COMMISSIONER OF INCOME TAX Vs. BHIMA BROS

JUDGEMENT

(1.) The Income Tax Appellate Tribunal, Cochin Bench, has referred the following question of law for the opinion of this court under S.256(2) of the Income Tax Act, 1961:

(2.) The assessment year concerned is 1977-78 for which the return was doe by June 30, 1977. It was actually filed only on August 31, 1977. While completing the assessment on January 31, 1978, the Income Tax Officer charged interest under S.139(8) for the belated filing of the return. Subsequently, he rectified the assessment under S.154 of the Act by his proceedings dated June 20, 1978, and reduced the amount of interest to Rs.2,855 reckoning the delay in filing the return as one month. The audit raised objections and the order was again rectified under S.154 on April 28, 1979, enhancing the interest to Rs.5,680 reckoning the delay as two months. The Commissioner of Income Tax (Appeals) confirmed this order, but the Tribunal, on appeal by the assessee, held that there was genuine scope for debate on the question whether the interest is to be reckoned for one month or two months and, therefore, it was not a case for rectification under S.154. The appeal was, therefore, allowed and the second order of rectification passed on April 28, 1979, was cancelled. It is on these facts that the reference has been made on the question mentioned earlier.

(3.) The Tribunal noted that under S.139(8) as it stands, the default will be for a period of 60 days as the return was filed only on August 31, 1977, while it was due on June 30, 1977. But then R.119A which lays down the procedure to be followed in calculating interest, required that in calculating the interest to be paid by an assessee the period for which the interest is to be calculated shall be rounded off to a whole month and for this purpose any fraction of a month shall be ignored. The Tribunal was of the opinion that a debatable question arose reading S.139(8) along with R.199A since the word "month" occurring in R.197A has to be reckoned as a calendar month in accordance with the definition of word "month" in S.3(35) of the General Clauses Act, 1897.