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income-tax Officer Vs. Brish Bhan Gupta - Court Judgment

LegalCrystal Citation
CourtIncome Tax Appellate Tribunal ITAT Allahabad
Decided On
Judge
Reported in(1985)13ITD1(All.)
Appellantincome-tax Officer
RespondentBrish Bhan Gupta
Excerpt:
.....according to her interest under sections 217 and 139(8) could be charged only in the course of regular assessment proceedings and that the same could not be charged in the course of proceedings initiated under section 148.3. on behalf of the revenue, the aforesaid finding of the learned aac is assailed as erroneous and it has been pointed out that the mistake in question cannot be regarded as mistake apparent from the record, because it involves interpretation of statute and in a mistake where interpretation of statute is involved and a debate about its interpretation is possible, it would not be a mistake apparent from record. reliance was placed in this connection on the decision of the hon'ble supreme court in the case of t.s. bahrain, ito v. volkart bros.[1971] 82 itr 50.4. on.....
Judgment:
1. By these three appeals common grounds have been raised. They were, therefore, heard together and are being disposed of by a combined order for the sake of convenience.

2. Assessments under Section 148 of the Income-tax Act, 1961 ('the Act') were made in the case of all the respondents for the assessment year 1975-76 and interest under Sections 139(8) and 217 of the Act were charged. The assessees filed appeals against the assessments in question, but the question of charging of interest was not raised in the said appeals. Subsequently, the assessees moved applications under Section 154 of the Act before the ITO and submitted before him that interest under Sections 139(8) and 217 could not be charged in proceedings initiated under Section 148. The said plea of the assessees was rejected by the ITO by pointing out that the aforesaid submissions involved interpretation of law about which the different High Courts had expressed themselves differently and as such it could not be regarded as a mistake apparent from the record, which could be rectified under Section 154. The assessees appealed against the aforesaid orders of the ITO to the AAC, who directed the ITO not to charge interest. For this purpose, she relied on the decision of the Hon'ble Allahabad High Court in the case of CIT v. Smt. Jagjit Kaur [1980] 126 ITR 540. According to her interest under Sections 217 and 139(8) could be charged only in the course of regular assessment proceedings and that the same could not be charged in the course of proceedings initiated under Section 148.

3. On behalf of the revenue, the aforesaid finding of the learned AAC is assailed as erroneous and it has been pointed out that the mistake in question cannot be regarded as mistake apparent from the record, because it involves interpretation of statute and in a mistake where interpretation of statute is involved and a debate about its interpretation is possible, it would not be a mistake apparent from record. Reliance was placed in this connection on the decision of the Hon'ble Supreme Court in the case of T.S. Bahrain, ITO v. Volkart Bros.

[1971] 82 ITR 50.

4. On behalf of the assessees, reliance was placed on the order of the AAC and it was stated that once the Hon'ble Allahabad High Court has spelt out law, no controversy or debate with regard to its interpretation was possible so far as the territory of Uttar Pradesh was concerned and, therefore, the learned AAC was justified in accepting the assessee's application for rectification and directing the ITO to charge interest under Sections 139 and 217.

5. We have given a careful consideration to the facts of the present case and the rival submissions. The decision of the Hon'ble Allahabad High Court in the case of Smt. Jagjit Kaur {supra) relates itself with the proceedings for penalty initiated under Section 273(a) of the Act.

The said Section as it obtained at the relevant time provided, inter alia, as follows : If the Income-tax Officer in the course of any proceedings in connection with the regular assessment....

Their Lordships were considering the scope of the wordings italicised above and in that connection they noted that regular assessment having been defined under Clause (40) of Section 2 of the Act as an assessment made under Section 143 or Section 144 of the Act, the proceedings in connection with the regular assessment would mean proceedings initiated under Section 139 and terminated by orders passed under Sections 143 and 144. According to their Lordships, the definition of a certain term, given in the Act, should prevail, unless the context indicated to the contrary and inasmuch as there was nothing in the wordings of Section 273, to indicate anything contrary in the context, the definition of 'regular assessment' should be given full effect. By stating as above, their Lordships were merely emphasising the obvious for Section 2 itself makes it clear that the definition given in that Section would have the meaning given therein 'unless the context otherwise requires'.

6. We have, therefore, to find out from the wordings of Section 139(8) and Section 217, whether the language used therein similar to the one used in Section 273 If so, the ratio of the decision of the Hon'ble Allahabad High Court in Smt. Jagjit Kaur's case (supra) would be applicable to the aforesaid sections also. If, however, the language and the context was different, it would not be correct to apply the ratio of the aforesaid judgment to situations which were not visualised by their Lordships while deciding the said case and it will be wrong to hold that the law in regard to the said sections, i.e., Section 139(8) and Section 217, had also been finally laid down by their Lordships of the Hon'ble Allahabad High Court while interpreting the wordings of Section 273 and that no controversy with regard to these sections was, therefore, possible in the State of Uttar Pradesh and so action under Section 154 would be justified.

7. Sub-section (8) of Section 139 does not concern itself with the charging of penalty. It concerns itself with the charging of interest for the late submission of the return of income. It reads, so far as it is relevant for our purpose as follows : 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, . . .

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.

Rule 117A of the Income-tax Rules, 1962 prescribes the circumstances under which the interest may be reduced or waived. It reads, inter alia, as follows : The Income-tax Officer may reduce or waive the interest payable under Section 139 in the cases and in the circumstances mentioned below, namely :-- (iv) where the return of income has been furnished in pursuance of a notice issued under Section 148 ; (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.

8. Reading the provisions of Sub-section (8) of Section 139 and Rule 117A (iv) referred to above, it would be clear that a return filed in response to a notice issued under Section 148 has to be treated as a return filed under Sub-section (2) of Section 139 and, therefore, the provisions of Sub-section (8) would apply thereto. If this were not so, the provisions of Clause (iv) of Rule 117A will be otiose. Let us, therefore, examine Section 148 with a view to find out if it provides the basis for Clause (iv) extracted above. Section 148 reads as follows : (1) Before making the assessment, reassessment or recomputation under Section 147, the Income-tax Officer shall serve on the assessee a notice containing all or any of the requirements which may be included in a notice under Sub-section (2) of Section 139 ; and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub-section.

The above wordings of Section 148 leave no manner of doubt as to the intention of the Legislature. The Legislature intended that notice under Section 148 be deemed to be a notice issued under Sub-section (2) of Section 139 and further desired that all the provisions of this Act shall apply accordingly. Provisions of Sub-section (8) of Section 139 would, accordingly, apply to the return filed in response to the notice under Section 148 read with Section 139(2). The said notice under Section 148 has to be treated as if it were a notice under Section 139(2) and there is nothing in the language of Sub-section (8) of Section 139 to exclude the above operation of the deeming provision. On the contrary, Clause (iv) of Rule 117A makes it specifically clear that interest under Section 139(8) is chargeable with regard to a return filed under Section 148 read with Section 139(2) and that the ITO may waive or reduce such an interest with the prior approval of the IAC.The decision of the Hon'ble Allahabad High Court in the case of Smt.

Jagjit Kaur (supra) did not concern itself with the above fact situation and, therefore, it would, in our opinion, be wrong to hold that the interpretation placed by their Lordships to the provisions of Section 273 would apply mutatis mutandis to the provisions of Section 139(8) and the related Rule 117A. The learned AAC was, therefore, in our opinion, wrong in holding that the facts of the present case were covered by the ratio of the decision in Smt. Jagjit Kaur's case (supra), so far as the provisions of Section 139(8) were concerned.

(1) Where, on making the regular assessment, the Income-tax Officer finds that any such person as is referred to in Sub-section (3) of Section 212 has not sent the estimate referred to therein, simple interest at the rate of twelve per cent per annum from the 1st day of April next following the financial year in which the advance tax was payable in accordance with the said sub-section up to the date of the regular assessment shall be payable by the assessee upon the amount equal to the assessed tax as defined in Sub-section (5) of Section 215.

'Regular assessment' has been defined, as noted earlier, under Section 2(40), to mean 'the assessment made under Section 143 or 144'. The framing of the assessment under Section 143 can be as a result of the proceedings initiated under Section 139 or under Section 147 read with Section 148. This being so, it would depend on the context in which the words 'regular assessment' are used as to whether the said words mean the culmination of the proceedings initiated under Section 139 or the proceedings initiated under Section 147. The context of Section 273 makes it clear that the proceedings referred to therein were those initiated under Section 139. The words 'regular assessment' as used in Section 139(8) do not necessarily refer to the proceedings initiated only under Section 139, but take into account even the deemed proceedings under Section 139(2) as per specific language of Section 148. In the context of Section 217, what would be the correct interpretation of the words 'regular assessment' would involve interpretation of the statute. No decision of the Hon'ble Allahabad High Court has been brought to our notice wherein their Lordships might have taken the view, as in the case of Section 273, that regular assessment in the context of Section 217 would mean only those proceedings which are initiated under Section 139 and not those under Section 147 read with Section 148. Assessment in either case would be in terms of Section 143 or 144, for these two sections provide the procedure for completing the assessment whether initiated in terms of Section 139 or in terms of Section 147. For the purpose of limitation, of course, separate provisions have been made for the proceedings initiated under Section 139 and those initiated under Section 147, for they relate to different, time schedules. But nowhere has it been stated that a proceeding initiated under Section 147 cannot be culminated in terms of Section 143 or Section 144, or that the procedure of assessment provided in Chapter XIV will not apply to proceedings initiated under Section 147. In fact, there are no other procedural Section for making assessments under the Act than those mentioned in Chapter XIV and Section 147 is part of the Chapter XIV dealing with procedure for assessment. Notice issued under Section 147, read with Section 148, initiates proceedings just as the notice under Section 139 does. Proceedings of assessment thus initiated have to follow the procedure indicated in Chapter XIV. Thus, filing of the return in response to the notice under Section 148 can be beyond the period stipulated in the notice. Extension of time for filing the return can be granted by virtue of the powers granted under Section 139(2). If necessary, revised return can be filed in terms of Section 139(5). If the ITO wants to examine the correctness of the return, he has to issue notice under Section 143(2). If he wants production of books of account, he has to resort to notice under Section 142(1) of the Act. If he has to make enquiries, he has to resort to the procedure laid down in Section 142(3). If he has to call for total wealth statements, etc., Section 142(1)(z7) has to be invoked. If the assessee does not co-operate, exparte assessment under Section 144 has to be made. If he has complied with all the notices, assessment will be made under Section 143(3). Therefore, the mere use of the words 'regular assessment' in Section 217 may not necessarily exclude the assessment initiated under Section 147/148. In view of this controversial nature of the question involved and there being no categorical decision of the Hon'ble Allahabad High Court on this point, rectification under Section 154 is not possible, treating the mistake as one apparent from record.

Accordingly, the orders of the learned AAC are hereby reversed and the departmental appeals are allowed.

10. Before we conclude, we may clarify that we may not be understood to be holding by what we have stated in para 9 that 'regular assessment' as used in Section 217 does include assessments completed in pursuance to a notice under Section 148. We have merely tried to highlight that the matter is not free from debate and, as such, it would be wrong to decide this controversy through the proceedings under Section 154. For resolving this controversy, the matter will have to be raised independently. Smt. Jagjit Kaur's case (supra) is, in any case, not an authority for it.


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