MAGESHWARI S Vs. COMMISSIONER OF INCOME TAX ASSESSMENT

JUDGEMENT

(1.) AS the appeals lie in a very narrow compass, they are admitted and heard for final disposal. These two appeals are preferred against the order dated September 15, 1992, passed by the learned single judge in Writ Petitions Nos. 27470 and 27471 of 1992. The learned single judge has rejected both the petitions on the ground that the properties which are brought for sale for recovery of the amount due under the assessment orders produced as annexures 'A' and 'A-1' in the writ petition do not belong to the assessee and further the petitioner-assessee has filed the objections to the same, and as such, the authorities are required to consider the objections and take appropriate action in accordance with law. But the grievance made by Sri G. Chander Kumar, learned counsel for the appellant, is that, in the writ petitions, the petitioner has made two prayers : (1) to quash to orders of attachment of the properties and bringing them for sale as per annexures 'L' and 'O' dated April 16, 1992, and August 19, 1992, respectively, produced in the writ petitions; and (2) to quash that portion of the order of assessment dated November 30, 1990, made for the assessment year 1984-85 relating to levy of penal interest under sections 139(8) and 217 of the Income-tax Act, 1961 (hereinafter referred to as the "Act"), produced at annexure 'A' in the writ petition. It is submitted that, whether the properties attached should be sold or not would depend upon the validity or otherwise of the aforesaid order of assessment relating to levy of penal interest, because the tax assessed has been paid. It is also contended that the order of assessment made for the assessment year 1984-85, in so for as it levies penal interest, is not applicable, as the assessee is not aggrieved by the quantum of assessment. In other words, it is submitted that when the quantum of assessment is not challenged, the appeal challenging the validity of levy of penal interest alone cannot be maintained, having regard to the provisions contained in section 246 of the Act, therefore, the appellant-petitioner is entitled to invoke the jurisdiction of this court under articles 226 and 227 of the Constitution.

(2.) REGARDING the validity of the penal interest levied under the assessment order dated November 30, 1990, made for the assessment year 1984-85, it is submitted that the assessment order is passed in a reassessment proceeding and as such, in a reassessment proceeding, penal interest cannot at all be levied, as held by this court in Charles D'Souza v. CIT [1984] 147 ITR 694, and affirmed by the Supreme Court in S. L. P. (Civil) No. 8215 of 1985 in CIT v. Charles D'souza [1990] 186 ITR (St.) 28.

(3.) IT may also be noticed at this stage that the petitioner-appellant has produced the assessment order for the year 1986-87, 1987-88 and 1988-89 as annexures A1, A2 and A3 under which also penal interest is levied, but the levy of penal interest under the above assessment orders has not been challenged and the prayer is confined to the order of assessment pertaining to 1984-85 assessment year, having regard to the fact that the Act has been amended by the Taxation Laws (Amendment) Act, 1984. Under this amendment, the old Explanation 2 to sub-section (8) of section 139 has been substituted by the new Explanation 2. The substituted Explanation 2 provides that where, in relation to an assessment year, an assessment is made for the first time under section 147, the assessment so made shall be regarded as a regular assessment for the purpose of this sub-section. Section 147 of the Act relates to income escaping assessment. The present case is concerned with the assessment made for the assessment year 1984-85 covering the financial year ending with March 31, 1984. Whereas the amendment effected by the Taxation Laws (Amendment) Act is with effect from April 1, 1985; therefore, it does not cover the assessment pertaining to the assessment year 1984-85. Hence, Explanation 2 as substituted by the Taxation Laws (Amendment) Act, 1984, cannot be taken advantage of by the Department in so far as the assessment order pertains to the assessment year 1984-85.