Kerala High Court
Commissioner Of Income Tax vs Kalpaka Transport Co. Ltd. on 31 May, 2006
Equivalent citations: (2006)204CTR(KER)86, [2006]287ITR15(KER), 2006(3)KLT453
Author: K.S. Radhakrishnan
Bench: K.S. Radhakrishnan, V. Ramkumar
JUDGMENT K.S. Radhakrishnan, J.
1. This appeal has been preferred by the Commissioner of Income-tax, Calicut aggrieved by the order of Income-tax Appellate Tribunal. Tribunal vide its order dated 23.5.2000 interfered with the order of the Commissioner of Income-tax (Appeals) upholding the levy of interest under Section 234A against the assessee upto February 1994 as against the actual date of filing of return in June 1993.
2. Assessee filed its return of income on 21.6.1993 declaring a total income of Rs. 35,71,006/-. As the return was filed out of time it was treated as an invalid return and notice under Section 148 was issued to the assessee on 17.1.1994. Notice was served on the assessee on 17.1.1994. Assessee sent a letter dated 5.2.1994 to the assessing authority requesting that the return already filed by the assessee on 21.6.1993 be treated as having filed in response to notice under Section 148. The said letter was received in the office of the assessing officer on 7.2.1994. Assessing Officer treated the date of filing of return in response to notice under Section 148 as 7.2.1994 and levied interest under Section 234A upto February 1994. Aggrieved by the order of the assessing officer assessee took up the, matter in appeal before the Commissioner of Income-tax (Appeals). Commissioner concurred with the view of the assessing authority. Matter was taken up before the Tribunal. Tribunal though found that the return filed by the assessee on 22.6.1993 under Section 142(1) was invalid and non est in the eye of law, interpreting Section 234A(1)(a) held that the return filed after the due date in response to a notice under Section 142(1) cannot be ignored while charging interest under Section 234A in view of the clear wording of Section 234A(1)(a). Tribunal took the view that in a case where the belated return has been filed after the issue of the notice under Section 142(1), the period for calculation of interest under Section 234A ends with the date of furnishing of that return. Tribunal opined if that is not the position, the assessing Officer may choose intentionally or unintentionally his own time to issue the notice under Section 148 and if he chooses to issue notice under Section 148 very late then the assessee would become liable to interest under Section 234A for a longer period. On the above reasoning the Tribunal interfered with the order passed by the Commissioner and took the view that interest could be charged only upto the date of filing of the return and not upto February 1994, the date on which assessee's request for treating the return filed on 22.6.1993 as the return filed in response to notice under Section 148.
3. We heard the senior counsel Sri. P.K.R. Menon for the revenue as well as Sri. Dale P. Kurian, counsel appearing for the assessee. We find it difficult to accept the reasoning of the Tribunal. We are of the view, the Tribunal has not properly appreciated the provisions of Section 234A which was inserted by the Direct Tax Laws (Amendment) Act, 1987 with effect from 1.4.1989. The said provision is extracted hereunder for easy reference.
234A(1). Where the return of income for any assessment year under Sub-section(1) or Sub-section (4) of Section 139, or in response to a notice under Sub-section(1) of Section 142 is furnished after the due date, or is not furnished the assessee shall be liable to pay simple interest at the rate of one and one-half per cent for every month or part of a month comprised in the period commencing on the date immediately following the due date, and -
(a) where the return is furnished after the due date, ending on the date of furnishing of the return; or
(b) where no return has been furnished, ending on the date of completion of the assessment under Section 144, on the amount of the tax on the total income as determined under Sub-section (1) of Section 143 or on regular assessment as reduced by the advance-tax, if any, paid and any tax deducted or collected at source.
Explanation 1:- In this section "due date" means the date specified in Sub-section (1) of Section 139 as applicable in the case of the assessee.
Indisputedly, assessee has not filed return in this case as stipulated under Section 139(1) on or before the due date or under Sub-section (4) of Section 139 within the time allowed under the notice issued by virtue of Sub-section (1) of Section 142. It is trite that return filed under Section 142(1) after the due date is invalid return and non est in the eye of law. Assessee was called upon to file the return by 20.9.1992 by issuance of a notice dated 19.8.1992 under Section 142(1). Assessee did not file the return by that date, but had filed the return only on 22.6.1993 which is an invalid return. On scrutiny of the records assessing officer found that the return submitted by the assessee was time barred and invalid. Consequently assessing officer issued notice under Section 148 on 17.1.1994 and the notice was served on the assessee on 20.1.1994. In response to that notice assessee had sent a letter dated 5.2.1994 wherein assessee requested that the return already filed on 22.6.1993 be treated as having filed under Section 148. The said letter was received in the office of the assessing authority on 7.2.1994. We are of the view that by merely filing a letter assessee cannot bypass the statute and make an invalid return as valid return in the eye of law. True, assessing officer could have rejected the letter dated 5.2.94 submitted by the assessee and direct him to file a fresh return in response to notice issued under Section 148. The mere fact that the assessing officer had treated the return filed on 22.6.1993 as the return in response to notice under Section 148 would not cure the illegality attached to the return filed by the assessee on 22.6.1993. Assessing officer has only accepted the request of the assessee to treat the return filed on 22.6.1993 as the return filed by the assessee in response to notice issued under Section 148. The letter of the assessee was received by the assessing officer on 7.2.1994. The mere fact that the assessing officer has treated the return filed by the assessee on 22.6.1993 as the return in response to the notice under Section 148 would not absolve the liability of the assessee to pay interest under Section 234A of the Income Tax Act.
4. We are of the view the assessing authority should have rejected the request of the assessee, in the event of which assessee would have filed a fresh return in response to the notice under Section 148. There is no legal obligation on the part of the assessing authority to accept the request of the assessee to treat the return filed on 22.6.1993 as the return filed in response to the notice under Section 148. The benevolence shown by the assessing officer in accepting the request of the assessee cannot be taken advantage of by the assessee for evading the demand of interest under Section 234A. Threrefore we are inclined to allow this appeal and set aside the order of the Tribunal and uphold the order of the Commissioner of Appeals. We hold that the assessee is bound to pay interest under Section 234A as demanded by the assessing officer. Appeal is allowed as above.