1995 (12) TMI 62 - HC - Income Tax

High Court rules interest levy not justified under section 139(8) of Income-tax Act

Shakti Tiles Industries Versus Commissioner Of Income-Tax

The High Court of Madhya Pradesh ruled in favor of the assessee, holding that the interest levy under section 139(8) of the Income-tax Act, 1961 was not ... Regular Assessment Issues:Validity of interest levy under section 139(8) of the Income-tax Act, 1961 for assessment year 1975-76.Analysis:The High Court of Madhya Pradesh was tasked with determining the legality of the interest levy under section 139(8) of the Income-tax Act, 1961 for the assessment year 1975-76. The case revolved around the assessee filing a return for the said assessment year on July 3, 1979, which was beyond the prescribed time limit. The Income-tax Officer completed the assessment on March 30, 1983, and imposed interest under section 139(8) of the Act amounting to Rs. 3,408. The applicant contested the interest levy, arguing that it was not a regular assessment and sought correction under section 154 of the Act. The dispute escalated through various appeal stages, leading to the Tribunal referring the question of law to the High Court for consideration.The crux of the matter lay in whether the assessment in question could be deemed a regular assessment under section 143 or section 144 of the Act. The court highlighted that the assessment was not conducted under either of these sections but was initiated based on a notice issued under section 148 of the Act, which pertains to situations where income has escaped assessment. The court emphasized that a return filed beyond the prescribed period should be considered as if no return was filed in the eyes of the law. Citing legal precedents, the court noted that interest under section 139(8) is not leviable in cases of assessments made under section 147 of the Act and that the term 'regular assessment' is specifically defined under section 2(40) to encompass assessments made under sections 143 and 144 only.The court concluded that since the assessment was not a regular assessment but one conducted pursuant to a notice under section 148 of the Act, the interest levy under section 139(8) was not justified. It held that the Tribunal erred in law by deeming the interest as leviable in this scenario. Consequently, the court ruled in favor of the assessee, answering the question posed in the negative, against the Revenue. The judgment was delivered without any orders as to costs, with a fixed counsel fee for either side if certified. The court directed the Registrar of the High Court to forward a copy of the order to the Tribunal for further action.