Decided on May 20,1985



K.N.SAIKIA, J. - (1.)THE petitioner, a resident of Police Bazar, Shillong, impugns the notice demanding interest of Rs. 3,972 levied under S. 139 of the IT Act, 1961, shortly "the Act", for delayed filing of return. During the asst. year 1962 -63, he had income from two firms, namely, M/s Ganeshdas Sreeram and M/s A. V. Morello & Co., both having their head offices at Shillong. The ITO, A -Ward, Shillong, made final assessment under S. 143(3)/154 of the Act and found his total income at Rs. 91,451 computed as follows :
(2.)A demand notice dated March 27, 1967, for payment of Rs. 51,246 as tax for the said asst. yr. 1962 -63, including an amount of Rs. 6,031 as interest under section the Act, was issued. The petitioner filed a petition for waiver of the interest as provided under r. 117A of the IT (Second Amendment) Rules, 1964, which was rejected on May 30, 1969. The firm, M/s Ganeshdas Sreeram, of which the petitioner was a partner, filed an appeal wherein the income was reduced to Rs. 74,981 and consequently his tax was reduced to Rs. 37,938 which included interest of Rs.
,972 levied under S. 139 of the Act, the demand for which is being impugned in this petition. 3. Bearing in mind the decisions in Titaghur Paper Mills Co. Ltd. vs. State of Orissa (1983) 34 CTR (SC) 393 : (1983) 142 ITR 663 (SC) and Raleigh Investment Co. Ltd. vs. Governor - General in Council (1947) 15 ITR 332 (PC), we first examined the question whether an appeal gainst levying interest under S. 139 of the Act was provided for in the Act. In K. B. Stores vs. CIT (1976) 103 ITR 505 (Gau), it has been held that interest is not a tax under the Act and that it is only an adjunct of the tax assessed and, therefore, no appeal lies from an order of the ITO under S. 139(8) of the Act charging interest for delayed filing of return, as S. 246(c) does not provide for such an appeal. As also the rule in this petition was issued as far back as on March 26, 1971, and similar petitions were entertained and decided by this Court, we proceed to decide the petition on merits.

(3.)DR . M. K. Sarma, the learned counsel for the petitioner, makes two submissions, namely : (i) that under S. 139 of the Act, the ITO is given power to charge interest on the amount of tax only when there is an application praying for extension of time for filing the "return of income" and on the application so made an order has been passed extending the time. As in the instant case neither was any application made to the ITO nor any order extending the time was passed, the ITO had no power to charge interest on the amount of tax and the demand made thereunder is without jurisdiction and it ought to be set aside. (ii) That the ITO had no power to charge interest on the amount of tax in the hands of the partner of a registered firm. Since it is provided under sub-cl. (a)of cl. (iii) to the proviso of sub -s. (1) of S. 139 of the Act, that a registered firm shall be treated as an unregistered firm, and it gives power to the ITO to charge interest on the firm alone and since the above provision requires every registered firm to be treated as an unregistered firm and there is no separate provision to treat the firm as registered firm again and charge interest on the amount of tax payable by the partners after ascertaining the income of the partners from that firm, the charging of interest is without any authority of law and ought to be set aside. (1) Share of profit from M/s Ganeshdas Sreeram: .
. Rs. (a) Business 80,291 (b) Property 10,183 . 90,474 (2) Share of profit from M/s A. V. Morello and Co. 977 Total 91,451


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