SHANMUGAR MILLS LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) IN these writ petitions a common question arises. The petitioner is Sree Shanmughar Mills, Rajapalayam, represented by the official liquidator, Madras. For the years 1948-49 to 1953-54 the revenue did not accept the books of account of the company and had therefore to assess the company under the best judgment method. The assessments for the relevant years were completed in or about July, 1954. Contemporaneously with the said order, the company was subject to payment of penal interest under Section 18A(8) of the INdian INcome-tax Act, 1922. As against the assessment orders, the petitioner-company, which was by then functioning, took up the matter in appeal before the appellate authority as well as the Tribunal. But it is seen from the records that during the course of such proceedings the company went into liquidation on April 30, 1959, on the final orders of this court in O.P. No. 297 of 1957. The official liquidator, thereafter, had to carry on the necessary administration connected with the winding-up of the company, one amongst which was to prosecute further the petitions or appeals by then filed by the company before the appellate or revisional authorities in the matter of assessments on the quondam company for tax. It is not in dispute that it was only on April 19, 1962, when the official liquidator came up to this court with a request for a reference on the alleged questions of law arising on the orders of the INcome-tax Appellate Tribunal, which was ultimately refused by this court, that a quietus was given to the tax liability of the quondam company for the years in question. It can only then be fairly assumed that the total income of the company which was finally to be subject to levy in accordance with law was reckoned in a manner ordinarily known to the taxing statute.

(2.) AS already stated, the Income-tax Officer, who completed the assessments for the respective years, levied penal interest under Section 18A(8), The official liquidator applied to the Inspecting ASsistant Commissioner of Income-tax by a petition dated September 13, 1963, for waiver or remission of part of the penal interest as levied by the original assessing authority, but the Inspecting ASsistant Commissioner, by his order, dated February 22, 1964, rejected the same on the ground that there had been an inordinate delay on the part of the assessee in making the claim for reduction of penal interest. The petitioner filed a petition under Section 33A(2) of the Indian Income-tax Act, 1922, equivalent to Section 264 of the Income-tax Act, 1961, read with Rule 48 of the Indian Income-tax Rules, 1922, to the Commissioner of Income-tax, Madras, seeking for interference with the order of the Inspecting ASsistant Commissioner and sought for relief to which he was entitled in the matter of liability to pay penal interest. But the Commissioner of Income-tax, by his order dated October 31, 1966, rejected the revision petitions for all the assessment years as above on two grounds. The first one was that, as the assessment orders were the subject-matter of further processes by way of appeals before the appellate authorities and since the charging of interest under Section 18A(8) formed part of the assessment order itself, he was precluded from entertaining any revision of such orders, and, therefore, he was of the view that they were incompetent. The second ground on which the Commissioner rejected the revision petitions was that there was inordinate delay in the matter of their presentation and that, notwithstanding the fact that there was no time limit prescribed for the presentation or entertainment of such revision petitions, as there was considerable time Jag between the date when the assessments were finalised by the original authority and the date when the applications for revision under Section 18A(8) were filed, he was of the view that such inordinate delay could not be excused, as it would be unreasonable to do so. It is as against this order the present writ petitions have been filed. Incidentally, it may be mentioned here that the Commissioner on a similar approach made earlier to him rejected the same by passing a non-speaking order and it was only on a second approach that he made the challenged order.

(3.) THE decision of the Bombay High Court referred to above was given on November 7, 1958, and that of this court on 20th August, 1962. THE learned counsel for the revenue referred me to a circular issued by the Central Board of Revenue dated November 6, 1956, which runs as follows: