V.K. Singhal, J. - (1.) THE Income-tax Appellate Tribunal has referred the following question of law, for the opinion of this court under Section 256(1) of the Income-tax Act, 1961, in respect of the assessment year 1981- 82, which arises out of the order of the Tribunal dated November 14, 1986 : "Whether the Tribunal was right in holding that interest under Section 139(8) could be levied by invoking the provisions under Section 154, when no such charge had been made in the original assessment passed under Section 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 Section 143(1) of the Income-tax Act on October 4, 1983. While passing the said order, interest under Section 139(8) of the Act was not charged from the assessee. Proceedings under Section 154/155 were initiated and an objection was taken that since the order of assessment has not directed to charge interest under Section 139(8), which must be presumed to have been waived and, which being a disputed point, interest cannot be charged by invoking the provisions of Section 154/155 of the Act. THE Income-tax Officer was of the view that charging of interest under Section 139(8) is obligatory unless it is waived by a specific order. Since there is no specific order for waiver, non-charging of interest constituted a mistake apparent from the record. THE interest was accordingly charged by order dated August 26, 1985. An appeal was preferred to the Appellate Assistant Commissioner, who was of the opinion that the provisions of Section 139(8) use the word "shall" and, therefore, it is a mandatory provision of law. The waiver could be by satisfying the conditions prescribed therefor and the Income-tax Officer has to exercise his discretion while passing the order of waiver. Since it has not been done and the Income-tax Officer has not applied his mind at all, it cannot be considered to be a case of waiver. As such, there was a mistake apparent from the record which was liable to be rectified under Section 154. The appeal was, accordingly, dismissed. In the second appeal before the Income-tax Appellate Tribunal, the order of the Appellate Assistant Commissioner was upheld. The arguments of learned counsel for both the parties have been heard. The provisions of Section 139(8) contemplate that, where the return under Sub-section (1) or Sub-section (2) or Sub-section (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 cent. 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 Section 144, on the amount of tax payable on the total income as determined on regular assessment, as reduced by the advance tax, if any, paid, and any tax deducted at source. The proviso has further authorised the Income-tax Officer, 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 words "shall be liable" under Section 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 the 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 cases, but is restricted to such cases and under such circumstances as may be prescribed. Rule 117A of the Income-tax 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 Section 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 Income-tax Officer 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 the record. Rule 117A has contemplated that the power of reduction or waiver could be exercised only with the previous approval of the Deputy Commissioner of Income-tax, where the amount of interest exceeds Rs. 1,000 in cases covered by Clauses (iv) and (v) of Rule 117A. It shows that the Income-tax Officer 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 Income-tax Officer, to charge the interest therefor is contrary to the provisions of the Act, and is liable to be rectified under Section 154 of the Act. This court in the case of Golecha Properties (P.) Ltd. v. CIT [1988] 171 ITR 47 has held that the penal interest under Sections 139, 215 and 217 could be levied even without notice to the assessee and for reduction or waiver of interest, the Income-tax Officer has no jurisdiction to waive or reduce the interest without application by the assessee. The Patna High Court in the case of CIT v. Tiwary Bechar and Co. [1987] 165 ITR 78 has also taken the same view. Since the assessee has not submitted any application for reduction or waiver of interest as contemplated under Rule 117A of the Income-tax Rules of 1962, the Income-tax Officer 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 Section 154 of the Act.
(3.) WE are, therefore, of the opinion that the Income-tax Appellate Tribunal was right in holding that the interest under Section 139(8) could be levied by invoking the provisions under Section 154, when no such charge had been made in the original assessment passed under Section 143(1). The reference application is accordingly answered in favour of the Revenue and against the assessee. No order as to costs.;