THEKKANATU FIRMS Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE petitioner is an unregistered firm doing abkari business. For the assessment year 1973-74, the petitioner's assessment was completed by the second respondent by order dated March 31, 1976, on a total income of Rs. 1,14,000 as evidenced by exhibit P-l. Later, the third respondent initiated reassessment proceedings after issuing notice under Section 148 of the Income-tax Act. He completed the reassessment under Section 143(3) read with Section 147(a) by order dated November 22, 1981, and withdrew the sales tax liability of Rs. 82,376 allowed in the original assessment on the ground that the petitioner did not make any provision in the accounts towards liability for sales tax and had also disputed the liability. THE reassessment order is exhibit P-2, While completing exhibit P-2 reassessment order, the third respondent added interest under Section 139(8) and interest under Section 217 amounting to Rs. 43,628 and Rs. 49,860, respectively. No interest under Section 139(8) or Section 217 was levied as per the original assessment.

(2.) THE petitioner filed an appeal before the Commissioner of Income-tax (Appeals), Calicut, against the reassessment order disallowing the sales tax liability of Rs. 82,576. THE appellate authority allowed the appeal partly and directed deduction of the correct amount of sales tax liability of Rs. 79,688. Exhibit P-3 is the order.

(3.) NOTICE under Section 147 was sent to the petitioner and proceedings were started on the issuance of the said notice. Section 148(1) provides that the Income-tax Officer shall serve on the assessee a notice before making the assessment, reassessment or recomputation under Section 147. The reassessment was completed within time. The contention of the petitioner that, as there was no levy of interest in the original assessment, there cannot be any levy of interest in the order of reassessment has been considered in exhibit P-7 order. It is true that interest was levied for the first time in the order of reassessment made on November 22, 1981, Section 139(8) does not prohibit levy of interest when reassessment is made. It also does not specifically mention that levy of interest can be made only during the course of regular assessment. Interest can be levied under Section 139(8) either in the course of regular assessment or in any other proceedings including reassessment. There cannot be any doubt that, under Section 139(8), interest can be levied either in the course of regular assessment or in any other proceedings including reassessment. The contention of the petitioner that exhibit P-7 is liable to be quashed is not tenable.