Rajasthan High Court Upholds Interest Levy on Income Tax; Precedent Set by ITO v. Secunderabad Tin Industries

The High Court of Rajasthan upheld the levy of interest under section 139(1)(iii) of the Income Tax Act, 1961 for the assessment year 1966-67. The court ruled in favor of the Revenue, rejecting the assessee's argument that interest could only be charged if an application for extension of time had been granted by the Income Tax Officer. The decision aligned with the precedent set in ITO v. Secunderabad Tin Industries, overturning the earlier stance in Kishan Lal Haricharan v. ITO. The judgment did not award costs to either party.

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Issues:
Levy of interest under section 139(1)(iii) of the Income Tax Act, 1961 for assessment year 1966-67.

Analysis:
The High Court of Rajasthan was tasked with determining the justification of upholding the levy of interest under section 139(1)(iii) of the Income Tax Act, 1961 for the assessment year 1966-67. The case involved an assessee who was served a notice to file a return of income for the said assessment year, which was submitted after a significant delay. The Income Tax Officer (ITO) charged interest under section 139 of the Act, a decision that was upheld in appeal by the Appellate Authority and the Tribunal.

During the proceedings, the assessee argued that interest could only be charged under section 139(1)(iii) if an application for extension of time had been made and granted by the ITO. The assessee relied on the decision of the Andhra Pradesh High Court in Kishan Lal Haricharan v. ITO, which supported this position. However, the Tribunal referenced the decision of the High Court in Daljit Singh & Co. v. Union of India, which held that interest could be charged under section 139(1)(iii) even in the absence of an application for extension, based on section 139(4)(a) of the Act.

The learned counsel for the assessee cited various decisions to support their argument, while the opposing party presented counter decisions favoring the stance taken by the High Court in Daljit Singh & Co. v. Union of India. Notably, in ITO v. Secunderabad Tin Industries, a Full Bench of the Andhra Pradesh High Court overturned their earlier decision in Kishan Lal Haricharan v. ITO, providing substantial reasoning for their decision.

Ultimately, the High Court of Rajasthan concurred with the view presented in ITO v. Secunderabad Tin Industries and upheld the levy of interest under section 139(1)(iii) of the Act for the assessment year in question. The judgment favored the Revenue and ruled against the assessee, with no order as to costs.

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