TMI Blog2013 (8) TMI 707X X X X Extracts X X X X X X X X Extracts X X X X ..... n one year. It is obvious that under the provisions, the assessing officer is granted a normal period of one year to complete the assessment and, if he does so, there can be no waiver of interest during that period. However, if the assessing officer is not diligent enough and does not complete the assessment within the said period of one year, any interest liability for the period beyond that one year cannot be foisted on the assessee unless the delay in not completing the assessment within the period of one year is clearly attributable to the assessee. In the present case, the period of one year which is available to the assessing officer for completing the assessment ended on 12.01.1987. For the delay beyond that date, there has to be waiver of interest unless part of that delay is attributable to the assessee. Here, the delay from 18.01.1988 to 18.02.1988 is clearly attributable to the assessee as it chose to file the second revised return on 18.01.1988. - There shall be waiver of interest under section 215 of the said Act in favour of the petitioner for the period 12.01.1987 to 18.01.1988. - Decided partly in favor of assessee. - W. P. (C) 1113/1991 - - - Dated:- 23- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioner applied on 18.06.1987 for fixing a date of hearing in September 1987. The assessing officer accordingly fixed 03.09.1987 as the next date of hearing in the assessment proceedings. Some details were filed on 03.09.1987 and further hearing was adjourned to 14.11.1987. On that date, at the request of the petitioner, the assessment proceedings were adjourned to 10.12.1987. 6. Thereafter, while the assessment proceedings were going on, the petitioner filed a second revised return on 18.01.1988 declaring an income of Rs. 4,47,54,650/- on which a further payment of tax of Rs.38,39,964/- was made under section 140A of the said Act. The filing of the second revised return necessitated the issuance of a fresh notice under section 143(2), which was issued by the assessing officer on 20.01.1988. This was followed by the assessment order under section 143(3) on 18.02.1988. The total income of the assessee was assessed at Rs. 6,89,44,449/- on which interest under section 215 of the said Act was charged in the amount of Rs. 52,14,136/-. However, the petitioner had taken the matter in appeal and ultimately the income of the assessee after giving appeal effect was computed at Rs. 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... forseen by the petitioner:- (i) Sales tax payable disallowed u/s 43B Rs. 100.18 lakhs (ii) Disallowance of depreciation and investment allowance on account of retrospective amendment of section 43(1) by the Finance Act, 1986. Rs. 38.62 lakhs (iii) Excise Duty reconcilable account which had resulted in excess debit of Excise Duty to the profit and Loss A/c only at the time of finalisation of accounts. Rs. 197.44 lakhs (iv) Excise Duty refund accrued during the year but included in the Profit Loss A/c for subsequent year, for which adjustment was made while finalising the account Rs.36.10. lakhs (v) Disallowance of depreciation and Rs.4.64 lakhs investment allowance on reinstated machinery 10. Thereafter the Commissioner came to the conclusion that this was not a case where discretion for waiver of interest could be exercised under rule 40(5) of the said Rules. The reasoning adopted by the Commissioner was as under:- At the first instance I would consider the points raised by the assessee in the petition, which are obviously in the context of clause (5) of rule 40 of the I.T. Rules. This clause gives discretion to the DCIT to reduce or waive interest in any case w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest at least for the period from 29.07.1986 to 18.02.1988. This argument was advanced on the premise that the original return was filed on 29.07.1985 and the period of one year specified in rule 40(1) elapsed on 28.07.1986, without the assessment being completed. In fact, no steps whatsoever had been taken by the assessing officer during this period pursuant to the filing of the return by the petitioner to complete the assessment. Therefore, according to the petitioner, as the assessment not having been completed within the period of one year after the submission of the return was not on account of any delay attributable to the petitioner, the period in excess of one year from the filing of the return ought not to be taken into account while computing interest under section 215 of the said Act. 12. The Commissioner of Income-tax gave part relief to the petitioner. It was held that the starting point of counting the period of one year would be the date on which the first revised return (i.e., 13.01.1986) was filed and not the date of the filing of the original return ( i.e., 29.07.1985). Therefore, according to the Commissioner, the period of one year referred to in rule 40(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .6.1985- Waiver/ Reduction of interest-Section 215/217- Rule 40(1) of the Income-tax Rules, 1962. Attention is invited to Board s Circular No. 12/66- IT(B) dated 9.6.1965 copy attached for ready reference. It has been brought to the notice of the Board that relying upon the example in the above circular, even in cases where there is no delay attributable to the assessee for completion of the assessment, waiver is limited only up to the date of taking up of the case for assessment beyond the period of the first year. Under rule 40(1) of the Income-tax Rules, 1962, first a decision has to be arrived at as to whether and if so to what extent the delay in the completion of the assessment beyond the first year is attributable to the assessee. After deciding this, waiver should be given from the end of the first year to the period, if any, from where the delay is attributable to the assessee, and then the waiver should extend up to the date of completion of the assessment. Sd/- B. Nagarajan, Director, Central Board of Direct Taxes, F. No. 400/24/87-IT (B) 14. It was contended on behalf of the petitioner that the entire interest amount ought to be waived on account of rule 40 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount of his omission or wrong statement made in the original return. Therefore, the starting point for computing the period of one year referred to in rule 40(1) would be the date on which the first revised return was filed, that is, 13.01.1986. 16. It was next contended by the learned counsel for the petitioner that even if 13.01.1986 is taken as the starting point, the period of one year therefrom elapsed on 12.01.1987. And, during that period the assessing officer did nothing. In fact the assessing officer did nothing even thereafter till 09.06.1987 when the notice under section 143(2) of the said Act was issued. Thereafter, the assessment was completed within a span of a little over eight months. It is obvious that if the assessing officer had issued the notice under section 143(2) immediately or at least shortly after the filing of the revised return on 13.01.1986, the assessment would have been completed within the period of one year. According to the learned counsel for the petitioner, this in itself is indicative of the fact that there was no delay on the part of the petitioner and that the petitioner had fully co-operated with the assessing officer in completing the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee. It is for this reason that this court, in 270 ITR 95, refrained from interfering with the order passed by the authority below. We may point out that the principle of law laid down in J.K. Synthetics Ltd v. CIT: 265 ITR 411 (Del) was however not disturbed, as it could not be by a Bench of coWPC equal strength. In 265 ITR 411 this court after examining the provisions of rule 40 observed as under:- From a bare reading of sub-rule (1) of rule 40, it is clear that the twin conditions necessary for reduction or waiver of interest under section 215 are: (i) that the assessment should have been completed more than one year after the submission of the return, and (ii) the delay in the assessment is not attributable to the assessee. The discretion vested in the Assessing Officer, under section 215(4) of the Act, read with rule 40 is undoubtedly quasi judicial and is coupled with a duty to consider whether the circumstances of the case warrant waiver or reduction of interest. He is under an obligation to objectively consider the circumstances and find out whether the applicant is entitled to the waiver or reduction. A mechanical consideration of the application defeats the very pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with effect from 13.01.1986, no delay could be attributable to the petitioner. That being the case, the waiver of interest, in our opinion, would be in respect of not just the period from 12.01.1987 to 09.06.1987 but for the period from 12.01.1987 to 18.01.1988. In other words, for the period commencing at the end of one year from the date of filing the first revised return upto the date of filing of the second revised return. We stop at the latter date because we presume that the filing of the second revised return caused a delay in the assessment and that is clearly attributable to the petitioner. To be clear, the period 19.01.1988 to 18.02.1988 is taken as attributable to the petitioner. 18. In the facts of the present case we find that after the issuance of the notice under section 143(2) the assessment has been completed within a little over eight months. Therefore, we are in agreement with the submissions made by the learned counsel for the petitioner that had the assessing officer been diligent enough and issued the notice under section 143(2) immediately or shortly after 13.01.1986, when the petitioner filed the first revised return, the assessment could have been comple ..... X X X X Extracts X X X X X X X X Extracts X X X X
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