Goswami, C.J. -
(1.) THIS civil rule relates to the assessment year 1965-66. The petitioner is a registered firm having its head office at Shillong. For the assessment year 1965-66, the petitioner submitted the return of income under Section 139 of the Income-tax Act, 1961 (briefly "the Act"), to the Income-tax Officer, "A" Ward, Shillong (respondent No. 1), on 11th April, 1966, and it was provisionally assessed under Section 141 on a total income of Rs. 4,25,393 on the basis of its return and a demand notice was accordingly issued for payment of Rs. 61,379*21 and actually Rs. 22,219.21 being reduced by the advance tax of Rs. 39,160, already paid. Thereafter, the respondent No. I made an assessment under Section 143(3) of the Act and determined the total income of the petitioner as Rs. 4,22,111 (annexure "A"). A demand notice accordingly was issued on 16th December, 1968, for a sum of Rs. 56,142 which, after adjustment of the amounts paid earlier, came to Rs. 2,584. The calculation arrived at included a sum of Rs. 3,158 charged as interest under Section 139 (annexure "B"). The petitioner submitted an application to the respondent No. 1 on 15th March, 1967, for waiver of the interest under Section 139(8) read with Rule I17A of the Income-tax Rules (annexure "C"). The respondent No. 1 also made an order under Section 154 of the Act rectifying his earlier assessment made under Section 143(3) and thereby the total income was reduced to Rs. 4,17,954. Although the total income was reduced, the total tax charged was enhanced to Rs. 56,372 and the interest charged under Section 139 was also enhanced to Rs. 4,091 from Rs. 3,158. After calculating the amounts already paid, the amount of tax payable was determined at Rs. 2,916 (annexures "D" and "E"). Thereafter, the respondent No. 1 issued a notice on 30th March, 1971, under Section 148 of the Act and the petitioner filed the return of income on 25th May, 1971, and the assessment was completed by the respondent No. 1 under Section 147/143(3). In accordance with the reassessment order, the tax demand after adjustment of payments came to Rs. 21,023 which included Rs. 4,959 as interest under Section 139 (annexures "F", "G" and "H ").
(2.) THE petitioner avers that the amount of interest charged under Section 139 has been calculated not on the amount of tax payable or required to be paid by the petitioner-firm, but has been calculated on the amount of tax which would have been payable if the petitioner-firm had been assessed as an unregistered firm (para. 13). THE petitioner further avers that while charging interest under Section 139, the respondent No. I has calculated interest on the gross amount of tax without allowing the deduction of advance tax paid by the petitioner (para. 15). THE petitioner also avers that it never made any application to the Income-tax Officer praying for extending the time to file the return of income and as such no extension of time was granted (para. 22).
The Income-tax Officer has in his counter-affidavit submitted that the interest charged on the petitioner has been calculated strictly in accordance with the provisions of Section 139 of the Act treating the firm as an unregistered one and that such charge of interest is not at all inconsistent with the provisions of law. In a further affidavit, the same officer has averred, without any replication by the petitioner, that a notice dated 20th May, 1965, under Section 139(2) of the Act was served on the petitioner on 28th May, 1965, requiring it to furnish a return of its income during the previous year within thirty days from the date of service of the notice and that the petitioner did not submit any return in pursuance to that notice, but submitted the same only on 11th April, 1966, and hence the "interest was legally payable by the petitioner under the proviso to Sub-section (2) of Section 139 read with Clause (iii) of the proviso to Section 139(1) of the Act, as was in force during the relevant assessment year ".
In the above premises, Mr. Baruah, the learned counsel for the petitioner, made the following submissions :
(1) The Income-tax Officer can charge interest under proviso (iii) to Section 139 only when he allows extension of time for filing the return to the assessee on an application made by him and, in the instant case, the petitioner not having applied for extension of time, the charging of interest for delayed return is without jurisdiction.
(2) Clause (a) of proviso (iii) to Section 139 is violative of Article 14 of the Constitution inasmuch as while all other assessees are liable to pay compensatory interest on the balance of tax actually found due, the petitioner, a registered firm, has to pay interest on a much more onerous basis and not on the amount due from it but on a very much higher amount that would have been due if the assessee had been assessed as an unregistered firm.
(3) The Income-tax Officer is bound in law to allow the petitioner credit for advance tax paid by it while computing the interest payable under proviso (iii).
(3.) BEFORE we deal with the first submission, we may set out the relevant provision of Section 139 as was in force at the relevant time.
"139. (1) Every person, if his total income .... during the previous year exceeded the maximum amount which is not chargeable to income-tux, shall furnish a return of his income ....
(a) in the case of every person .... before the expiry of six months from the end of the previous year ..... or before the 30th day of June of the assessment year, whichever is later;
(b) in the case of every other person, before the 30th day of June of the assessment year :
Provided that, on an application made in the prescribed manner, the Income-tax Officer may, in his discretion, extend the date for furnishing the return-
(i) in the case of any person whose total income includes any income ..... the previous year in respect of which expired on or before the 31st day of December .... and in the case of any person referred to in Clause (b), up to a period not extending beyond the 30th day of September of the assessment year without charging any interest;
(ii) in the case of any person whose total income includes any income from business or profession the previous year in respect of which expired after the 31st day of December of the year immediately preceding the assessment year, up to the 31st day of December of the assessment year without charging any interest; and
(iii) up to any period falling beyond the dates mentioned in Clauses (i) and (ii), in which case, interest at six per cent, per annum shall be payable from the 1st day of October or the 1st day of January, as the case may be, of the assessment year to the date of the furnishing of the return-
(a) in the case of a registered firm or an unregistered firm which has been assessed under Clause (b) of Section 183, on the amount of tax which would have been payable if the firm had been assessed as an unregistered firm ; and
(b) in any other case, on the amount of tax payable on the total income, reduced by the advance tax, if any, paid or by any tax deducted at source, as the case may be ....
(4) Any person who has not furnished a return within the time allowed to him under Sub-section (1)or Sub-section (2) may before the assessment is made furnish the return for any previous year at any time before the end of four assessment years from the end of the assessment year to which the return relates, and the provisions of Sub-clause(iii) of the proviso to Subsection (1) shall apply in every such case ....
(8) Notwithstanding anything contained in Clause (iii) of the proviso to sub-section (1), the Income-tax Officer may, in such cases and under such circumstances as may be prescribed, reduce or waive the interest payable by any person under any provision of this section." (Inserted by the Finance Act, 1963).