2006 (10) TMI 91 - HC - Income Tax

Held that though there was prescription of time limit u/s 140A read with sec. 139 for payment of tax there was time limit which expired on Nov 30 Levy of one month interest because of payment of tax on 1.12.97 instead of 30.11.97 (because of holiday on 30.11.97) is not sustainable

Summary

Issues: Challenge to rectification order for interest payment delay.

Analysis:
1. The petitioner contested an order directing interest payment for a one-day delay in income tax payment for the year 1997-98. The Revenue argued that interest was justified since tax was paid on December 1, 1997, instead of November 30, 1997. The revision against this order was dismissed, citing the General Clauses Act's inapplicability to the case.

2. The petitioner filed a writ petition challenging the order levying interest for December 1997 and the subsequent dismissal of the revision. The petitioner argued that the General Clauses Act should apply, as there was a time limit for filing returns under section 139 of the Income-tax Act, which expired on November 30, 1997. The petitioner paid the balance tax on December 1, 1997, due to November 30 being a holiday, contending that the time limit under section 139 should be considered.

3. The court considered the petitioner's arguments and found merit in them. Despite section 140A of the Income-tax Act not explicitly prescribing a time limit, when read with section 139, a time limit for tax payment and return filing is implied. As the petitioner paid the tax on the next working day after the holiday, i.e., December 1, 1997, the court deemed the levy of interest for one month as unsustainable.

4. Consequently, the court quashed the revision order and set aside the rectification order to the extent challenged by the petitioner, allowing the original petition in favor of the petitioner.