Court rules interest under section 139 mandatory, Inspecting Assistant Commissioner approval needed for waiver

The High Court held that interest can be charged under section 139 by invoking section 154 of the Income-tax Act. The court emphasized the mandatory nature of interest charging under section 139(8) and ruled that the Taxing Officer lacked jurisdiction to waive interest. As approval from the Inspecting Assistant Commissioner was not obtained for waiver exceeding Rs. 1,000, the court concluded that interest could not be waived in this case. The Tribunal's decision was overturned, and the court ruled in favor of the Revenue, ordering the assessee to pay costs of Rs. 500.

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Issues:
Whether interest can be charged under section 139 by using section 154 for a late-filed return.

Analysis:
The High Court was tasked with determining whether interest could be charged under section 139 by invoking section 154 of the Income-tax Act. The case involved an assessment year of 1971-72 where interest was not initially charged due to a late-filed return. The Income-tax Officer rectified the order by charging interest after finding the mistake. The Appellate Assistant Commissioner set aside the order, deeming the charging of interest as waived. The Revenue appealed to the Appellate Tribunal, which upheld the decision. The court referred to previous decisions where similar issues were considered, emphasizing the obligation to charge interest under section 139(8) since 1962. The court highlighted that waiver of interest required the approval of the Inspecting Assistant Commissioner, which was not obtained in this case, making the non-charging of interest an apparent error rectifiable under section 154.

The court reiterated that interest charging is mandatory under section 139(8) and that the Taxing Officer lacks jurisdiction in this matter since the enactment of the Income-tax Act, 1961. The court emphasized that the only relief for an assessee regarding interest charging is through reduction or waiver under rule 117A, which necessitates the Inspecting Assistant Commissioner's approval for amounts exceeding Rs. 1,000. As no such approval was obtained in this case, waiver could not be implied, and the Income-tax Officer had no authority to waive interest. Therefore, the court concluded that the Tribunal erred in holding that interest could not be charged using section 154, based on the previous court decisions and the legal framework governing interest charging and waiver.

The court discharged the reference in favor of the Revenue and against the assessee, ordering the assessee to pay costs of Rs. 500 to the Revenue. The judgment was transmitted to the Assistant Registrar of the Income-tax Appellate Tribunal as per the provisions of the Income-tax Act, 1961.

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