COMMISSIONER OF INCOME TAX Vs. ROYAL TEXTILES

JUDGEMENT

(1.) THE Appellate Tribunal has referred the following question under Section 256(1) of the I.T. Act, 1961 (hereinafter called "the Act"), at the instance of the Commissioner of Income-tax :

(2.) THE assessee is a firm consisting of three partners which filed a return in Form No. 3 on March 10, 1968, disclosing an income of Rs. 1,90,000 for the assessment year 1967-68. THE ITO made a provisional assessment under Section 141 of the Act on May 20, 1968, and issued a demand requiring the assessee to pay Rs. 21,516 by way of tax. On August 20, 1968, the ITO sent to the assessee a letter stating that he should file the return in Form No. 2 and enclosed a form with that letter. THE assessee paid the tax provisionally assessed on September 2, 1968. He took action on the ITO's letter dated August 20, 1968, only on October 15, 1970. On that date, he filed the return in Form No. 2 enclosing with it the statements of adjusted total income, trading and profit and loss account, balance-sheet, etc. THE ITO completed the assessment on December 28, 1970, determining the taxable income at Rs. 2,79,260 and the tax payable-was assessed at Rs. 25,843. He charged interest under Section 139(1) in a sum "of Rs. 3,082, calculating the interest for the period from January 1, 1968, to March 10, 1968. This period was taken as representing, the delay in filing the return.

(3.) THEREAFTER interest at 9% per annum was liable to be charged. The starting point of charging of interest is the 1st day of January following the commencement of the assessment year and the termination point is the date of filing of the return. There are three forms prescribed under the Act. Form No. 2 is the form for return of income for persons other than companies. Form No. 3 is the return of income for persons other than companies, co-operative societies and local authorities whose total income does not exceed Rs. 15,000 or whose total income exceeds Rs. 15,000 but who have no income under the head " Business or profession ". In the present case, even in the original return the assessee disclosed an income of Rs. 1,90,000. It was actually assessed on a higher figure. Therefore, the appropriate form in the present case should have been only Form No. 2 and not Form No. 3.