Reasonable time requirement limits delayed interest levy under section 201(1A), cancelling stale demands but sustaining timely action.

Interest under section 201(1A) is mandatory, and the absence of an express limitation period does not by itself invalidate the levy. However, tax-related powers must still be exercised bona fide, reasonably and within a reasonable time, consistent with the Act's time-bound scheme for other proceedings and the principle of finality. Applying that standard, prolonged inaction of more than about four years was treated as unreasonable for the earlier assessment years, so the delayed interest demands were cancelled for those years, while the levy for the later assessment year was sustained because action had been taken within a comparatively shorter and reasonable period.

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Issues: Whether interest levied under section 201(1A) of the Income-tax Act could be sustained when the proceedings were initiated and completed after a long delay, and whether the levy was vitiated for not being made within a reasonable time.

Analysis: Interest under section 201(1A) is mandatory, and the absence of an express limitation period does not by itself invalidate the levy. However, statutory powers must still be exercised bona fide, reasonably, and within a reasonable time. The scheme of the Income-tax Act shows that assessment, reassessment, rectification, revision, and penalty proceedings are all subject to time-bound control, and the same principle of finality applies to proceedings relating to tax deducted at source. Applying that principle, the Tribunal held that prolonged inaction extending beyond about four years could not be treated as reasonable in the circumstances of the earlier assessment years, while the levy for the later assessment year, where the action was taken within a comparatively shorter and reasonable period, was sustainable.

Conclusion: The levy of interest under section 201(1A) was cancelled for assessment years 1978-79 to 1985-86 and upheld for assessment year 1986-87.

Final Conclusion: The assessee succeeded in part, as the delayed interest demands were struck down for the earlier years but sustained for the last year on the ground that the action had been taken within a reasonable time.

Ratio Decidendi: Even where no express limitation is prescribed, statutory powers to levy tax-related consequences must be exercised within a reasonable time, judged by the scheme of the Act and the surrounding circumstances.

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