NEMI CHAND JAIN Vs. UNION OF INDIA

JUDGEMENT

(1.) THE petitioners by this writ petition have challenged the validity of Section 234A of the Income-tax Act, 1961, and have also challenged levy of interest, vide annexures P-4, P-5, P-6, P-7, P-8 and P-9 and orders passed under Section 264, vide annexures P-14, P-15 and P-16.

(2.) THE brief facts giving rise to this writ petition are that the petitioners were assessed by the Deputy Commissioner of Income-tax, Special Range, Bhilai, in respect of their income. In respect of all the petitioners, the year of assessment is 1991-92 and the relevant accounting year is the year ending on March 51, 1991. THE petitioners submitted their returns voluntarily for the aforesaid period on May 3, 1993. THEreafter, respondent No. 2 issued notices purporting to be under Section 148 of the Income-tax Act, 1961 (for short "the Act" of 1961), on May 4, 1993. In response to the aforesaid notices, the petitioners filed the very same returns which were filed on May 3, 1993, saying that the returns be treated as filed in response to notices under Section 148 of the Act of 1961.

(3.) WE have heard learned counsel for the parties and perused the record. So far as Section 234A of the Act of 1961 is concerned, it is only a regulatory measure to see that the parties do not commit default in the matter of filing of their returns of income. Therefore, it has been enacted as a compensatory measure in order to compensate the Revenue where return is furnished after the due date by way of interest at the rate of 2 per cent. for every month or part thereof comprised in the period commencing on the date immediately following the due date and where the return is furnished after the due date, ending on the date of furnishing of the return ; or where no return has been furnished, ending on the date of completion of the assessment under Section 144, on the amount of the tax on the total income as determined under Sub-section (1) of Section 143 or on regular assessment as reduced by the advance tax, if any, paid and any tax deducted or collected at source. The idea behind this section is that the assessee should see that he files a return of income in time and that the failure in filing of the return can be levied with interest so as to compensate the loss occasioned to the Revenue which the Revenue would have otherwise received if the return had been filed in time. This provision has already been upheld by three High Courts in the cases of Sant Lal v. Union of India [1996] 222 ITR 375 (P & H), Ranchi Club Limited v. CIT [1996] 217 ITR 72 (Patna) and Union Home Products Ltd. v. Union of India [1995] 215 ITR 758 (Kar). WE need not burden this judgment with the detailed reference to all these cases. Suffice it to say that this provision is compensatory in nature and it is not arbitrary or violative of Articles 14 and 19(1)(g) of the Constitution of India--it being only a regulatory measure with a view to keep the parties in discipline and that they file returns of income in time. It cannot be said to adversely affect the parties nor their profession. WE are therefore of the opinion that Section 234A of the Act of 1961 is not violative of Article 14 or 19(1)(g) of the Constitution of India.