JAWAHAR LAL GUPTA, J. - (1.) IS the action of the respondents in holding that the petitioner is liable to pay interest, in respect of the asst. year 1994 -95 under S. 234B of the IT Act, 1991 illegal ? This is the short question that arises for consideration in this case. A few facts as relevant for the decision of the case may be briefly noticed.
(2.) THE petitioner filed a return of income for the asst. year 1994 -95. He declared an income of Rs. 98,515. It appears that during the course of assessment proceedings, the AO found that an amount of Rs. 5 lacs had been credited to the petitioner's account in his bank pass -book. He was questioned. The petitioner claimed that he had received a gift. However, he stated that "to avoid prolonged litigation with the IT Department and to win peace" he would surrender this amount as his income for the asst. year 1994 -95 subject to the condition that no penal action or prosecution was initiated against him. On 20th April, 1998, the petitioner filed a revised statement of taxable income and paid the additional amount of tax. He appended the following note to the revised statement of taxable income : "No interest under ss. 234A, 234B and 234C is payable since the assessee has surrendered the amount to win peace with the Income -tax Department and to avoid unnecessary litigation much after the close of the assessment year. A copy of this document is at Annexure P.2 with the writ petition. On 6th Aug., 1998, a notice under S. 148 was issued to the petitioner. He filed a reply, On 12th Jan., 2000, the AO passed the order by which the taxable income was assessed at Rs. 5,98,520. It was further ordered that : "Charge interest as per law. Penalty proceedings under S. 271(1)(c) have been initiated. Issued demand notice and challan." On the same day viz., 12th Jan., 2000, a notice of demand under S. 156 of the IT Act, 1961, was issued. The amount held payable by way of interest under S. 234B was Rs. 2,06,940. After adjusting the amount already paid by the petitioner, he was ordered to pay a sum of Rs. 2,05,865. Aggrieved by the order, the petitioner filed an appeal before the CIT(A), Amritsar. A copy of the petition of appeal has been produced as Annexure P -6. However, vide letter, dt. 28th Feb., 2000, the petitioner requested the CIT(A) for permission to withdraw the appeal. A copy of this letter is at Annexure P.7 with the writ petition. This permission was granted by the appellant authority vide order, dt. 29th Feb., 2000. A copy of the order is at Annexure P.8. On 7th June, 2000, the petitioner was given notice of the penalty proceedings under S. 271(1)(c) of the IT Act, 1961. A copy of the notice is at Annexure P.9. The petitioner alleges that the action of the respondents in raising a demand of Rs. 2,06,940 on account of interest under S. 234B is illegal and without jurisdiction. He also alleges that penalty proceedings have been illegally initiated. However, the challenge to the notice in respect of the penalty proceedings has not been pressed at the time of the hearing of this petition. Consequently, the claim only in respect of the challenge to the levy of interest has to be considered.
(3.) A reply has been filed on behalf of the respondents by Mr. Rajiv Aggarwal, Dy. CIT, Amritsar. It has been averred by way of a preliminary objection that the petitioner has an effective alternative remedy of a revision petition before the CIT, Amritsar under S. 264 of the Act. On merits, it has been pleaded that the petitioner had filed the revised return after he was questioned by the Asstt. Director about the alleged gift of Rs. 5 lacs. As such, "the said return cannot be termed as revised return within the meaning of S. 139(5) of the IT Act, 1961, firstly on the ground of the same being belated and, secondly, on the ground that the same was not filed as a result of discovery of any omission or any wrong statement therein. It was filed as the petitioner had failed to explain the gift. It was in pursuance to this detection that the petitioner had declared an income of Rs.;