TaxTMI 
TaxTMI 
1978 (3) TMI 93
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....Whether, on the facts and in the circumstances of the case, interest under the proviso to section 139(1) is imposable for assessment year 1962-63 ? (2) Whether, on the facts and in the circumstances of the case, there was justification in law for the Commissioner to direct the Income-tax Officer by an order under section 263(1) to levy interest under the proviso to section 139(1) when the Income-tax Officer had not levied any such interest at the stage of making the assessment under section 143(3) ? " The assessee, M/s. Jagdish Rice Mills, Dhamtari, which is a registered firm, derives income from rice milling business. For the assessment year 1962-63, the corresponding accounting year of which ended on Diwali 1961, return of income wa....
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....terest under clause (iii) of the proviso to sub-section (1) of section 139 was clearly pre-judicial to the interests of the revenue. As the order of the Income-tax Appellate Tribunal does give rise to a question of law relating to the interpretation of sub-section (4) of section 139 of the Income-tax Act, 1961, the Appellate Tribunal has made this reference under section 256(1) at the instance of the assessee. Section 139 of the Income-tax Act, 1961, so far as material, reads as follows : " 139. (1) Every person, if his total income......during the previous year exceeded the maximum amount which is not chargeable to income-tax, shall furnish a return of his income...... (a) in the case of every person......before the expiry of s....
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....arned counsel for the assessee, contends that, no doubt, sub-section (4) applies to the provisions of clause (iii) of the proviso to sub-section (1) of section 139, but the phrase " in which case " occurring in clause (iii) makes the subsequent portion of the clause dealing with interest dependent on the earlier portion of the clause, which read with the opening part of the proviso, makes the making of an application in the prescribed manner and the actual grant of extension by the Income-tax Officer, conditions precedent for the payment of interest. He, therefore, contends that clause (iii) cannot be read in isolation, and it must be read in the context in which it appears. That submission of his is fortified by the decision of the Delhi H....
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....2), but who furnishes the return in pursuance of sub-section (4) before the assessment is made, subjects himself to the provisions of clause (iii) of the proviso to sub-section (1). The only part of that provision which is relevant in such a case and which will, therefore, be applicable is the provision regarding the obligation of the assessee to pay interest at 6 per cent. per annum up to the date of the furnishing of the return. Thus, the interest part of the proviso alone is relevant in the context of the language of sub-section (4) of section 139. That view of our finds support in the view expressed by the Assam High Court in Ganesh Das Sreeram v. Income-tax Officer [1974] 93 ITR 19, 24 (Gauhati), where Goswami C.J., as he then was, ....
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....ts clause (iii) of the proviso to sub-section (1) which empowers the Income-tax Officer to charge interest for late submission of the return." We also find support from the observations of the Mysore High Court in Indian Telephone-Industries Co-operative Society Ltd. v. Income-tax Officer [1972] 86 ITR 566 (Mys) and of the Orissa High Court in Biswanath Ghosh v. Income-tax Officer [1974] 95 ITR 372 (Orissa). In the instant case, the assessee had not furnished the return within the time allowed to it under sub-section (1) or sub-section (2) and had taken the benefit of sub-section (4) to furnish the return for the previous year on May 7, 1963, before the assessment had been made and before the expiry of the period mentioned in the sub-sec....