Gauhati High Court
Commissioner Of Income-Tax vs Assam Small Industries Development ... on 19 February, 1996
Equivalent citations: [1996]219ITR324(GAUHATI)
Author: N. Surjamani Singh
Bench: N. Surjamani Singh
JUDGMENT D.N. Baruah, J.
1. In this reference under Section 256(1) of the Income-tax Act, 1961, the following question has been referred to this court for opinion :
"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in sustaining the Appellate Assistant Commissioner's order cancelling the order under Section 201(1A) of the Income-tax Act, 1961, charging interest under that section for the default enumerated in that section ?"
2. The assessee is a company incorporated under the Companies Act and a Government of Assam undertaking. For the assessment year 1985-86, the assessee filed an application under Section 194C of the Income-tax Act. On scrutiny it was found by the Income-tax Officer that the person responsible for deduction of tax at source did not deposit the deducted amount in time. In spite of the opportunity given by the Income-tax Officer to explain about it, none appeared before the Income-tax Officer. The Income-tax Officer, as per Section 201 read with Rule 30 of the Income-tax Rules, 1962, found the assessee liable for penalty and interest under Section 201(1A). Considering all these the Income-tax Officer directed the assessee to pay interest of Rs. 9,954 under Section 201(1A).
3. Being aggrieved, the assessee preferred an appeal before the Appellate Assistant Commissioner of Income-tax. The Appellate Assistant Commissioner allowed the appeal by observing as follows :
"After carefully considering the matter, I find that the appellant is a Government undertaking. Tax deducted by it has been paid to the Government. The management is not fully conversant with the income-tax law. Therefore, there were some delay in making payment to the Government account. It is only a technical breach of law. There is no contumacious conduct involved. I, therefore, delete the penal interest charged by the Income-tax Officer."
4. Against that the Revenue approached the Income-tax Appellate Tribunal. The Tribunal confirmed the order passed by the Appellate Assistant Commissioner. The Tribunal also observed that there was no presumption that everybody knows law. Therefore, the Tribunal upheld the order passed by the Appellate Assistant Commissioner.
5. Situated thus, the Revenue requested the Tribunal for referring the aforesaid question of law to this court for opinion.
6. We have heard Mr. G.K. Joshi, learned senior standing counsel for the Revenue, assisted by the junior standing counsel, Mr. U. Bhuyan. None appears for the assessee.
7. Mr. Joshi submits that both the Appellate Assistant Commissioner and the Tribunal erred in law in interpreting the provisions of Section 201(1A). Mr. Joshi submits that imposition of penalty and charging of interest can be made in two different circumstances. The Assessing Officer can impose penalty only when he is satisfied that the assessee has without good and sufficient reason failed to deduct and/or pay the tax. No penalty can be imposed in the absence of any good and sufficient reason. Section 201(1A) makes the position very clear. Unlike in the case of penalty, there is no such restriction for charging interest. In this connection, Mr. Joshi has drawn our attention to a decision of the Supreme Court in Ganesh Dass Sreeram v. ITO [1988] 169 ITR 221. In the said case, the apex court repelled the argument of counsel for the assessee that as, in view of the late filing of the returns, there is postponement of the payment of tax and the Revenue suffers loss on account of delayed payment of tax, the interest when levied takes the character of penalty. The apex court observed that interest is levied by way of compensation and not by way of penalty.
8. On going through the provision of Section 201(1A) it is clear that interest has to be paid for delayed payment of tax. The section does not impose any restriction unlike penalty. The Assessing Officer has jurisdiction to impose penalty only when he finds that delay in payment was without good and sufficient reason.
9. In view of the above, we are of the opinion that the Tribunal was not justified in sustaining the order of the Appellate Assistant Commissioner who cancelled the levy of interest.
10. For the reasons stated above, we answer the question in the negative and in favour of the Revenue.
11. A copy of this order under the signature of the Registrar and the seal of the High Court shall be transmitted to the Income-tax Appellate Tribunal.