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Indian Telephone Industries Co-operative Society Ltd. Vs. Income-tax Officer, Special Survey Circle, Banglore and anr. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKarnataka High Court
Decided On
Case NumberWrit Petition Nos. 3564 and 3574 to 3579 of 1970
Judge
Reported in[1972]86ITR566(KAR); [1972]86ITR566(Karn)
ActsIncome Tax Act, 1961 - Sections 139, 139(1), 139(2), 143(3), 147, 148 and 271(4A)
AppellantIndian Telephone Industries Co-operative Society Ltd.
Respondentincome-tax Officer, Special Survey Circle, Banglore and anr.
Appellant AdvocateG. Chander Kumar, Adv.
Respondent AdvocateS.R. Rajasekhara Murthy, Adv.
Excerpt:
.....earnest money was allowed to be refunded @ 6% interest. - if the provisions of the proviso to sub-section (2) and the provisions of sub-section (4) (a) of section 139 are perused, it is clear that sub-clause (iii) of the proviso the sub-section (1) of section 139 applies not only where the assessee requests for extension of time for furnishing his return of income but also where the date fixed originally under section 139(2) falls beyond the date specified in the proviso to sub-section (2) of section 139. 10. in that view, the levy of interest in the impugned assessment orders was perfectly legal and the contention urged on behalf of the petitioner has to fail. 12. in the result, for the reasons stated above, these writ petitions fail and are dismissed......the 30th day of june. therefore, under sub-section (1) of section 139, it is required to file the return of income before the 30th day of june of the assessment year. though the petitioner had income which exceeded the maximum which is not chargeable to income-tax under the act, it did not submit returns before the 30th day of june of the relevant assessment years. the income-tax officer also did not issue any notice under section 139(2) except for the assessment year 1969-70. proceedings were taken for assessment under section 147 and for that purpose notices were issued under section 148 requiring the petitioner to submit its returns within the dates mentioned in the said notices. in the notice issued under section 139(2) for the assessment year 1969-70 also, the petitioner was.....
Judgment:

Govinda Bhat, J.

1. The Indian Telephone Industries Co-operative Society Ltd. is the petitioner in this batch of seven writ petitions. They relate to the assessments made on the petitioner under the Income-tax Act, 1961, hereinafter called 'the Act', for the assessment years 1963-64 to 1969-70. Assessments for all the years except for 1969-70 were made under section 143(3) read with section 147147 of the Act, and for the assessment year 1969-70 the assessment was under section 143(3).

2. The previous year of the petitioner ends on the 30th day of June. Therefore, under sub-section (1) of section 139, it is required to file the return of income before the 30th day of June of the assessment year. Though the petitioner had income which exceeded the maximum which is not chargeable to income-tax under the Act, it did not submit returns before the 30th day of June of the relevant assessment years. The Income-tax Officer also did not issue any notice under section 139(2) except for the assessment year 1969-70. Proceedings were taken for assessment under section 147 and for that purpose notices were issued under section 148 requiring the petitioner to submit its returns within the dates mentioned in the said notices. In the notice issued under section 139(2) for the assessment year 1969-70 also, the petitioner was required to submit its return within the date specified therein. On November 12, 1969, the petitioner filed its returns for all the seven assessment years within the dates mentioned in the notices.

3. The Income-tax Officer (respondent No. 1) passed assessment orders by which he not only levied tax on the income determined, but also interest under sections 139 and 217 of the Act. The assessment orders also directed issue of penalty notices for late submission of returns of income and for not filing an estimate of advance tax. The petitioner applied to the Commissioner of Income-tax, Mysore (respondent No. 2), to waive the penalty in exercise of his powers under section 271(4A). In the said application the petitioner requested for an oral hearing. The 2nd respondent, without giving a hearing, rejected the application.

4. On September 2, 1970, the petitioner preferred the above writ petitions under article 226 of the Constitution of India challenging the levy of interest under section 139 and the order of the 2nd respondent passed without affording an opportunity of being heard.

5. The first contention of Sri. G. Chander Kumar, learned counsel for the petitioner, was that the levy of interest under section 139 is permissible only in case where the assessee makes an application in the prescribed manner for extension of time to file the return and not in cases where the assessee files the return within the time fixed in the notice issued under section 148 or section 139(2). His second contention was that the commissioner was bound to give a hearing before he rejected the application under section 271(4A) of the Act and he not having done so, his order is liable to be quashed.

6. In our Judgment, both the contentions are untenable and have to be rejected. The petitioner who was bound to submit its returns on or before the 30th of June of each relevant assessment year, did not file the returns within the dates specified in the notices issued under section 148 and section 139(2). The question is, whether in a case where the assessee files his return beyond the date prescribed under sub-section (1) of section 139 but within the date specified in the notice under section 139(2) or section 148, interest is liable to be charged in accordance with the provisions of sub-clause (iii) of the proviso to sub-section (1) of section 139. A notice issued under section 148 shall contain all or any of the particulars which may be included in a notice under sub-section (2) of section 139 and the provisions of the Act shall, so far as may be, apply to the said notice as if the notice were a notice issued under section 139(2). The proviso to sub-section (2) of section 139, which is the material provision empowering the levy of interest, reads thus :

'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 (iii) of the proviso to sub-section (1) shall apply.'

7. The first part of the proviso empowers the Income-tax Officer to extend the date for furnishing of the return on an application made by the assessee. If the assessee is not able to submit his return within the date specified in the notice under section 139(2) of the Act, he may make an application to the Income-tax Officer for extension of time and the Income-tax Officer is empowered to extend the date for the furnishing of the return. Similar power is conferred on the Income-tax Officer for extension of time for the furnishing of the return when no notice under section 139(2) is issued but where the assessee makes an application for extension of time voluntarily and that power is conferred under the proviso to sub-section (1) of section 139. The extension of time for the furnishing of the return either under sub-section (1) of section 139 or under sub-section (2) of section 139 may be granted up to the 30th day of September or the 31st day of December of the assessment year, as the case may be, without charging interest. Extension of time beyond the said dates can be granted only on condition that the assessee pays interest at the rates provided under the provisions of sub-clause (iii) of the proviso to sub-section (1) of section 139. If the date originally fixed for filing return in the notice issued under section 139(2) or section 148 falls beyond the date mentioned in the proviso to sub-section (1) of section 139 or if the extension granted on the application of the assessee falls beyond the said date, interest at the rates provided shall be payable from the first day of October or the first day of January, as the case may be, of the assessment year, to the date of the furnishing of the return. The liability to pay interest arises not only where the assessee on an application obtains an extension of time beyond the dates mentioned in the relevant provision but also where the date fixed originally under the notice under section 139(2) or section 148, as the case may be, falls beyond the said date.

8. Sri Chander Kumar, learned counsel for the petitioner, brought to our notice an unreported decision of the Andhra Pradesh High Court in Writ Petition No. 1934 of 1968, Kishanlal Haricharan v. Income-tax Officer, A-Ward, Nizamabad, wherein it is stated that :

'Where the assessee does not request for time for submitting a return, sub-clause (iii) of the proviso of sub-section (1) of section 139 has no application.'

9. In the said case, the assessee did not at any time furnish a return of his income. Section 139 as it stood before its amendment by the Taxation Laws (Amendment) Act, 1970, did not empower the levy of interest where the assessment is completed without the assessee furnishing a return of his income. Such an assessee may be subject to other liabilities under the Act but was not chargeable to interest. Therefore, the decision of the Andhra Pradesh High Court holding that no interest could be levied on the petitioner was right on the merits of the case. But, the observation made therein that sub-clause (iii) of the proviso to sub-section (1) of section 139 has no application where the assessee does not request for time for submitting his return is too wide a statement from which we respectfully dissent. If the provisions of the proviso to sub-section (2) and the provisions of sub-section (4) (a) of section 139 are perused, it is clear that sub-clause (iii) of the proviso the sub-section (1) of section 139 applies not only where the assessee requests for extension of time for furnishing his return of income but also where the date fixed originally under section 139(2) falls beyond the date specified in the proviso to sub-section (2) of section 139.

10. In that view, the levy of interest in the impugned assessment orders was perfectly legal and the contention urged on behalf of the petitioner has to fail.

11. There is no merit in the second contention also. The nature of the power conferred on the Commissioner under section 271(4A) of the Act is not in the nature of a quasi-judicial power and, therefore, he is not required to give an oral hearing. The petitioner can show cause as to why penalty should not be levied in the proceedings for levy of penalty before the first respondent and against the orders of the first respondent there is the right of appeal provided under the Act.

12. In the result, for the reasons stated above, these writ petitions fail and are dismissed. In the circumstances, there will be no order as to costs.

13. Petitions dismissed.


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