1991 (4) TMI 22 - HC - Income Tax

Summary

Issues:
- Petitioner seeking writ of certiorari to quash order rejecting applications under section 273A for assessment years 1974-75, 1975-76, and 1976-77.
- Late filing of returns for assessment years leading to levying of interest and penalties.
- Imposition of interest under section 139(8) for late filing of returns.
- Imposition of penalties under section 271(1)(a) for late filing of returns.
- Petitioner's application under section 273A(1) for waiver of penalties and interest.
- Consideration of reduction in interest by the High Court under article 226 of the Constitution.

Analysis:
The petitioner, an assessee, filed a writ petition seeking to quash the order rejecting applications under section 273A of the Income-tax Act for the assessment years 1974-75, 1975-76, and 1976-77. The petitioner revised the return for 1974-75 due to claimed differences in rates of papers, leading to a subsequent assessment. Returns for 1975-76 and 1976-77 were voluntarily filed, but interest was levied for late filing. Penalties were also imposed for late filing, with reductions granted in some cases. The petitioner applied for waiver of penalties and interest under section 273A(1) for the three assessment years.

Interest was imposed under section 139(8) for late filing of returns, with specific amounts charged for each assessment year. The court noted that interest is a form of compensation, not penalty, levied to compensate for delayed tax payments. The court observed that the Assessing Officer did not consider the circumstances when the revised returns were filed, indicating no intention to evade tax. However, the question arose whether the High Court could intervene under article 226 to reduce or fix the interest amount.

The court held that under article 226, it exercises supervisory power, not appellate jurisdiction. As the Assessing Officer did not consider the basic character of interest payable under section 139(8), the court decided to send the case back to the Commissioner of Income-tax for reconsideration. The court partially allowed the petition for the assessment year 1975-76 and fully allowed it for the assessment years 1974-75 and 1976-77. The Commissioner was directed to reevaluate the petitioner's petitions considering the circumstances leading to delayed tax payments within three months. Each party was ordered to bear their own costs.