1975 (10) TMI 108 - HC - Income Tax

Court upholds Income Tax Officer's assessments on construction contract profit, deems interest charges valid.

The court upheld the Income Tax Officer's assessments of the petitioner's net profit from a construction contract, emphasizing that it would not question ... - Issues:Assessment of net profit for the contract workCharging of interest under different sectionsOpportunity to show cause against levy of interestApplication of rules for reduction or waiver of interestAssessment of net profit for the contract work:The petitioner, a firm of contractors, was assessed for the years 1970-71 and 1971-72 by the Income Tax Officer, who estimated the net profit from a construction contract at 12 1/2% instead of the 9.5% reported by the petitioner. The Commissioner of Income Tax upheld the assessments, dismissing the revisions filed by the petitioner. The court held that it would not question the Income Tax Officer's estimation but only examine if the Commissioner applied his mind to the case. As the Commissioner had considered the facts, the court found no grounds for interference.Charging of interest under different sections:The petitioner was charged interest under various sections for the assessment years. The court noted that the Income Tax Officer had the authority to levy interest under the relevant sections, and the petitioner's argument that they were not given an opportunity to show cause against the interest levy was deemed meritless. The court highlighted that the burden was on the assessee to prove sufficient cause for delayed returns to seek reduction or waiver of interest, which the petitioner failed to do.Opportunity to show cause against levy of interest:The court emphasized that the Income Tax Officer was not obligated to provide an opportunity to show cause against interest levy when returns were filed late. The petitioner's contention that they should have been given a chance to present their case was rejected as the liability for interest is automatic in cases of delayed returns unless sufficient cause is proven.Application of rules for reduction or waiver of interest:Regarding the rules for reduction or waiver of interest, the court found that the petitioner's case did not fall within the specified categories that would allow for a reduction or waiver of interest. The court reiterated that the Income Tax Officer had the discretion to reduce or waive interest only under prescribed circumstances, which the petitioner failed to demonstrate. Consequently, the court dismissed the petitioner's contentions as untenable and upheld the assessment orders passed by the Income Tax Officer.In conclusion, the court dismissed the writ petition, stating that all contentions raised by the petitioner were found to be without merit, and no costs were awarded in the circumstances.