Writ jurisdiction and reassessment interest: lack of authority cannot be justified by alternate remedy, delay, or inapplicable amendments.

Writ relief under Articles 226 and 227 was treated as maintainable despite laches and the non-use of revision under Section 264, because revisional remedy is not a substitute for appeal and delay does not cure a lack of jurisdiction. The commentary also notes that penal interest under Section 139(8) could not be levied in reassessment for assessment year 1984-85, since the amended Explanation 2 introduced by the Taxation Laws (Amendment) Act, 1984 applied only from 1 April 1985. The impugned interest levy was therefore regarded as unauthorised, while the assessment otherwise remained intact.

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Issues: (i) Whether the assessee could be denied relief under Articles 226 and 227 of the Constitution of India on the grounds of laches and failure to invoke revision under Section 264 of the Income-tax Act, 1961. (ii) Whether penal interest could be levied under Section 139(8) of the Income-tax Act, 1961 in reassessment proceedings for assessment year 1984-85.

Issue (i): Whether the assessee could be denied relief under Articles 226 and 227 of the Constitution of India on the grounds of laches and failure to invoke revision under Section 264 of the Income-tax Act, 1961.

Analysis: Revision is not a substitute for appeal and the existence or non-exercise of revisional remedy does not by itself bar recourse to writ jurisdiction. Mere delay in approaching the Court, in a case where the assessing authority lacked jurisdiction to levy the impugned interest, was held insufficient to refuse relief. The assessee's alleged non-cooperation during reassessment also did not confer jurisdiction on the authority to make an otherwise unauthorised levy.

Conclusion: The objection based on alternate remedy, laches, and conduct was rejected and relief was held to be maintainable in favour of the assessee.

Issue (ii): Whether penal interest could be levied under Section 139(8) of the Income-tax Act, 1961 in reassessment proceedings for assessment year 1984-85.

Analysis: The levy of penal interest in reassessment proceedings was covered against the Department by the earlier Division Bench decision in Charles D'Souza, which had also been affirmed by the Supreme Court. The amendment introducing the substituted Explanation 2 to Section 139(8) by the Taxation Laws (Amendment) Act, 1984, effective from 1 April 1985, did not apply to assessment year 1984-85. Accordingly, the assessing authority had no competence to levy the impugned interest for that year.

Conclusion: The levy of penal interest for assessment year 1984-85 was held invalid and was quashed in favour of the assessee.

Final Conclusion: The appeals succeeded to the extent of striking down the penal interest component of the reassessment order, while leaving the assessment order otherwise intact.

Ratio Decidendi: Lack of jurisdiction to impose an illegal levy is not cured by the existence of an unavailed revisional remedy or by delay in seeking writ relief, and a reassessment for the relevant year could not attract penal interest under the amended provision where the amendment was inapplicable.

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