Decided on November 13,1973



R.N. Misra, J. - (1.) THESE are three connected applications under Article 226 of the Constitution. The first application is by a partner of the firm, M/s. Nilamani Ghosh & Partners. The second and third applications are by the firm itself.
(2.) THERE was delay in filing of returns of the income under the Income-tax Act, 1961 (hereinafter referred to as "the Act"). So fax as the firm is concerned, the particulars are as hereunder : So far as the petitioner in O.J.C. No.92 is concerned, the material particulars are : The petitioners challenge the levy of interest on the following grounds: (1) The assessee having not applied for extension of time as provided under Sub-section (1) of Section 139 of the Act, no interest is leviable. In support of this contention reliance is placed on an Andhra Pradesh decision in Kishanlal Haricharan v. Income-tax Officer, 1971 82 ITR 660: (2) Interest has been charged at 9 per cent. per annum whereas it should be only at 6 per cent. as was provided in the law in force at the time when the default occurred. In support of this proposition reliance is placed on a decision of the Madhya Pradesh High Court in .. (3) In regard to the assessment year 1967-68 of the firm, interest demanded originally was Rs. 2,260, but, subsequently, it has been enhanced to Rs. 10,527 while it is conceded that the subsequent demand of penalty may not be contrary to law so far as quantum is concerned; according to the submission of the petitioner the Income-tax Officer had no power to enhance the demand of interest. Reliance is placed upon a decision of the Supreme Court in S.A.L. Narayan Row, Commissioner of Income-tax v. Ishwarlal Bhagwanda, [1965] 57 ITR 149, [1966] 1 SCR 190 (SC) and some decisions of High Courts. Having heard the learned counsel for the parties we are of the view that none of the points raised by the petitioner is to succeed. We give our reasons below: Point No. 1.--It is conceded that the assessee had never asked for extension of time for filing return in respect of any of these years. Sub-section 4(a) of Section 139 of the Income-tax Act makes provision in respect of cases where returns are filed beyond time even though extension has not been obtained. In respect of such returns the provision of Clause (iii) of the proviso to Sub-section (1) of that section has been made applicable. Under the third clause of the proviso interest is payable from the date of default till the date of furnishing of the return. On the admitted position that return had not been filed within the time specified under Sub-section (1) of Section 139, provisions of Sub-section (4)(a) of Section 139 would be attracted and interest becomes exigible. The Andhra Pradesh case referred to by the learned counsel for the petitioner has no application. That was not a case to which Sub-section (4)(a) of Section 139 of the Act applied. In fact no return had been filed at all and, therefore, the levy of interest was only under Sub-section (1) of Section 139. The court held that when extension had not been applied for, interest was not payable. Point No. 2.--As we find, the Income-tax Officer has charged interest at 6 per cent. until the provision was amended to enhance the rate of interest at 9 per cent. In fact in the counter affidavit given by the Income-tax Officer in O.J.C. No. 195 of 1972 that position has been clarified. Mr. Pasayat for the petitioner claims that the rate of interest must be only at 6 per cent. in view of the fact that default in this case had occurred prior to the amendment. It is only here that he relies upon the decision of the Madhya Pradesh High Court in Gwalior Rayon Silk Manufacturing (Weaving) Co. v. Income-tax Officer. That was a case in respect of penalty under Section 220(2) of the Act and the court took the view that the rate of interest as provided on the date when default occurred would apply to the facts of the case. We do not agree with the view expressed in the said decision. It is true that Central Act 27 of 1967 has no retrospective effect, but in respect of continuing default after the amendment, in our view, the rate of interest as provided thereunder would apply. Point No. 3.--It is conceded that the interest demanded is not arbitrary and was payable. The Income-tax Officer appears to have made a mistake on the earlier occasion which he has rectified after the appellate order. As it appears consequent upon the appellate decision the interest has been worked out. All the writ applications are accordingly dismissed. But in the facts of the case, we think it proper not to saddle the petitioners with costs. Panda, J. I agree. ;

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