TMI Blog1987 (10) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... prior to April 1, 1971, are as follows: "Section 139. (1) Every person, if his total income... during the previous year exceeded the maximum amount which is not chargeable to income-tax, shall furnish a return of his income... (a) in the case of every person ... before the expiry of six months from the end of the previous year ... or before the 30th day of June of the assessment year, whichever is later; (b) in the case of every other person, before the 30th day of June of the assessment year: Provided that, on an application made in the prescribed manner, the Income-tax Officer may, in his discretion, extend the date for furnishing the return (i) in the case of any person whose total income includes any income from business or profession the previous year in respect of, which expired on or before the 31st day of December of the year immediately preceding the assessment, year, and in the case of any person referred to in clause (b), up to a period not extending, beyond the 30th day of September of the assessment year without charging any interest; (ii) in the case of any person whose total income includes any income from business or profession the previous year in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application for extension of time to file returns was made by the appellants for the relevant assessment years. The returns were submitted before the assessment was made and also before the end of the four years as mentioned in sub-section (4) of section 139 of the Act. The Income-tax Officer assessed the appellants under section 143(3) of the Act and determined the total incomes of the appellants and the amounts of tax payable by them. In view of sub-section (4) of section 139, the Income-tax Officer also added to the amount of tax, interest calculated at the rate of six per cent. per annum on the amount of tax which would have been payable if the firms had been assessed as unregistered firms. Being aggrieved by the charging of interest under sub-section (4) read with clause (iii)(a) of the proviso to sub-section (1) of section 139 of the Act, the appellants filed writ petitions before the Gauhati High Court, challenging the charging of interest and the validity of sub-section (4) read with clause (iii)(a) of the proviso to sub-section (1) of section 139 of the Act as violative of article 14 of the Constitution. The Gauhati High Court, as stated already, overruled the challenge a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not confined only to the extension of time granted by the Income-tax Officer, but also to the time originally fixed for the filing of returns under subsections (1) and (2) of section 139 of the Act. There may be two types of cases in the late filing of returns, namely, (1) the assessee, after getting the date extended by the Income-tax Officer under sub-section (1) or sub-section (2) of section 139 of the Act, does not file the return within the extended date, but files the same before the end of the four assessment years concerned ; and (2) the assessee, without filing any application for extension of time, files the return beyond the period mentioned in sub-section (1) or sub-section (2) but before the end of the four assessment years in question. In either case, the provision of clause (iii) of the proviso to subsection (1) of section 139 will apply. In other words, the Income-tax Officer will be entitled to charge interest on the amount of tax in accordance with the provision of clause (iii) of the proviso to sub-section (1) of section 139. Thus, where time has been extended by the Income-tax Officer on an application made in that regard by the assessee and the assessee doe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t become transformed into penalty. It is urged on behalf of the appellants that all the assessees who are charged with interest for the late filing of returns should be classified in one and the same category inasmuch as they are similarly situated, but sub-section (4) read with clause (iii) of the proviso to sub-section (1) of section 139 of the Act has without any reasonable justification placed the registered firms in a separate category inasmuch as for the late filing of returns by such firms they are saddled with interest to be calculated on the amount of tax payable by them as unregistered firms. It is submitted that such separate classification of registered firms for the purpose of payment of interest under section 139, does not bear any nexus to the object sought to be achieved by the section and, accordingly, the provision of sub-section (4) read with clause (iii)(a) of the proviso to sub-section (1) of section 139 of the Act is discriminatory and violative of the provision of article 14 of the Constitution and, as such, is void. In support of the contention, the appellants have placed much reliance upon a decision of the Karnataka High Court in M. Nagappa v. ITO [197 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... privilege which has been conferred on a registered firm by the Act is not available to an unregistered firm. The Legislature is, however, competent to withhold any of the privileges conferred on a registered firm if it violates any of the provisions of the Act. A registered firm is required to file its return within the time as prescribed by the Act. Clause (iii)(a) of the proviso to section 139(1) read with sub-section (4) of section 139 in effect only provides for the withdrawal of the privilege of the registered firm to be assessed at a reduced rate because of its non-compliance with the provisions of sub-sections (1) and (2) of section 139 of the Act. In other words, a registered firm is treated as an unregistered firm for purposes of quantification of interest. The contention of the appellants that by treating registered firms as unregistered firms for the charging of interest, the Legislature has placed the registered firms in a separate category is not at all comprehensible. On the other hand, by treating the registered firms as unregistered firms, the Legislature has avoided the discrimination that would have been there if the registered firms were not so treated for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the proviso to sub-section (1) of section 139 of the Act is not violative of article 14 of the Constitution and is quite legal and valid. The decision of the Karnataka High Court in Nagappa's case [1975] 99 ITR 32, as affirmed on appeal by the Division Bench of that High Court, in so far as it declares the said provision as ultra vires article 14 of the Constitution, is erroneous. Before we part with these appeals, we think we should clarify one situation, namely, where the advance tax duly paid covers the entire amount of tax assessed, there is no question of charging the registered firm with interest even though the return is filed by it beyond the time allowed, regard being had to the fact that payment of interest is only compensatory in nature. As the entire amount of tax is paid by way of advance tax, the question of payment of any compensation does not arise. In C. A. No. 1035 of 1973, it appears that the total tax for the assessment year 1968-69 was assessed at Rs. 16,288. The assessee paid advance tax amounting to Rs. 39,018 in three instalments on September 25, 1967, January 24, 1968, and March 2, 1968. It is apparent that the amount of advance tax paid by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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