (analogous to section 143 of the Income-tax Act, 1961) was invalid, inasmuch as the return on the basis of which the assessment was made, was not filed before the expiry of the assessment year on March 31, 1956. It was obvious that under section 19(3) of the Assam Agricultural Income-tax Act, 1939, a return could be filed within three years from the end of the assessment year, that is to say, a return could be filed on or before March 31, 1959. In the instant case, a return was filed by the assessee on March 31, 1958. The Supreme Court held that the return filed by the assessee was well within time as provided by section 19(3) and it was open to Income-tax Officer to make an assessment based on that return under section 20 of the Assam Agricultural Income-tax Act, 1939. The Supreme Court rejected the contention that the words 'at any time' occurring in sub-section (3) of section 19 should be given a limited meaning and should be confined to the year of assessment. The Supreme Court rejected the contention that if a return was not filed before the expiry of the relevant assessment year, it would be imperative on the part of the Agricultural Income-tax Officer to initiate assessment proceedings under section 30 (analogous to section 148 of the Income-tax Act, 1961). As the return could be filed under section 19(3) before the expiry of three years from the end of the assessment year, the Supreme Court held that the return filed by the assessee on March 31, 1958, was a valid return and the assessment made on the basis of that return was valid. We are unable to see how the facts of this case support the Revenue. Undoubtedly, the return in the case before the Supreme Court was filed before the expiry of the time specified in section 19(3) of the Act (analogous to section 139(4) of the Act) and it is perfectly valid to make an assessment based on that return. The facts in the case of the assessee are altogether different as the return was not filed within the time limit specified in section 139(4). For that reason, the return could not be treated as a valid return. The reliance placed by learned standing counsel on the aforesaid decision of the Supreme Court is thoroughly misplaced.
12. We may point out that what the Income-tax Officer did in the present case was absolutely right. Without regularising the assessment proceedings by the issuance of a notice under section 148 of the Act, the Income-tax Officer could not have made an assessment on the basis of the return filed on June 1, 1979, which was beyond the time limit specified in section 139(4)(b)(iii)) of the Act. There is no misunderstanding of the correct provision of law as far as the Revenue is concerned and we wonder how learned standing counsel for the Revenue canvassed before this court a plea that the Income-tax Officer committed an error in regularising the assessment proceedings by the issuance of a notice under section 148. We have to reject the contention in this regard urged by learned standing counsel without the slightest hesitation.
13. The next submission made by learned standing counsel is that even if the assessment is regarded as one made under section 143(3) read with section 147(a), we must still hold that it is a 'regular assessment' within the meaning of section 2(40) of the Act rendering the provisions relating to the charge of interest under sections 139(8) and 217 of the Act applicable. This contention of learned standing counsel is equally without any substance. In the first place, we must mention that learned standing counsel has not invited our attention to any decision which has taken a contrary view although we have reason to think that perhaps one or two High Courts have taken that view. Except an oral assertion, no authority is placed before this court to support the proposition that an assessment made under section 143(3) read with section 147 should be regarded as a regular assessment made under section 143(3) alone. The Tribunal has rejected this part of the Revenue's contention in an order elaborately written giving cogent reasons and referring to a catena of decisions of High Courts supporting the view that an assessment made under section 143(3) read with 147 cannot be regarded as an assessment made under section 143(3) alone. It is not necessary to refer to the long line of cases which have taken this view but we would refer to two or three cases which shed light on this point. We may first refer to the decision of the Punjab and Haryana High Court in Smt. Kamla Vati v. CIT . In the case before the Punjab High Court, an identical contention was raised by the Revenue, that an assessment under section 143(3) read with section 147 should be regarded as an assessment under section 143(3) alone satisfying the requirements under section 2(40) of the Act and, therefore, the charge of interest was proper. Rejecting the Revenue's contention, Chinnappa Reddy O. (Acting Chief Justice, as he then was) observed as under at pages 251 and 252 :
'We find it difficult to accept the submission of Shri Awasthy in the face of the definition of the expression 'regular assessment' in section 2(40) of the 1961 Act. It is true that in Deviprasad Kejriwal v. Commissioner of Income-tax : [1976]102ITR180(Bom) , the Bombay High Court considered the expression 'regular assessment' occurring in sections 18A(5), 18A(6) and 18A(9) of the 1922 Act, to include assessment under section 34 of that Act but we notice from a perusal of the decision that there were earlier decisions under the 1922 Act, one of the Bombay High Court in Sarangpur Cotton manufacturing Co. v. Commissioner of Income-tax : [1957]31ITR698(Bom) and the other of the Madras High Court in Natarajan Chettiar v. Income-tax Officer : [1961]42ITR29(Mad) , which appear to have interpreted the expression 'regular assessment' in a different way. In Natarajan Chettiar's case : [1961]42ITR29(Mad) Rajamannar C.J., after referring to the decision of Chagla C.J. in Sarangpur Cotton manufacturing Co. v. Commissioner of Income-tax : [1957]31ITR698(Bom) , proceeded to hold that an assessment made under section 34 was not a regular assessment. He observed (page 31) : 'If a regular assessment means and signifies an assessment made in the regular course contemplated by the provisions of the Indian Income-tax Act, then surely an assessment under section 34 is not a regular assessment'. The view expressed by Rajamannar C.J. was reiterated by the Madras High Court in a later case in Gopalaswami Mudaliar v. Fifth Addl. Income-tax Officer : [1963]49ITR322(Mad) . Thus, the expression 'regular assessment' had been understood by some learned judges, including so eminent a judge as Chief Justice Rajamannar, to mean an assessment made in the regular course under section 23 and not an assessment under section 34. It appears to us that it is that meaning that has been accepted by the Legislature when it defined the expression 'regular assessment' in section 2(40) to mean 'assessment made under section 143 or section 144'. The Kerala High Court has taken the same view in Gates Foam and Rubber Co. v. Commissioner of Income-tax : [1973]90ITR422(Ker) . The learned judges referred to the two decisions of the madras High Court in Natarajan Chettiar v. Income-tax Officer : [1961]42ITR29(Mad) and Gopalaswami Mudaliar v. Fifth Addl. Income-tax Officer : [1963]49ITR322(Mad) and to the specific reference made in the 1961 Act to 'assessment under section 147' and held that an assessment under section 147, that is, assessment, reassessment or recomputation made after resort to section 147 would not be regular assessment. With respect, we agree with the view expressed by the learned judges of the Kerala High Court.'
14. The aforesaid observations answer the contention raised by learned standing counsel squarely against the Revenue.
15. We may then refer to the decision of the Patna High Court in CIT v. Ram Chandra Singh : [1976]104ITR77(Patna) . The following observations (at page 82) may be usefully referred to :
'It will be noticed that in section 273 also the words 'regular assessment' have been used. It is clear from the various provisions of the 1922 Act as well as the 1961 Act that a penalty can be imposed for non-furnishing of the estimate of advance tax only in connection with the regular assessment under section 23 of the 1922 Act or regular assessment under section 143 or section 144 of the 1961 Act. As the proceeding for assessment or reassessment under section 34 of the 1922 Act or under section 147 of the 1961 Act is not a proceeding in connection with the regular assessment, no penalty can be imposed for non-furnishing of an estimate of the advance tax payable by the assessee. I am fortified in my view by a Bench decision of the Kerala High Court in Gates Foam & Rubber Co. v. Commissioner of Income-tax : [1973]90ITR422(Ker) .'
16. In the view taken as above, the High Court held that an assessment made under section 143(3) read with section 147 cannot be regarded as a 'regular assessment'.
17. Reference may also be made to the Allahabad High Court in CIT v. Smt. Jagjit Kaur : [1980]126ITR540(All) . The following observations at page 542 are instructive :
'Section 2(40) defines 'regular assessment' meaning the assessment made under section 143 or section 144. This definition is made subject to the context in the Act, that is, if there is contextual claim to the contrary, the context will prevail over the definition clause. We do not find anything in the context of section 273(b) which would impel us to hold that the words 'regular assessment' as occurring in section 273(b) could not be read as required by section 2(40) as applying to assessments made under section 143 or section 144. The Kerala High Court in the case of Gates Foam and Rubber Co. v. CIT : [1973]90ITR422(Ker) has taken the same view. Counsel for the Revenue urged that inasmuch as section 2(8) defines the word 'assessment' as including reassessment and inasmuch as section 2(40) does not define the word 'assessment', the definition of assessment contained in section 2(8) should be read into section 2(40). This line of reasoning may have been fruitful in case section 2(40) did not specifically mention assessments made under section 143 or section 144. Thus, section 2(40) brands only assessments made under section 143 and section 144 as regular assessments. We would, therefore, not be justified in engrafting cases of reassessment in section 2(40). Mr. Gulati, appearing for the Revenue, also urged that under the old Act there were a string of cases where the view was taken that section 18A(9) of the old Act, applied to assessments made under section 34 and that in cases where no return was filed and no previous assessment was made were taken to be cases of regular assessment. We do not think that any useful purpose would be served by referring to those cases, for the old Act did not contain any provision corresponding to section 2(40) of the new Act. Thus, inasmuch as section 2(40) confines a regular assessment to one made either under section 143 or section 144, we cannot read the 'regular assessment' as occurring in section 273 as applying to assessments made under section 147(a). The lacuna, if any, in the Act can be corrected only by a legislative enactment, and not by a process of judicial interpretation. The Punjab High Court in Smt. Kamla Vati v. CIT has taken the same view, and so has the Patna High Court in the case of CIT v. Ram Chandra Singh : [1976]104ITR77(Patna) .'
18. We may finally refer to the decision of this court in Nizam's Religious Endowment Trust's case : [1981]131ITR239(AP) . The Tribunal relied on the above decision of this court as concluding the matter in dispute against the Revenue. In that case before this court, the same question regarding the scope of 'regular assessment' had arisen for consideration. This court held that only assessments made by the Income-tax Officer under section 143 or section 144 are regular assessments and it is not permissible to expand the scope of the expression to include appellate orders and consequential orders passed by the Income-tax Officer. The principle applies with equal force to orders passed by the Income-tax Officer under section 143 read with section 147. The Tribunal quoted extensively from the judgment of this court in order to bring home to the Revenue that matters stood concluded by the decision of this court against the Revenue. On a careful consideration of the decision of this court, we hold that the Tribunal is correct in holding that the above decision of this court is a direct authority to support the proposition that only orders passed by the Income-tax Officer under sections 143 and 144 could be considered as regular assessments within the meaning of section 2(40) of the Act and it is not possible to expand the scope of the expression 'regular assessment', to include other orders. We are in respectful agreement with the view taken by this court in the above case and also the view taken to the same effect by other High Courts to which we have referred above.
19. As the assessment made in the present case is one under section 143(3) read with section 147, the charge of interest by the Income-tax Officer was unauthorised and the Appellate Assistant commissioner and the Tribunal came to the correct conclusion that the interest charged by the Income-tax Officer should be quashed.
20. Before concluding, we must refer to one contention raised by learned standing counsel. He invited our attention to Explanation 2 inserted after section 139(8) by the Taxation Laws (Amendment) Act, 1984, with effect from April 1, 1985. The Explanation reads :
'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 sub-section.'
21. Learned standing counsel submitted that this Explanation, although added prospectively from 1985-86 assessment year, should be held to be applicable to the pre-existing legal position and, therefore, the assessment made in the present case for the first time under section 147 should be regarded as regular assessment. We are unable to agree. The Legislature is fully aware of the decisions to the contrary effect of several High Courts. If the intention of the Legislature is to nullify the effect of the contrary decisions in this regard, it would have provided for retrospective operation of the Explanation. On the other hand, the Legislature deliberately makes the Explanation effective only from 1985-86 assessment onwards. We see no reason why we should hold that the same position prevails for the assessment year 1976-77 in the present case. We reject the contention of learned standing counsel in this regard.
22. We accordingly answer question No. 1 referred to us in the negative, that is to say, in favour of the assessee and against the Revenue.
23. With regard to the second question, we have already answered it in the affirmative, that is to say, against the Revenue and in favour of the assessee in para 4 (at p. 649) supra.
24. As none appeared on behalf of the respondent-assessee, we make no order as to costs.