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Commissioner of Income-tax, West Bengal-vi Vs. Dina Nath èkathoriA. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKolkata High Court
Decided On
Case NumberIncome-tax Reference No. 27 of 1977
Reported in(1984)40CTR(Cal)378,[1984]149ITR60(Cal)
AppellantCommissioner of Income-tax, West Bengal-vi
RespondentDina Nath èkathoriA.
Excerpt:
- .....in holding that when the assessee had not applied for extension of the date for furnishing the return of income, no interest could be charged under clause (iii) of the proviso to section 139(1) of the said act for the delayed submission of the return of income ?'the assessment year involved is 1970-71, for which the relevant accounting period is 1969 calendar year. section 139(1) as it stood during the relevant period required every person whose total income during the previous year exceeded the maximum amount which was not chargeable to income-tax to furnish a return of his income in the prescribed form and verified in the prescribed manner within a period of six months from the end of the previous year or before the 30th day of june, of the assessment year, whichever was.....
Judgment:

SUHAS CHANDRA SEN J. - The Tribunal has referred the following question of law under s. 256(1) of the I.T. Act, 1961, to this court :

'Whether, on the facts and in the circumstances of the case, and on a correct interpretation of clause (iii) of the proviso to section 139(1) and section 1339(4)(a) of the Income-tax Act, 1961, the Tribunal was correct in holding that when the assessee had not applied for extension of the date for furnishing the return of income, no interest could be charged under clause (iii) of the proviso to section 139(1) of the said Act for the delayed submission of the return of income ?'

The assessment year involved is 1970-71, for which the relevant accounting period is 1969 calendar year. Section 139(1) as it stood during the relevant period required every person whose total income during the previous year exceeded the maximum amount which was not chargeable to Income-tax to furnish a return of his income in the prescribed form and verified in the prescribed manner within a period of six months from the end of the previous year or before the 30th day of June, of the assessment year, whichever was later.

There was proviso to s. 139(1) which at the relevant time stood as under :

'Provided that, on an application made in the prescribed manner, the Income-tax Officer may, in his discretion, extend the date for furnishing the return -

(i) in the case of any person whose total income includes any income from business or profession the previous year in respect of which expired on or before the 31st day of December, of the year immediately preceding the assessment year, and in the case of any person referred to in clause (b), up to a period not extending beyond the 30th day of September, of the assessment year without charging any interest :

(ii) in the case of any person whose total income includes any income from business or profession the previous year in respect of which expired after the 31st day of December, of the year immediately preceding the assessment year, up to the 31st day of December, of the assessment year without charging any interest; and

(iii) up to any period falling beyond the dates mentioned in clauses (i) and (ii), in which case, interest at nine per cent. per annum shall be payable from the 1st day of October, or the 1st day of January, as the case may be, of the assessment year to the date of the furnishing of the return -

(a) in the case of a registered firm or an unregistered firm which has been assessed under clause (b) of section 183, on the amount of tax which would have been payable if the firm had been assessed as an unregistered firm; and

(b) in any other case, on the amount of tax payable on the total income, reduced by the advance tax, if any, paid or by any tax deducted at source, as the case may be.'

Section 139(4) provided:

'139(4)(a). Any person who has not furnished a returns with the time allowed to him under sub-section (1) or sub-section (2) may, before the assessment is made, furnish the return for any previous year at any time before the end of the period specified in clause (b), and the provisions of clause (iii) of the proviso to sub-section (1) shall apply in every such case;

(b) the period referred to in clause (a) shall be -

(i) where the return relates to a previous year relevant to any assessment year commencing on or before the 1st day of April, 1967, four years from the end of such assessment year;

(ii) where the return relates to a previous year relevant to the assessment year commencing on the 1st day of April, 1968, three years from the end of the assessment year;

(iii) where the returns relates to a previous year relevant to any other assessment year, two years from the end of such assessment year.'

The question is whether an assessee who has not field his return within the time allowed under s. 139(1), but has availed of the right given to him under s. 139(4) and has filed a return before the assessment is made, is liable to pay interest under sub-clause (iii) of the proviso to s. 139(1).

The case of the assessee is that the interest is only payable by a person who has made an application to the ITO to extend the date for furnishing the return. In this case, the assessee has not made any such application. Therefore, the provision of sub-clause (iii) of the proviso could not be made applicable to the case of the assessee.

We are unable to accept this contention made on behalf of the assessee. Under s. 139(1) the assessee was required to file his return of income in the prescribed form within a period of six months from the end of the relevant previous year or before the 30th June, of the assessment year, whichever was later. We are not here concerned with the special cases mentioned in s. 139(1). The assessee, in the case before us, did not file any such return. The assessee also did not make any application for extension of time under the proviso to s. 139(1). Sub-s. (4) of s. 139 gave the assessee a right to file a return of income within a period of two years from the end of the assessment year 1970-71, if no assessment had taken place in the meantime. The assessee availed of that right that was conferred under s. 139(4) was, however, saddled with the liability that 'the provisions of sub-clause (iii) of the proviso to sub-section (1) shall apply in every such case'. It is significant to note that the entire proviso to s. 139(1) was not made applicable. Sub-clause (iii) of the proviso to s. 139(1) provided that if a return of income was filed beyond the dates mentioned in sub-cls. (i) and (ii), interest at the rate of 9 per cent. per annum shall be payable from 1st October or 1st January, as the case may be, of the assessment year to the date of the return. This interest was payable for delayed filing of the return. We fail to see why this provision for payment of interest will not be applicable to the case of the assessee only because the assessee had not made an application for extension of time under the proviso.

The scheme of s. 139 is quite clear. The assessee has to file his return of income within a certain period of time. If he does not do so, he can apply under the proviso for extension of time for the filing of the return. The ITO has been empowered of time for filling the return and also to levy interest at his discretion and the rate of interest has been prescribed under sub-clause (iii) of the proviso. The assessee, who has not filed his return and who has not made an application for extension of time in the manner prescribed by the proviso, may yet file this return under s. 139(4) within the time limited therein. But in such a case, he will have to pay the interest mentioned in sub-cl. (iii) of the proviso. There is no inconsistency between sub-s. (4) of s. 139 and the proviso to s. 139(1). In fact, that part of the proviso which requires an application to be made in the prescribed manner has not been made application to be made in the prescribed manner has not been made applicable where a return is filed under s. 139(4). The intention is quite clear and the section should be construed in such a manner that will make s. 139(4) workable. It should not be construed in such a way that a portion of that section becomes otiose or redundant. We are of the opinion that sub-cl. (iii) of the proviso was clearly attracted in this case and the assessee was liable to pay interest even though he had filed his return under s. 139(4) of the Act.

The views that we have taken in this case are in consonance with the view of the Allahabad High Court in the case of CIT v. Tikam Chand Agarwal : [1979]119ITR248(All) , a Full Bench of the Andhra Pradesh High Court in the case of ITO v. Secunderabad Tin Industries : [1978]113ITR1(AP) , the Gujarat High Court in the case of Chhotalal and Co. v. ITO : [1976]105ITR230(Guj) , a Full Bench of the Gauhati High Court in the case of Shankarlall Goenka v. ITO , the Kerala High court in the case of Koipally Brothers v. ITO : [1979]119ITR931(Ker) , the Madhya Pradesh High Court in the case of Jagdish Rice Mills v. CIT : [1978]114ITR817(MP) , and the Mysore High Court in the case of Indian Telephone Industries Co-operative Society Ltd. v. ITO : [1972]86ITR566(KAR) .

A contrary view has been taken by the Delhi High Court in the case of Garg and Co. v. CIT : [1974]97ITR639(Delhi) . In that case, it was held that the proviso to s. 139(1) required an application to be made in the prescribed manner which required the use of the prescribed form for getting extension. Interest could be demanded from an assessee under sub-cl. (iii) of the proviso to 139(1) only if an application in the prescribed manner had been made by him. We respectfully differ from this view. Section 139(4) does not make the entire proviso applicable but it makes only the provisions of sub-clause (iii) of the proviso applicable, i.e., that part of the provisio, which provides for payment of interest for late furnishing of the return. It does not lay down that all the provisions of the entire proviso must be applied. If a person applies for extension of time, he comes within the ambit of s. 139(1) and the proviso to it. But if a person does not make such an application, the Legislature has given him a right to file a return of income even in such a case under s. 139(4) but has saddled him with an obligation to pay interest as it would have been payable if he had made an application for extension of time.

In the premises, the question is answered in the negative and in favour of the Revenue.

In the facts and circumstances of this case, each party will pay and bear its own costs.

UMESH CHANDRA BANERJEE J. - I agree.


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