COMMISSIONER OF INCOME TAX Vs. PARMANAND M PATEL

JUDGEMENT

(1.) The following question has been referred by the Income- tax Appellate Tribunal, Ahmedabad Bench "B" under Section 256(1) of the Income-tax Act, 1961 (the Act) at the instance of the Commissioner of Income-tax. SWhether the Appellate Tribunal is right in law and on facts in setting aside the order made by the CIT invoking the provisions of section 263 of the I.T. Act wherein he had directed the ITO to consider initiation of penalty proceedings u/s.271(1)(a) of the Act ?

(2.) The Assessment Year is 1982-83 and the relevant accounting period is year ended on Aso Vad Amas S.Y. 2039. The assessee filed a return of income on 13th August, 1984 and the assessment came to be completed on 26th November, 1984 under Section 143(3) of the Act.

(3.) The Commissioner of Income-tax (the Commissioner) initiated revisional proceedings under Section 263 of the Act on the ground that scrutiny of the assessment records showed that the Assessing Officer had failed to charge interest under Section 139(8) of the Act and had also not taken steps to initiate penalty proceedings under Section 271(1)(a) of the Act, there being unexplained delay in filing the return by 25 months. The assessee objected to the show cause notice, but after hearing the representative of the assessee the Commissioner passed an order on 17th March, 1987 holding that interest under Section 139(8) of the Act was not charged by way of penalty but was a compensation and part and parcel of the process of assessment as held by the Hon'ble Supreme Court in the case of Central Provinces Manganese Ore Co. Ltd. Vs. Commissioner of Income-tax, [1986] 160 ITR 961 (S.C.) and, therefore, the Assessing Officer had committed an error in not charging interest under Section 139(8) of the Act.