Patna High Court
Commissioner Of Income-Tax vs Bahri Bros. (P.) Ltd. on 19 November, 1974
Equivalent citations: [1976]102ITR443(PATNA)
JUDGMENT S.N.P. Singh, C.J.
1. At the instance of the Commissioner of Income-tax, Bihar, the Income-tax Appellate Tribunal, Patna Bench, has stated a case and made a reference under Section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), for decision of the following question of law:
"Whether, on the facts and circumstances of the case, interest could be charged under Section 139(2) if the application for extension of time is not made by the assessee."
2. The relevant facts for the disposal of this reference may be briefly stated as follows. The assessee, M/s. Bahri Bros. (P.) Ltd., is a company and the previous year of the assessee is the financial year. For the assessment year 1964-65, the assessee was required to file return under Section 139(2) of the Act by the 30th September, 1964, but no such return was filed. Subsequently, a notice under Section 139(2) of the Act was served on the assessee on the 22nd of August, 1964, asking it to file the return within 35 days from the date of the service of the notice. The assessee failed to file the return within the period of 35 days. It filed the return on March 11, 1966, and the Income-tax Officer completed the assessment on January 13, 1969, and in the assessment order he indicated that penal interest would be charged for the late filing of the return. In accordance with the above direction of the Income-tax Officer, interest to the tune of Rs. 2,776 was charged on the assessee. The assessee, being aggrieved by the order of the Income-tax Officer in respect of levy of interest, preferred an appeal before the Appellate Assistant Commissioner and raised the contention that in view of the fact that it had not applied for time to file the return, no interest was chargeable for the late filing of the return under Sub-clause (iii) of the proviso to Section 139(1) read with the proviso to Section 139(2). The Appellate Assistant Commissioner, agreeing with the contention of the assessee, directed deletion of Rs. 2,776 from the demand. Against the order of the Appellate Assistant Commissioner the revenue came up in appeal before the Tribunal and contended that the return filed by the assessee should be held to have been filed under Section 139(4) and not under Section 139(2), and as such the provisions of Clause (iii) of the proviso to Sub-section (1) were applicable. As this point had been raised for the first time before the Tribunal, the Tribunal sent for the original record to find out whether the return was filed under Section 139(2) or under Section 139(4) of the Act. Regard being had to the fact that interest had been charged for the late submission of the return from January 1, 1965, to March 11, 1966, and not from October 1, 1964, the Tribunal held that interest was not charged for the default of non-submission of return under Section 139(4). The Tribunal further held that from the calculation of interest it appeared that the return filed by the appellant was accepted under Section 139(2) and because the return was filed late, the interest was charged. The Tribunal, thereafter, upon a consideration of the provisions of Section 139(2), held that only if an application was made and the date was extended for furnishing the return, interest would be charged in accordance with the provisions of Sub-clause (iii) to the proviso to Sub-section (1) of Section 139 read with the proviso to Sub-section (2) of Section 139. As no application had been made in the prescribed manner for extension of the date to file the return and the date has not been extended by the Income-tax Officer, the provisions of Sub-clause (iii) of the proviso to Sub-section (1) of Section 139 were not applicable.
3. It may be stated at the outset that it is beyond the scope of this reference whether the return was filed under Section 139(4) or under Section 139(2) of the Act. The Tribunal has recorded the finding that the return was filed under Section 139(2) and that finding is final. We have, therefore, to consider the question whether on the facts of the instant case interest could be charged under Section 139(2) of the Act. Section 139(2) of the Act reads as follows :
"In the case of any person who, in the Income-tax Officer's opinion, is assessable under this Act, whether on his own total income or on the total income of any other person during the previous year, the Income-tax Officer may, before the end of the relevant assessment year, serve a notice upon him requiring him to furnish, within thirty days from date of service of the notice, a return of his income or the income of such other person during the previous year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed:
Provided that, on an application made in the prescribed manner, the Income-tax Officer may, in his discretion, extend the date for the furnishing of the return, and, when the date for furnishing the return, whether fixed originally or on extension, falls beyond the 30th day of September or, as the case may be, the 31st day of December of the assessment year, the provisions of Sub-clause (Hi) of the proviso to Sub-section (1) shall apply."
4. It is clear from the proviso to Sub-section (2) that discretion has been given to the Income-tax Officer to extend the date for the furnishing of the return, if an application is made in the prescribed manner. It is also clear from the above proviso that the provisions of Sub-clause (iii) of the proviso to Sub-section (1) shall apply if the conditions laid down in the other proviso are fulfilled. Under Sub-clause (iii) of the proviso to Section 139(1), interest at the prescribed rate is chargeable for the late filing of the return. In the instant case as no application was made by the assessee in the prescribed manner for extension of the date for the furnishing of the return nor was any time extended, the proviso to Sub-section (2) of Section 139 was not attracted. The Tribunal, therefore, rightly upheld the order of the Appellate Assistant Commissioner deleting the interest.
5. I may refer to some of the case laws which were placed before us by the learned standing counsel appearing for the department. In the case of Bishwanath Ghosh v. Income-tax Officer, [1974] 95 ITR 372 (Orissa), a Bench of the Orissa High Court took the view that where the return had not been filed within the time specified under Sub-section (1) of Section 139 of the Act but was filed late and no extension of time had been obtained, the provisions of Subsection (4)(a) of Section 139 would be attracted and interest would be payable. The admitted position in that case was that the return had not been filed within the time specified under Sub-section (1) of Section 139. In that case no notice to file return under Sub-section (2) of Section 139 had been given. The return which was filed in that case was held to be a return under Sub-section (4)(a) of Section 139. On the above facts it was held that the interest became exigible. In the case of Kishanlal Haricharan v. Income-tax Officer, [1971] 82 ITR 660 (AP) a Bench of the Andhra Pradesh High Court held that an assessee was liable to pay penal interest under Clause (iii) of. the third proviso to Section 139(1)(b) of the Act only if he had asked for extension of time for submitting the return. Where the assessee did not request for time for submitting the return, Clause (iii) of the third proviso to Section 139(1)(b) would not apply. In that case, the assessee did not file a return of his income, in spite of notices issued to him, under Sections 139(2) and 142(1) of the Act. The Income-tax Officer made a best judgment assessment under Section 144 levying, in addition to the tax, penal interest under Section 139(1)(b), proviso, Clause (iii). The view which I have taken gets ample support from the decision of the Andhra Pradesh High Court in the case referred to above. I may state here that, in the Orissa case, the Andhra Pradesh case was not dissented from, but it was distinguished. It was observed that that case was not one to which Subsection (4)(a) of Section 139 of the Act applied. In the case of Ganesh Das Sreeram v. Income-tax Officer, [1974] 93 ITR 19 (Gauhati) a Bench of the Gauhati High Court held that when an assessee fails to furnish returns within the time allowed under Sub-section (1) or Sub-section (2) of Section 139 of the Act and furnishes it under Section 139(4), Clause (iii) of the proviso to Section 139(1) is attracted which empowers the Income-tax Officer to charge interest for late submission of returns. That case is also distinguishable, inasmuch as the return filed in this case was under Section 139(4) and not under Section 139(2). I may state here that a clue to the interpretation is to be found in the Finance Act of 1972 by which Clause (a) of Sub-section (8) of Section 139 was substituted and corresponding changes were made in Sub-sections (1) and (2) both. After the amendment, interest is payable and chargeable whether or not the Income-tax Officer has extended the time for the filing of the return under Sub-section (1) or Sub-section (2) beyond the specified date. Thus, from April 1, 1972, interest for delay or default in furnishing the return of income (in all cases) is chargeable from the expiry of the due date for furnishing such return voluntarily under Section 139(1).
6. For the reasons stated above, I answer the question in the negative and in favour of the assessee. As the assessee has not appeared in this reference there will be no order as to costs.
S.K. Jha, J.
7. I agree.