V.K. SINGHAL, J. - (1.) THE Tribunal has referred the following question of law, for opinion of this Court under s. 256(1) of the IT Act, 1961, in respect of asst. yr. 1981-82 which arise out of the order of the Tribunal dt. 14th Nov., 1986 : "Whether the Tribunal was right in holding that interest under s. 139(8) could be levied by invoking the provisions under s. 154, when no such charge had been made in the original assessment passed under s. 143(1) ?"
(2.) THE material facts relevant for deciding the above question are that the assessee is a partnership firm and the assessment was completed under s. 143(1) of the IT Act on 4th Oct., 1983. While passing the said order, interest under s. 139(8) of the Act was not charged from the assessee. Proceedings under s. 154/155 were initiated and an objection was taken that since the order of assessment has not directed to charge the interest under s. 139(8), which must be presumed to have been waived and, which is being a disputed point, interest cannot be charged by invoking the provisions of s. 154/155 of the Act. THE ITO was of the view that, charging of interest under s. 139(8) is obligatory unless it is waived by a specific order. Since there is no specific order for waiver, non-charging of interest is mandatory and constitute mistake apparent from record. THE interest was accordingly charged by order dt. 26th Aug., 1985. An appeal was preferred to the AAC, who was of the opinion that the provisions of s. 139(8) uses the word "shall", therefore, it is a mandatory provisions of law. The waiver could be by satisfying the conditions prescribed therefor and the ITO has to exercise his discretion while passing the order of waiver. Since it has not been done and the ITO has not applied his mind at all, therefore, it cannot be considered to be a case of waiver. As such, there was a mistake apparent from record, which was liable to be rectified under s. 154. Appeal was accordingly dismissed. In the second appeal before the Tribunal, the order of the AAC was upheld. The argument of the learned counsel for both the parties have been heard. The provisions of s. 139(8) contemplated that, where the return under sub-s. (1) or sub-s. (2) or sub-s. (4) for an assessment year is furnished after the specified date, or is not furnished then, the assessee "shall" be liable to pay simple interest at 12% per annum, reckoned from the day immediately following the specified date to the date of the furnishing of the return, or, where no return has been furnished, the date of completion of the assessment under s. 144 on the amount of the tax payable on the total income as determined on regular assessment as reduced by the advance tax, if any, paid, and any tax deduced at source. The proviso has further authorised the ITO, in such cases and under such circumstances as may be prescribed, to reduce or waive the interest payable by any assessee under this sub-section. The use of the language "shall be liable" under s. 139(8) leaves no discretion with the assessing authority, not to charge the interest subject to the other conditions of the said clause. The proviso which is by way of an exception gives the power to reduce or waive the interest, but, for exercise of such power, it is contemplated that the power could be exercised, "in such cases and under such circumstances as may be prescribed". This proviso, therefore requires that the power of waiver is not applicable to all the cases, but, is restricted to such cases and under such circumstances as may be prescribed. Rule 117A of the IT Rules, 1962 has prescribed the circumstances which besides the other conditions contemplate the basis "whether the assessee is prevented by sufficient cause from furnishing the return within the time". While interpreting the provisions of s. 154, the mistake which is contemplated to be rectified must be a manifest or patent mistake which does not require elaborate arguments or, for which two views are not possible or, the order is contrary to the provisions of the Act, and the rules made thereunder or, in ignorance of the provisions of the Act, or a binding decision. If it is the discretion of the ITO while finalising the assessment to charge the interest or not to charge the interest without any requirement on the part of the assessee then, it could be considered that the authority has exercised its discretion; not to charge interest. But, if there is no discretion not to charge interest or the discretion is coupled with certain conditions to be fulfilled by the assessee, then unless those conditions are fulfilled, non-charging of interest would be a mistake apparent from record. Rule 117A has contemplated that the power of reduction or waiver could be exercised only with the previous approval of the Dy. CIT, where the amount of interest exceeds Rs. 1,000 in the case covered by cls. (iv) and (v) of r. 117A. It shows that, the ITO has no power to reduce or waive the interest, where the amount of interest chargeable exceeds Rs. 1,000. The failure on the part of the ITO not to charge the interest, therefore, is contrary to the provisions of the Act, and liable to rectify under s. 154 of the Act. This Court in the case of Golcha Properties Pvt. Ltd. vs. CIT (1988) 66 CTR (Raj) 246 : (1988) 171 ITR 47 (Raj) has held that the penal interest under ss. 139, 215 and 217 could be levied even without notice to the assessee and for reduction or waiver of interest, the ITO has no jurisdiction to waive or reduce the interest without application by the assessee. Patna High Court in the case of CIT vs. Tiwari Bichar & Co. (1987) 62 CTR (Pat) 8 : (1987) 165 ITR 78 (Pat) has also taken the same view. Since the assessee has not submitted any application for reduction or waiver of interest as contemplated under r. 117A of the IT Rules of 1962, the ITO has no discretion to waive the interest. As such, not charging of the interest amounted to a mistake apparent from the record and was liable to be rectified under s. 154 of the Act.
(3.) WE are, therefore, of the opinion that the Tribunal was right in holding that interest under s. 139 (8) could be levied by invoking the provisions under s. 154, when no such charge had been made in the original assessment passed under s. 143(1). The reference application is accordingly answered in favour of the Revenue and against the assessee. No order as to costs.;