Chandrakantaraj Urs, J.
1. The petitioner is an assessee under the I.T. Act, 1961 (hereinafter referred to as 'the Act'). He filed a return of his income for the assessment year 1976-77 on February 23, 1978. The 2nd respondent, ITO, in concluding the assessment for the said assessment year, levied interest under sub-s. (8)(a) of s. 139 of the Act, as well as interest under sub-s. (1A) of s. 217 of the Act, in addition to issue of a notice to commence proceedings under s. 217(1)(a) and s. 273(c) of the Act, for filing belated return and concealment of income.
2. Aggrieved by the imposition of interest under s. 139(8)(a) and s. 217(1A) of the Act, the assesses-petitioner preferred two revision applications to the Commissioner, 1st respondent herein, inter alia, contending that the order was bad inasmuch as there was no proposition first to levy such interest; that there was no hearing given to the assesses-petitioner before the interest was levied, that the denial of a hearing to the assessee deprived the petitioner of his right under r. 117A(v) of the I.T. Rules, 1962 (hereinafter referred to as 'the Rules'), to get the interest waived or reduced showing sufficient cause for not furnishing the return in time.
3. The Commissioner disposed of the two applications in respect of the interest charged under the two separate sections by a common order. In the said order, while setting aside the levy of interest under s. 217(1A) of the Act, the Commissioner held after coming to the conclusion that the petitioner had a reasonable cause to show in respect of the proposed penalty under s. 271(1)(a) of the Act, nevertheless came to the conclusion that as the belated return and late payment of tax had deprived the Revenue of the use of the money between July 1, 1976, and February 23, 1978, the petitioner was not entitled to either reduction or waiver of the interest charged under s. 139(8)(a) of the Act.
4. Before me, Shri K. Srinivasan, learned counsel for assessee, has urged the grounds which appear to have been canvassed before the respondent-Commissioner and which have been set out earlier in the course of this order. Sub-section (8)(a) of s. 139 of the Act is as follows :
'139. (8)(a) 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 income-tax 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 at twelve per cent. 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 advanced tax, if any, paid, and any tax deducted at source : Provided that the Income-tax Officer may, in such cases and under such circumstances as may be prescribed, reduce or waive the interest payable by any assessee under this sub-section......' (rest of the section not necessary for our purpose).
5. The reading of the section makes it clear that the concerned assessing officer is bound to consider cases and circumstances under which the interest chargeable under sub-s. (8)(a) of s. 139 of the Act is liable to be reduced or waived. While the section itself does not provide for the cases and circumstances under which he can waive or reduce the interest, the same has been prescribed in r. 117A(v) of the Rules. Rule 117A(v) of the Rules reads as follows :
'117A. Reduction or waiver of interest payable under section 139 - The Income-tax Officer may reduce or waive the interest payable under section 139 in the cases and in the circumstances mentioned below, namely :- ......... (v) any case in which the assessee produces evidence to the satisfaction of the Income-tax Officer that he was prevented by sufficient cause from furnishing the return within time :
Provided that the previous approval of the Inspecting Assistant Commissioner has been obtained where the amount of interest reduced or waived, as the case may be, under clause (iv) or clause (v) exceeds one thousand rupees.'
6. As far as I can see, the difference in the language of r. 117A(v) of the Rules and the language of s. 271(1)(a) of the Act is that the term 'sufficient cause' has been used in the rule while in the section 'reasonable cause' has been used. Otherwise, the nature of the power to be exercised by the authority concerned in both the aforementioned rule and the section is similar inasmuch as they are discretionary powers exercised to find out whether or not the cause shown is sufficient or reasonable to avoid the rigour imposed by either s. 139(8)(a) or s. 271(1)(a) of the Act. In the case of s. 271(1)(a) of the Act it is already settled law that without affording an opportunity to the assessee proceeded against under that section, no penalty can be imposed on him. Regard being had to the cumulative effect of s. 139(8)(a) of the Act and r. 117A(v) of the Rule, one has necessarily to inter that the assessing officer is under an obligation to afford an opportunity to the assessee as to why interest should not be charged unless sufficient cause is shown for the delay in filing the return. Mere mechanical computation of the interest without informing the assessee that such interest is being charged would totally deprive the assessee of explaining the delay in filing the return. Therefore, on the well-established principles of construction of a taxing statute, while it must be construed strictly, whenever the construction offers more than one interpretation, one favourable to the assessee should be framed, it must be held that the ITO in computing the assessment of an assessee who has filed a belated return, must necessarily first make a proposal to impose interest under s. 139(8)(a) of the Act, as, otherwise, it puts the assessee at a disadvantage as pointed out by me earlier. If that opportunity is not afforded to the assessee, then r. 117A(v) of the Rules becomes redundant in the statute, as no occasion arises for the assessing authority to exercise the discretionary jurisdiction vested in it. Therefore, that part of the order of the 2nd respondent-ITO imposing interest under s. 139(8)(a) of the Act, suffers from the infirmity of not being in accordance with the procedure laid down by law and is, therefore, liable to be set aside.
7. The 1st respondent-Commissioner has not at all considered the case of the assesses-petitioner regarding the need of an opportunity for the petitioner to explain the delay in filing the return. Therefore, his order, which is at annex. B, suffers from an error of law apparent on the face of the record inasmuch as a relevant ground urged by the assessee in his revision application has not been considered. Even in the order, in so far as it relates to the levy of interest under s. 139(8)(a) of the Act, the explanation offered by the assessee that he was compelled to file the return belatedly, because the firm of which he was a member itself filed the return for the relevant assessment year late, has been accepted by the Commissioner as reasonable cause for the purpose of s. 271(1)(a) of the Act. No doubt, as already pointed out, the language used in r. 117A(v) of the Rules is sufficient cause, but it cannot be argued that what is a reasonable cause is not a sufficient cause. If the Commissioner came to the conclusion that it was a reasonable cause in relation to s. 271(1)(a) of the Act the reasoning that the Government was deprived of the use of the use of the tax payable by the assessee for a given period should outweigh the reasonableness of it in extending that benefit to levy of interest under s. 139(8)(a) of the Act, does not appear to be logical. If it is reasonable for giving relief to the assessee under a penal provision, it should be held reasonable in other cases as well. In correctly understanding the two provisions, the waiver or reduction that may ultimately result under s. 139(8)(a) or s. 271(1)(a) of the Act is relatable to the delay and not to any other cause. Further, if the delay is explained reasonably, and that could be accepted in respect of one provision of the Act, the same explanation should hold good for proceedings under other sections as well. In this view of the matter, I consider that the 1st respondent-Commissioner took into consideration extraneous circumstances in sustaining the levy of interest under s. 139(8)(a) of the Act. Therefore the order of the Commissioner is liable to be set aside and it is so set aside, in so far as it pertains to levy of interest under s. 139(8)(a) of the Act.
8. In the result, the matter is remanded to the 1st respondent-Commissioner to examine the case of the assesses-petitioner for relief in so far as it relates to the levy of interest under s. 139(8)(a) of the Act and pass fresh orders in the light of the observations made by me above.
9. In the circumstances of the case, there will be no order as to costs.