Income Tax Appellate Tribunal - Amritsar
Smt. Promila Bajaj vs Income-Tax Officer on 9 September, 1994
Equivalent citations: [1994]51ITD532(ASR)
ORDER
R.K. Bali, Accountant Member
1. These three appeals by the assessee directed against common order dated 10-5-1993 passed by the Dy. CIT(A), Amritsar in respect of assessment years 1985-86, 1986-87 and 1987-88 involve common issue and are, therefore, disposed of by a common order for the sake of convenience.
2. The common grounds taken by the assessee in these three appeals are as under:-
That the Ld. ITO has grossly erred in levying interest Under Section 139(8) and the Ld. Dy. CIT(A) has grossly erred in sustaining the levy of interest under Section 139(8) for period beyond the date of actual filing of the return viz., 25-6-1990.
That the voluntary return filed by the assessee on 25-6-1990 was to be taken as the actual date of filing the return for all the provisions of the Income-tax Act.
3. Briefly the facts are that the assessee in this case filed the returns of income for the assessment years under consideration on 25-6-1990. No notice under Section 139(2) or under Section 148 was issued and served upon the assessee calling for the returns of income for the above assessment years. Since the returns were filed beyond the normal period allowed under Section 139(1), notices under Section 148 dated 15-3-1991 were issued subsequently to regularise these returns and in response to the said notices the assessee filed written reply stating that the returns filed on 25-6-1990 may be treated as the returns filed in response to these notices. The assessments were subsequently completed by the Assessing Officer vide orders dated 24-3-1993 and interest under Section 139(8) was charged by the Assessing Officer upto the date of regular assessment, which were completed under Section 143(3), read with Section 147(a)/148. The assessee filed appeals against the orders of the Assessing Officer and contended that since the assessee has filed the returns voluntarily and without receipt of any notices from the department on 25-6-1990 and the entire tax due was duly deposited at the time of filing of the returns the Assessing Officer should have charged interest only up to the date of filing of the returns, i.e., 25-6-1990 and not beyond this date. The Ld. Dy. CIT(A), however, upheld the orders of the Assessing Officer and the appeals filed by the assessee were dismissed on the reasoning that the returns filed on 25-6-1990 were belated returns and as such the Assessing Officer had rightly charged interest under Section 139(8). The assessee is in second appeal before us against the orders of the Dy. CIT(A).
4. Sh. Makkar, Ld. DR, at the time of hearing raised a preliminary objection is entertaining the appeals filed by the assessee stating that the assessee had moved petition under Section 273A to the Commissioner of Income-tax, Amritsar, who vide his order dated 17-11-1993 has directed that interest chargeable under Sections 139(8) and 215/217 for the assessment years under consideration is reduced to 50% and the balance amount of interest if recovered should be refunded to the assessee. He accordingly submitted the assessee having once availed of the provisions of Section 273A, the appeals filed by the assessee challenging the action of the Assessing Officer on the same issue were incompetent and for that purpose the Ld. DR relied on the order of this Bench dated 11-6-1993 in the case of Akhara Sangalwala v. ACIT in ITA Nos. 1373 to 1381/Asr./1992.
4.1 Sh. B.R. Abrol, Advocate, learned representative of the assessee, on the other hand submitted that objection raised by the Ld. DR is misplaced as the assessee is not at all challenging the order of the CIT passed under Section 273A, which has been accepted by her as the statute make the order passed under Section 273A as non-appealable. It was submitted that the assessed is aggrieved with the order of the Assessing Officer who has charged interest for late filing of the return under Section 139(8) upto the date of completion of the regular assessments and not upto the date of filing of the returns by the assessee. Sh. Abrol submitted that the remedy available to the assessee under Section 246/253 and under Section 273A operate in different plains. Under Section 273A the assessee admits its liability to penalty or interest but approaches the CIT for waiver of penalty and interest after fulfilling certain conditions, whereas under Section 246/253 the assessee seeks relief from the chargeability of interest/penalty on the ground that the assessee is not liable to interest or penalty under the statute. Sh. Abrol accordingly submitted since in the appeals filed by the assessee before the Dy. CIT(A) and now before the Tribunal, the assessee is challenging that the liability to interest is only upto the date of filing the return and not the date of framing of the assessments, the appeals filed by her are competent and should be disposed of on merits.
5. On merits, Sh. Abrol submitted that as held by the Hon'ble Supreme Court in the case of Ganesh Dass Sreeram v. ITO [1988] 169 ITR 221, the interest payable by the assessee under Section 139(8) is only compensatory in nature and since the assessee has paid the entire tax due under Section 140A on the dates when the returns were filed, the interest should be charged only upto the date of filing of the returns and not upto the date of the regular assessments under Section 143(3), read with Section 147(a)/148.
6. Sh. Makkar, Ld. DR supported the order of the Dy. CIT(A) and further submitted that the provisions of Section 139(8), read with Section 147 are quite clear and the departmental authorities were perfectly justified in charging the interest upto the date of assessments, which were completed under Section 147, read Section 143(3).
7. We have considered the rival submissions. When interest is charged under Section 139(8) of the I.T. Act, 1961, three remedies are open to the assessee - he may, after the Assessing Officer issues him Demand Notice charging interest, file appeal to the Dy. CIT(A)/CIT(A) under Section 246 denying the liability to pay any interest at all or the assessee may approach the CIT to waive or reduce the interest if the requirement of Section 273 are satisfied. There is even a 3rd remedy in the form of Rule 117A, which can be availed of by the assessee by making a petition to the Assessing Officer who can waive interest chargeable if the conditions laid under Rule 117A are fulfilled. All the three remedies available to the assessee go in different directions. The power of the Commissioner to waive or reduce the interest is subject to the fulfilment of certain conditions specified under Section 273A. Similar is the discretion to waive or reduce interest under Rule 117A by the Assessing Officer subject to fulfilment of certain conditions specified under that Rule whereas the power of the Appellate Authorities to confirm or reduce the penalty leviable/interest chargeable is not connected with the requirements specified under Section 273A or under Rule 117A. The right of appeal by an assessee objecting to any interest charged by the Assessing Officer under Section 139(8) is not taken away either expressly or by necessary implication of the provisions contained in Section 273A. All that Section 273A states is that an order passed by the Commissioner under Section 273A would be final and it shall not be called in question by any Court or law or any other authority.
In the present case, the Commissioner while passing order under Section 273A has directed that interest chargeable from the assessee should be reduced to 50% and this finding of the CIT is final and is not challenged by the assessee in these appeals. The ground taken by the assessee in these appeals is that interest is chargeable under Section 139(8) only upto the date of filing of the returns i.e., 25-6-1990 and not upto the date of framing of the regular assessments under Section 143(3) read with Section 147(a). Accordingly, we will reject the preliminary objection taken by Sh. Makkar, the Ld. DR that the appeals filed by the assessee are not maintainable.
8. Coming to the merits of the case, the provisions of Section 139(8) read as under :-
Where the return under Sub-section(1) or Sub-section (2) or Sub-section (4) for an assessment year is furnished after the specified date, or is not furnished, then, whether or not the Assessing Officer has extended the date for furnishing the return under Sub-section(1) or Sub-section (2), the assessee shall be liable to pay simple interest @ 15% per annum reckoned from the day immediately following the specified date to the date of the furnishing of the return or, where no return has been furnished, the date of completion of the assessment under Section 144, on the amount of the tax payable on the total income as determined on regular assessment as reduced by the advance tax, if any, paid and any tax deducted at source....
A perusal of the Section reproduced above, clearly indicates:-
(i) that whether there is or there is not an application for extension, interest shall be chargeable in all cases if the return is furnished beyond the specified date.
(ii) it also provides for charging of interest where the assessee omits to file the return and the assessment is completed to the best of judgement under Section 144 of the Act.
(iii) the law requires submission of the return by the assessee, who is also given the responsibility of provisionally quantifying the tax payable by him on the basis of the return to be submitted by him. If he does not submit the return within the prescribed time then he is made liable to pay interest with reference to the assessed amount of tax.
However, the question, which is before us for consideration is as to what should be the interest chargeable in the case of the assessee. It has been held by the Hon'ble Gauhati High Court in the case of River Valley Tea Co. (P.) Ltd. v. Agricultural ITO [1974] Tax LR 805, 811 (Gauhati that in case the assessee submits a delayed return interest is to be calculated upto the date of submission of the return. However, in a case where no return is furnished and on that account the assessment is framed under Section 144, interest is to be calculated upto the date of such assessment subject to the rounding off provisions. Interest chargeable under Section 139(8) is to be calculated on the amount of total tax payable on regular assessment as reduced by (a) advance-tax paid, if any and (b) any tax deducted at source. The Hon'ble Punjab & Haryana High Court while dealing with the question of charging of interest under Section 215 in the case of CIT v. Atlas Cycle Indus. [1989] 180 ITR 319 at page 322 has held that where the assessee has paid tax under Section 140A, Sub-section (2) of Section 215 provides that where the advance-tax paid is less than 75% of the assessed tax, but the assessee has paid tax under Section 140A or 'otherwise', before the date of completion of the regular assessment - then interest payable under Section 215 shall be limited to....(i) interest calculated on the shortfall between the assessed tax and the advance-tax paid for the period from 1st April, next following the financial year upto the date of payment under Section 140A 'otherwise' plus (ii) interest calculated on the shortfall between the assessed tax and the total tax paid for the period from date beyond payment of tax under Section 140A or 'otherwise' upto the date of regular assessment.
According to the Hon'ble Judges, the word 'or otherwise' as given in Sub-Section (2) of Section 215 signifies that in whatever manner the tax is paid, it shall be taken note of in calculating the interest. Thus, even where the assessee commits a default in not paying the due tax within time but pays a part of the tax within the financial year, the same has to be taken into account for charging interest under Section 215(1).
9. Applying the analogy of the above interpretation of Section 215 to Section 139(8), we will hold that although strictly the payment made under Section 140A in relation to all the three assessment years on the date of filing the returns i.e., 25-6-1990, cannot be considered as advance-tax, but they can be considered as payment made 'or otherwise' in terms of Section 215(2) - and also keeping in view the fact that interest charged under Section 139(8) or under Section 215 is held to be compensatory in nature by the Hon'ble Supreme Court in the case of Ganesh Dass Sreeram (supra) as well as Central Provinces Manganese Ore Co. Ltd. v. CIT [1986] 160 ITR 961 (SC), the departmental authorities ought to have charged interest under Section 139(8) upto the date of filing of the returns and further interest should be charged only if the assessed tax is more than the tax paid under Section 140A on 25-6-1990. Accordingly, we direct the Assessing Officer to recalculate the interest chargeable under Section 139(8) as under:-
(i) Interest should be calculated on the shortfall between the assessed tax and the tax paid under Section 210 or TDS, if any from the date immediately following the due date of filing the returns upto the date of payment of tax under Section 140A i.e., 25-6-1990.
(ii) Further interest, if any, should be calculated on the shortfall between the assessed tax and the total tax paid for the period from the date beyond the date of payment of tax under Section 140A i.e., 25-6-1990 in this case, upto the date of regular assessment.
10. In the result all the three appeals filed by the assessee are partly allowed in terms of the above order.