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TMI Blog1973 (2) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 117A 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 cam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iolative of article 14 of the Constitution inasmuch as while all other assessees are liable to pay compensatory interest on the balance of tax actually found due, the petitioner, a registered firm, has to pay interest on a much more onerous basis and not on the amount due from it but on a very much higher amount that would have been due if the assessee had been assessed as an unregistered firm. (3) The Income-tax Officer is bound in law to allow the petitioner credit for advance tax paid by it while computing the interest payable under proviso (iii). 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. " 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time. He submits that an application by the assessee and a consequent order extending time for furnishing the return are conditions precedent for authorising the Income-tax Officer to charge interest under clause (iii) of the proviso to section 139(1) which is invoked in this case by the department. Under section 139(1), every person who has a taxable income in the previous year is under an obligation to furnish a return of his income. Different time-limits for submission of return are mentioned in clauses (a) and (b). These time-limits are allowed under the Act and there is no need for any application when the return is submitted within the time allowed under section 139(1)(a) and (b). There is also no question of payment of any interest when returns are submitted in compliance with section 139(1). Secondly, a further relaxation in the matter of charging of interest is made when an assessee makes an application in the prescribed manner praying for extension of time for furnishing the return under the proviso to section 139(1). Here again certain time-limits are specified within which returns may be filed without liability to pay interest, provided an application is made for time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn our attention to a decision of the Andhra Pradesh High Court in Kishanlal Haricharan v. Income-tax Officer and he strenously urges us to take the same view as expressed in the following passage relied upon by him : "A perusal of the proviso (proviso to section 139(1)) makes it clear that it is only when an assessee requests for time under the third clause, he can be directed to pay penal interest as provided in the clause. Where the assessee does not request for time for submitting a return, the third clause has no application. Other consequences may follow. For example, the petitioner may subject himself to the penalty provided in section 271 of the Act." With respect, we are unable to agree with the above decision which has taken no note of section 139(4) of the Act. For the reasons given by us and in view of the provisions of sub-section (4) of section 139, there is no escape from the conclusion that clause (iii) of the proviso is attracted to the case of the present assessee and the Income-tax Officer is fully justified in charging interest in the case. With regard to the second submission of Mr. Baruah on the score of article 14 of the Constitution, it is sufficient to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elevant consideration. Mr. Baruah strenuously submitted that we should hold charging of interest as a compensatory measure instead of it being penal in order to steer clear of the decision of the Supreme Court in Jain Brothers v. Union of India. In that case, a challenge was made to section 271(2) of the Act of 1961, on the ground of contravention of article 14. The Supreme Court held in that case as follows : "Now a firm when registered is treated as a separate entity liable to tax. After 1956 it has to pay tax at a special reduced rate. If a firm got itself registered the partners were entitled to certain benefits and advantages. It was, however, open to the legislature to say that once a registered firm committed a default attracting penalty, it should be deemed or considered to be an unregistered firm for the purpose of its imposition. No question of discrimination under article 14 can arise in such a situation. We fully share the view of the High Court that there was nothing to prevent the legislature from giving the benefit of a reduced rate to a registered firm for the purpose of tax but withhold the same when it committed a default and became liable to imposition of penalt ..... 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