Interest under section 139 can arise without extension application, and partner's share income remains separately liable

Interest under section 139 of the Income-tax Act could be levied on a belated return even without any application for extension of time, because such an application was not a condition precedent under the statutory scheme. The separate taxable status of a registered firm and its partners also meant that interest could be charged on a partner's share of income despite the firm being treated as an unregistered firm for that limited purpose. The legal position affirmed that liability to interest could attach in both capacities according to the respective assessment framework.

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Issues: (i) Whether interest under section 139 of the Income-tax Act, 1961 could be charged even though no application for extension of time for filing the return was made or granted; (ii) whether interest could be levied on the partner's share of income from a registered firm.

Issue (i): Whether interest under section 139 of the Income-tax Act, 1961 could be charged even though no application for extension of time for filing the return was made or granted.

Analysis: The governing provision was construed in the light of the earlier majority view of the same court, which held that the requirement of an application for extension of time is not a condition precedent for levy of interest on a belated return. The statutory scheme was read to permit levy of interest where the return is filed beyond the prescribed time but within the period allowed by the Act. The absence of a formal extension application did not negate the liability.

Conclusion: The levy of interest was upheld and the contention that it was jurisdiction for want of an extension application was rejected.

Issue (ii): Whether interest could be levied on the partner's share of income from a registered firm.

Analysis: The court applied the principle that a registered firm and its partners are separate taxable entities for assessment purposes. Treating a registered firm as an unregistered firm for the limited purpose of charging interest did not extinguish the independent liability of the partner on his share of income. The charging provision was held to operate against both the firm and the partner in their respective capacities.

Conclusion: The levy of interest on the partner's share of income was upheld.

Final Conclusion: The challenge to the demand of interest failed in all material respects, and the impugned notice was sustained.

Ratio Decidendi: For levy of interest under section 139, a prior application for extension of time is not a mandatory precondition, and the partner of a registered firm remains separately liable to interest on his share of income notwithstanding the firm's treatment as an unregistered firm for that limited purpose.

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