GANESH DAS SREERAM Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) THIS civil rule relates to the assessment year 1965-66. The petitioner is a registered firm having its head office at Shillong. For the assessment year 1965-66, the petitioner submitted the return of income under Section 139 of the Income-tax Act, 1961 (briefly "the Act"), to the Income-tax Officer, "A" Ward, Shillong (respondent No. 1), on 11th April, 1966, and it was provisionally assessed under Section 141 on a total income of Rs. 4,25,393 on the basis of its return and a demand notice was accordingly issued for payment of Rs. 61,379*21 and actually Rs. 22,219.21 being reduced by the advance tax of Rs. 39,160, already paid. Thereafter, the respondent No. I made an assessment under Section 143(3) of the Act and determined the total income of the petitioner as Rs. 4,22,111 (annexure "A"). A demand notice accordingly was issued on 16th December, 1968, for a sum of Rs. 56,142 which, after adjustment of the amounts paid earlier, came to Rs. 2,584. The calculation arrived at included a sum of Rs. 3,158 charged as interest under Section 139 (annexure "B"). The petitioner submitted an application to the respondent No. 1 on 15th March, 1967, for waiver of the interest under Section 139(8) read with Rule I17A of the Income-tax Rules (annexure "C"). The respondent No. 1 also made an order under Section 154 of the Act rectifying his earlier assessment made under Section 143(3) and thereby the total income was reduced to Rs. 4,17,954. Although the total income was reduced, the total tax charged was enhanced to Rs. 56,372 and the interest charged under Section 139 was also enhanced to Rs. 4,091 from Rs. 3,158. After calculating the amounts already paid, the amount of tax payable was determined at Rs. 2,916 (annexures "D" and "E"). Thereafter, the respondent No. 1 issued a notice on 30th March, 1971, under Section 148 of the Act and the petitioner filed the return of income on 25th May, 1971, and the assessment was completed by the respondent No. 1 under Section 147/143(3). In accordance with the reassessment order, the tax demand after adjustment of payments came to Rs. 21,023 which included Rs. 4,959 as interest under Section 139 (annexures "F", "G" and "H ").

(2.) THE petitioner avers that the amount of interest charged under Section 139 has been calculated not on the amount of tax payable or required to be paid by the petitioner-firm, but has been calculated on the amount of tax which would have been payable if the petitioner-firm had been assessed as an unregistered firm (para. 13). THE petitioner further avers that while charging interest under Section 139, the respondent No. I has calculated interest on the gross amount of tax without allowing the deduction of advance tax paid by the petitioner (para. 15). THE petitioner also avers that it never made any application to the Income-tax Officer praying for extending the time to file the return of income and as such no extension of time was granted (para. 22).

(3.) BEFORE we deal with the first submission, we may set out the relevant provision of Section 139 as was in force at the relevant time.