Madras High Court
Salem Co-Operative Sugar Mills Ltd. vs Commissioner Of Income-Tax on 9 February, 1999
Equivalent citations: [1999]240ITR910(MAD)
Author: R. Jayasimha Babu
Bench: R. Jayasimha Babu
JUDGMENT R. Jayasimha Babu, J.
1. The assessee has incurred liability for payment of interest by reason of delay in filing the return and not paying the advance tax in time. While making the assessment accordingly interest was added. The assessee's grievance is that before adding interest, the assessee should have been given show-cause notice and heard in the matter.
2. Counsel for the assessee relied on the observation made by the Andhra Pradesh High Court in the case of M. G. Brothers v. CIT [1985] 154 ITR 695, at page 713. Those observations, however, are purely obiter at the end of the paragraph relied on it has been recorded by the court thus.
"Since, however, this question is not referred to us, we are not going into the matter."
3. That judgment, therefore, does not in any way support the case put forth by the assessee.
4. The duties of an assessee are amply made known by several provisions of the Act with which the assessee is required to comply. Filing a return in time and paying the advance tax to the extent required and within the time allowed are obligations laid down in the Act itself. The assessee is also made aware of the fact that failure to do so will result in his being made liable for payment of interest. The fact that power is conferred on the authorities to reduce or waive the interest, if petition is filed for that purpose before the appropriate authority cannot have the effect of compelling the authority to give a show-cause notice before adding interest and in having to make a separate order with regard to the levy of interest. The provision made in the rules enabling the assessee to apply for reduction and the provision in the Act enabling the assessee to seek waiver from the Commissioner are provisions made with a view to enable the assessee to secure relief, if the amount of interest added is high or the amount in the circumstances which the assessee may demonstrate before the Commissioner and are circumstances recognised under the Act as relevant for granting reduction or waiver.
5. Had it been the intention of Parliament to require show-cause notice being given to the assessee before interest is levied, such a requirement could have been spelt out in the Act. In all cases where notice is given to the assessee before assessment, the assessee will have the opportunity to place all the relevant facts before the Assessing Officer, That is the extent to which opportunity is required to be given under the provisions of the Act. The Supreme Court in the case of Central Provinces and Manganese Ore Co. Ltd. v. CIT [1986] 160 ITR 961, has categorically laid down that the levy of interest is a part of the process of assessment. It is also held that it is open to the assessee to dispute the levy in appeal provided he limits himself to the ground that it is not liable to the levy at all. It is also open to the assessee to seek either waiver or reduction by applying, initially to the Income-tax Officer, and later to the Commissioner.
6. We do not see any merit in the first question proposed.
7. As regards the second question proposed in Tax Case No. 312 of 1998, the finding of the Tribunal is that the so-called transit house was in fact a guest house and, therefore, the expenditure incurred for its maintenance are not allowable. We do not see any error in law, in that finding.
8. These two petitions are, therefore, dismissed.