Reassessment is not a regular assessment for interest under the Income-tax Act; levy under sections 139(8) and 217 was unsustainable.

Reassessment under section 147, initiated after notice under section 148, was held not to amount to a regular assessment for charging interest under sections 139(8) and 217 of the Income-tax Act, 1961. The Court followed earlier authorities and concluded that interest could not be sustained where the assessment was completed for the first time in reassessment proceedings under sections 143(3)/147. The Tribunal was therefore justified in not upholding the interest levy.

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Issues: Whether interest under sections 139(8) and 217 of the Income-tax Act, 1961 could be upheld where the assessment was completed for the first time under sections 143(3)/147 of the Income-tax Act, 1961.

Analysis: The reference turned on whether an assessment made in reassessment proceedings under section 147, pursuant to notice under section 148, could be treated as a regular assessment for charging interest under sections 139(8) and 217. The Court followed the earlier authorities holding that such reassessment is not a regular assessment for this purpose, and therefore the levy of interest was not sustainable.

Conclusion: The Tribunal was justified in not upholding the interest charged under sections 139(8) and 217 of the Income-tax Act, 1961.

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