CHHOTALAL AND COMPANY Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) SOME questions of law regarding some of the sections of the Income -tax Act, 1961, hereinafter referred to as 'the Act', are involved in these three petitions and, therefore, we will dispose of the three special civil applications by this common judgment. The petitioner is Special Civil Application No. 294 of 1972 is a partnership firm which has been registered with the income -tax authorities in accordances with the provision of the Act. The petitioners in Special Civil Applications No. 655 of 1972 and 1112 of 1972 are partners of the said firm and they have challenged the orders of the respondents' levying of penal interest under the provisions of section 139(1) and section 139(4). The firsts respondent is the Income -tax Officer, Morvi, having jurisdiction over these three petitioners and the second respondent is the Additional Commissioner of Incomes -tax, Gujarat III, who has jurisdiction over the cases of the three petitioners.

(2.) THE short facts giving rise to these three petitions are as follows. The partnership firm is carrying on its business at Morvi in Rajkot District. All the partners of the partnership firm are Indian citizens. The firm is registered under the provisions of the Indian Partnership Act. The firm maintains its books of account on mercantile basis and has adopted Samvat year as its accounting year. The relavent assessment year was 1967 -68, the accoounting year being Samvat year 2022. The registered firm is an assessee under the Income -tax Act and it being assessed by the first respondent at Morvi. On September 4, 1970, the partnership firm filed its return in income under section 139 of the Income -tax Act along with a declaration in Form No. 12 under section 184, sub -section (7), for assessment year 1967 -68. For the relevant assessment year 1967 -68 the return of income under section 139(1) of the Income -tax Act had to be furnished before June 30, 1967. The partnership firm did not make any application to the first respondent for extension of time but under section 139(4) of the Act, the partnership firm filed the return and applied for extension of time before the assessment was made and it was done within the period of four years counted from the end of the assessment year to which the return related. Therefore, it was open to the partnership firm to apply for extension of time under section 139(4) before March 31, 1972. According to the petitioners, section 139(4) is only a proviso to section 139(1) and as such the return of income of the petitioner having been filed before the completion of the assessment and also having been filed before March 31, 1972, was within time and it is the contention that the penal interests which is chargeable under section 139(1), proviso, clause (iii)(a), could not be invoked and the question of penal interest under that section could not arise. The assessment order was passed by the first responded on September 16, 1970, assessing the income of the partnership firm and allowing the partnership firm to continue the registration for assessment year 1967 -68. The Income -tax Officer at the time of passing the assessment order directed the issue of a notice under section 274 read with section 271 for late submission of return and he also directed that interest under section 139 should be charged. The petitioner -firm, therefore, received a demand notice and a notice under section 274 read with section 271 of the Act. The demand notice included an amount of Rs. 4,000 being the amount of interest under section 139 and the said amount of Rs. 4,000 was in due courses recovered from the petitioner -firm. The petitioner -firm then preferred a revision application under section 264 of the Income -tax Act to the second respondent for revising the order of the Income -tax Officer. The second respondent dismissed the application of the petitioner on July 28, 1971. Thereafter, the petitioner firm and its partners have challenged the orders in relation to levying of penal interest under section 139 and the orders passed by the Commissioner in revision applications. It is the contention of the petitioner the these orders levying interest are invalid and without the authority of law and various contentions haves been set out in the petitions challenging the orders levying interest. The petitioner -firm has, therefore, approached this court under articles 226 and 227 of the Constitution praying for a writ of certiorari and/or mandamus or any other appropriate writ, order or direction calling for the record of the case and to quash and set aside the orders charging interest and the orders passed in revision confirming the orders levying interest. The petitioner -firm has prayed for an order directing the respondents to refund to it the amount of interest of Rs. 4,000 charged under section 139(1) of the Act.

(3.) THE petitioner in Special Civil Application No. 1112 of 1972 has been ordered to pay penal interest for assessment years 1967 -68, 1968 -69 and 1969 -70 and she has also prayed that the orders levying penal interest should be quashed and set aside by this High Court. Mr. Patel appearing on behalf of the petitioners in these three special civil applications has urged the following contentions before us :