Income Tax Appellate Tribunal - Cuttack
Income Tax Officer vs Ladi Rama Rao Patra (Also Ladi Rama Rao ... on 29 April, 1992
Equivalent citations: (1993)45TTJ(CTK)188
ORDER
M. A. A. KHAN, J.M. :
The appeal by the Revenue and the cross objection by the assessee are directed against the order of the Dy. CIT(A), Berhampur, dt. 23rd June, 1989 and they involve question of justification of the direction of the Dy. Commissioner(A) to the Assessing Officer not to charge interest under Ss. 139(8) and 217 of the IT Act, 1961 (the Act). The controversy arises under the following circumstances.
2. In the course of special survey conducted by the Department under S. 133A of the Act at the business premises of the assessee at Berhampur on 20th Sept., 1985, it was known that the assessee derived taxable income. But he had filed no return of his income for the year under consideration. The Assessing Officer, therefore, initiated proceedings under S. 147(a) of the Act and by his notice under S. 148 of the Act required the assessee to file return of his income. Thereupon, the assessee filed the return of his income on 22nd Sept., for the first time for the year under consideration declaring a total income of Rs. 41,500. It was under these circumstances that the Assessing Officer charged interest under Ss. 139(8)/217 of the Act in this case.
3. In appeal, the Dy. Commissioner(A) accepted assessees contention that since the assessment made under S. 147 of the Act was not covered by the term "regular assessment" as defined in S. 2(40) of the Act, the levy of interest under Ss. 139(8)/217 in the instant case was bad in law. Relying upon the decision of the Karnataka High Court in Charles DSouza vs. CIT (1984) 147 ITR 694 (Kar) and of Orissa High Court in CIT vs. Ganeshram Nayak (1981) 129 ITR 43 (Ori), the Dy. Commissioner(A) directed the Assessing Officer not to charge interest under S. 139(8)/217 of the Act from the assessee. It may also be mentioned that in this behalf the Dy. Commissioner(A) referred to the decision of the Tribunal in assessees own case for asst. yrs. 1980-81 and 1981-82. It is against such order of the Dy. Commissioner(A) that the Revenue has come up in appeal before the Tribunal. The Assessee, by his cross objection, has tried to support the impugned order of the Dy. Commissioner(A).
4. The learned Departmental Representative urged before me that Expln. 2 to S. 139(8) of the Act as substituted and sub-s. (6) of S. 215 as inserted by the Taxation Laws (Amendment) Act, 1984, w.e.f. 1st April, 1985 justify the charge of interest under Ss. 139(8) and 217 in the present case. It was submitted that the amendments made in Ss. 139(8) and 215(6) being simply clarificatory and explanatory of the law would be applicable to all pending cases at the time of coming into force of the said amended provisions. It was submitted that since the return for the assessment year under consideration had been filed for the first time under S. 147 and that to on 22nd Sept., 1986, when Expln. 2 to S. 139(8) and sub-s. (6) of S. 215, as amended by the aforesaid Taxation Laws (Amendment) Act, 1984, had already came into force, interest under Ss. 139(8) and 217 of the Act was clearly chargeable. The learned Departmental Representative further submitted that the cases relied on by the Dy. Commissioner(A) were not applicable to the facts of the present case inasmuch as they were rendered before coming into force of the amended provisions of Expln. 2 to S. 139(8) and S. 215(6) of the Act.
5. The learned counsel for the assessee, on the other hand, not only supported the order under appeal but also submitted that the issue in the point stands concluded by the decision of the Tribunal, Cuttack Bench, in the case of assessee for asst. yrs. 1980-81 and 1981-82 (ITA Nos. 391 and 392/CTK/1985). Reliance was also placed on the above-mentioned two decisions, referred to by the Dy. Commissioner(A) in his order. It was also submitted that the term "regular assessment" as given in S. 2(40) of the Act was not modified in terms of amendments made in Expln. 2 to S. 139(8) and S. 215(6) of the Act and, therefore, the amended provisions of the said Explanation and S. 215(6) would not govern the issue. The retrospective application of the said Explanation and S. 215(5) of the Act was also disputed.
6. After having given my thoughtful consideration to the arguments of the parties, I am of the view that interest under Ss. 139(8) and 217 of the Act is chargeable in the instant case. There is no denying of the fact that as per the definition of the term "regular assessment" as given in S. 2(40) of the Act, an assessment made by recourse to S. 147/148 of the Act would not be regarded as "regular assessment". But as the clear language of the amended Explanation and S. 215(6) would show, an exception to the definition of "regular assessment" as given in S. 2(40) of the Act, has been carved out by the legislature for the purpose of levy of interest under S. 139(8) and S. 217 of the Act. The amended provisions of Expln. 2 and S. 215(6) read as under :
"Sec. 139(8) :
XXX XXX XXX Explanation 2 : Where, in relation to an assessment year, an assessment is made for the first time under S. 147, the assessment so made shall be regarded as a regular assessment for the purpose of this sub-section.
Sec. 215(6) : Where, in relation to an assessment year, an assessment is made for the first time under S. 147, the assessment so made shall be regarded as a regular assessment for the purpose of this section and Ss. 216, 217 and 273."
A reading of the above provisions would clearly show that if an assessment is made for the first time under S. 147, in relation to an assessment year, the said assessment shall be regarded as a "regular assessment" for the purpose of S. 139(8) and S. 217 of the Act. The Expln. 2 to S. 139(8), and S. 215(6) were, as stated earlier, made effective from 1st April, 1985 by the Taxation Laws (Amendment) Act 1984. According to them for the purposes of S. 139(8) and S. 217 the assessment made for the first time in a case under S. 147 in respect of an assessment year was to be regarded as a "regular assessment, 170. This mandate contained in these amended provisions clearly makes an exception to the definition of the term "regular assessment" as given in S. 2(40). That being so, it was not at all necessary to make a simultaneous amendment in S. 2(40) also. In my opinion, therefore, the amended provisions of Expln. 2 to S. 139(8), and S. 215(6) being clarificatory and explanatory of law would be applicable to all proceedings pending on the date of coming into force of the said provisions on 1st April, 1985.
7. The argument that the amended provisions of S. 139(8) Expln. 2, and Ss. 215(6)/217 be considered to be effective with reference to the assessment year commencing from 1st April, 1985 i.e., for and from asst. yr. 1985-86 and not to earlier assessment years is not legally sound as it would, if accepted, lead to unjust and unfair consequences. It is beyond my understanding and comprehension that an assessee filing his returns for asst. yrs. 1983-84 and 1984-85 or earlier years after 1st April, 1985 or say after delay of years should not be made liable to any interest but an assessee filing his return for asst. yr. 1985-86 with a delay of one or two months should be required to pay interest under Ss. 139(8) and 217 of the Act. It would not be a proper and equitable interpretation of the provisions of an amending Act, I am confident of. The argument is dismissed.
8. Now, it is an undisputed fact that the return for the year under consideration was filed by the assessee for the first time on 22nd Sept., 1986 in compliance of the notice issued under S. 148 of the Act read with S. 147(a). It is thus beyond any dispute that when such a return had been filed by the assessee the amended provisions of Ss. 139(8) and 215(6) were already there in force. Since the above-mentioned provisions were in force when the return for the year under consideration was filed belatedly for the first time and which return, in view of the amended provisions of Explanation, would be treated to be laying the foundation of a "regular assessment", interest under Ss. 139(8) and 217 shall be chargeable. I, therefore, hold that for the purpose of levy of interest under Ss. 139(8) and 217 the assessment made in this case for the year under consideration on the basis of the return filed on 22nd Sept., 1986 in compliance of the notice under S. 148 read with S. 147(a) of the Act was a "regular assessment". Thus, in my opinion, interest under Ss. 139(8) and 217 of the Act was clearly chargeable in the instant case.
9. The Karnataka and Orissa High Courts in the cases Charles DSouza vs. CIT and CIT vs. Ganeshram Nayak cited (supra) were not at all concerned with the position of law as brought about by the amended provisions of Expln. 2 to S. 139(8), and S. 215(6) of the Act as they were decided much earlier to coming into force of the amended provisions of S. 139(8), Expln. 2 and S. 215(6) of the Act. Since amendments of the said provisions subsequently had materially changed the definition of the term "regular assessment" in so far as the question of levy of interest under Ss. 139(8) and 217 was concerned, and the two Honble High Courts had no occasion to consider the effect of such change, the ratio laid down in the aforesaid two decisions does not apply to the facts and circumstances of the present case.
10. In the assessees case for the asst. yrs. 1980-81 and 1981-82 the point of retrospective effect of the provisions of Expln. 2 to S. 139(8) and S. 215(6) was no doubt raised before the Tribunal, but the Tribunal recorded no finding on this subject. The Tribunal decided the case merely relying on the decision of Karnataka High Court reported in (1984) 147 ITR 694 (Kar) (supra) which I have distinguished above. That apart, whereas, in the case before me, it is undisputed fact that the return had been filed when the amended provisions of Expln. 2 to Ss. 139(8), and 215(6) were already there in force, there is no such evidence on our record to show that the returns for the asst. yrs. 1980-81 and 1981-82 also had been so filed. That, in my opinion, makes a distinguishing feature justifying a departure from the view taken by the Tribunal in assessees case for the asst. yrs. 1980-81 and 1981-82.
11. The above discussion leads me to the conclusion that the instant case was a case of levy of interest under Ss. 139(8) and 217 of the Act in view of clear position of law as brought about by the amended provisions of Expln. 2 to S. 139(8), and S. 215(6) of the Act which were clearly applicable to the case under consideration.
12. In the result, the Revenues appeal is allowed but assessees cross objection is dismissed.