MOHANLAL SONI Vs. UNION OF INDIA

JUDGEMENT

(1.) In this rule the petitioner challenges the appellate order passed by the AAC, The appellate order is in the following terms;

(2.) The fact leading to the order is that the petitioner is a firm registered under the Indian Partnership Act as well as under the I.T. Act, having at the material period three partners, namely, (1) Shri Mohanlal Soni, (2) Shri Ramgopal Soni, and (3) Shri Radhakissen Soni, each having 1/3rd share in the partnership business. The petitioner was assessed as such as a registered firm within the meaning of Section 2(7) of the said Act and it is alleged that the method of accounting maintained by the petitioner is "mercantile system" and the accounting period is Dewali year. In compliance with the notice under Section 210 of the I.T. Act for payment of advance income-tax for the assessment year 1967-68 the petitioner paid the advance tax of Rs. 1,316 on 20th August, 1966, and Rs. 1,711 on 4th February, 1967, amounting to Rs. 3,027. In respect of the period 1968-69, the payment of advance income-tax was made on 5th March, 1968, the payment being Rs. 1,254. For the period 1969-70, the advance tax of Rs. 3,564 was paid in two instalments, first on 7th December, 1968, and the last one on 13th March, 1969. For the assessment year 1967-68 the petitioner furnished its income-tax return on 10th July, 1967, showing its income at Rs. 69,751.47. Thereafter, the petitioner found certain discrepancies in the computation of its income and the petitioner furnished a "duplicate revised return" on 5th January, 1970, under Section 139(5) of the said Act and on the basis of the said revised return the petitioner paid further tax of Rs. 1,100 on 19th January, 1972, under Section 140A of the Act. For the assessment year 1969-70, the petitioner furnished the return on 2nd January, 1970, showing the enhanced total income, and on the basis thereof the petitioner paid a further tax of Rs. 1,600 under Section 140A of the I.T. Act. The assessment for the assessment year 1967-68 was completed on 31st January, 1972, under Section 143(3) of the said Act by which the ITO charged interest of Rs. 7,415 under Section 139(1) of the Act. In respect of the assessment years 1968-69 and 1969-70 the petitioner was assessed on an income of Rs. 71,935 and Rs. 72,336. The respondent No. 4, ITO, charged interest under Section 139(1) of the Act for the two assessment years amounting to Rs. 3,661 and Rs. 1,080. Being aggrieved by the said order of assessment, three appeals were made to the AAC and a similar order, as hereinbefore stated, was passed. In so far as the assessment years 1967-68 and 1969-70, the interest charged under Section 139(1) of the Act was upheld holding therein that the appeals as against the interest charged are not maintainable. Being aggrieved by the said order of the ITO and the appellate order, the petitioner moved this court and obtained the present rule. At the outset it must be stated that the finding of the AAC that no appeal lay against the order passed under Section 139(1) of the I.T. Act is patently wrong. The charging of interest under Section 139(1) is, according to me, appealable under Section 246 of the I.T. Act. Therefore, in so far as the charge of interest is concerned, the learned AAC must re-hear the appeal to that extent. The order portion of that order, according to me, is to be affirmed, because, in my opinion, the argument advanced by Mr. Roy Chowdhury that Section 139(1) is ultra vires Article 14 of the Constitution of India is misconceived.

(3.) Mr. Roy Chowdhury relied upon the two cases in support of his contention. The case, M. Nagappa v. ITO [1975] 99 ITR 32 (Kar) was affirmed in the case in Addl. CIT v. Mahadeshwara Lorry Service [1981] 129 ITR 516 (Kar). It is argued by Mr. Roy Chowdhury that under Section 139(1) proviso, Clause (iii)(a), the equation of registered firm and unregistered firm is ultra vires Article 14 of the Constitution. The case as hereinbefore stated supports Mr. Roy Chowdhury's contention but with due respect to the Hon'ble judges of the Division Bench of the Karnataka High Court, I am not able to accept the principles laid down in the said decision. In the case, Jain Brothers v. Union of India , the Supreme Court held as follows (p. 118):