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TMI Blog1995 (10) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... ions under the Act. Accordingly, interest was levied against him under sections 139(8) and 215 of the Act rejecting his prayer for waiver of the same by the order dated March 9, 1993 (annexure " D "), but by the same order the penalty proceedings initiated under sections 271(1)(a) and 273 of the Act were dropped. The material portion of the said order reads as under : " Please refer to your application dated August 19, 1992. After considering the facts of your case, it has been decided that the interest under sections 139(8) and 215 cannot be waived in your case. However, penalty proceedings under sections 271(1)(a) and 273 have been dropped. This is for your information. " Similarly, the second petitioner was subjected to levy of interest under sections 139(8) and 215 of the Act for the assessment years 1985-86, 1986-87, 1987-88 and 1988-89. His application for waiver was also rejected by the respondent-Income-tax Officer by the order dated September 22, 1992 (annexure " J "). It also appears that the penalties levied under sections 271(1)(a) and 273 of the Act were annulled by the appellate authority. Under the said circumstances, both the petitioners challenged the said ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nancial year, an assessee had paid advance tax under section 209A or section 212 on the basis of his own estimate (including revised estimate), and the advance tax so paid is less than seventy-five per cent. of the assessed tax, simple interest at the rate of fifteen per cent. per annum from the 1st day of April next following the said financial year up to the date of the regular assessment shall be payable by the assessee upon the amount by which the advance tax so paid falls short of the assessed tax : Provided that in the case of an assessee, being a company, the provisions of is sub-section shall have effect as if for the words 'seventy-five per cent.', the words 'eighty-three and one-third per cent.' had been substituted. " " (4) In such cases and under such circumstances as may be prescribed, the Assessing Officer may reduce or waive the interest payable by the assessee under this section. " Rule 117A of the Income-tax Rules, 1962 ('the Rules", in short), provides for reduction or waiver of interest payable under section 139 ; and clause (v) thereof is only material for the present case which reads as follows : " 117A. Reduction or waiver of interest payable under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is case with the liability of the assessee to pay interest on the amount of tax which had remained unpaid. Tax, interest and penalty are three different concepts. Tax becomes payable by an assessee by virtue of the charging provision in a taxing statute. Penalty ordinarily becomes payable when it is found that an assessee has wilfully violated any of the provisions of the taxing statute. Interest is ordinarily claimed from an assessee who has withheld payment of any tax payable by him and it is always calculated at the prescribed rate on the basis of the actual amount of tax withheld and the extent of delay in paying it. It may not be wrong to say that such interest is compensatory in character and not penal. " Again in the case of Central Provinces Manganese Ore Co. Ltd. v. CIT [1986] 160 ITR 961 (SC), while rejecting the plea that the levy of interest under section 139(8) and section 215 of the Act is a penalty, their Lordships of the Supreme Court have held that (page 965) : " At the very outset, it is necessary to consider the nature of the levy of interest under sub-section (8) of section 139 and under section 215. It is not correct to refer to the levy of such interest as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 27) : " It is submitted by learned counsel appearing on behalf of the appellants that as, in view of the late filing of the returns, there is postponement of the payment of tax and the Revenue suffers loss on account of delayed payment of tax, the interest when levied takes the character of penalty. This contention need not detain us long, for it has already been decided by this court in Central Provinces Manganese Ore Co. Ltd. v. CIT [1986] 160 ITR 961, that interest is levied by way of compensation and not by way of penalty. In Chandra Sekhar's case [1985] 151 ITR 433 (SC), this court also has taken a similar view. The High Court, however, has taken the view that the interest charged partakes also of a penal character. In expressing that view, the High Court has placed reliance upon a decision of this court in Jain Brothers v. Union of India [1970] 77 ITR 107. In that case, this court was mainly considering a challenge to section 271(2) of the Act, which is a penal provision, on the ground of contravention of article 14 of the Constitution. The question whether charging of interest under the proviso to section 139(1) of the Act was in the nature of penalty or not, was not consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of interest is justified. Consequently, it follows that the grant of an opportunity for showing such a cause is not a condition precedent for levy of interest under the respective provisions. It has further been held by the apex court that the interest is levied by way of compensation and not penalty, and the two levies are quite distinctive in nature. As noticed above, it has been held that the interest is levied because the Revenue is deprived of the benefit of the tax for the period during which it has remained unpaid. In the case of Associated Cement Co. Ltd., AIR 1981 SC 1887, it has been said that the penalty is ordinarily levied when it is found that the assessee has wilfully not followed any of the provisions of the taxing statute ; whereas the interest is ordinarily claimed from an assessee who has withheld the payment of any tax payable by him. Therefore, on the given set of facts, the reasons set out by the assessee may be found to be sufficient for coming to a conclusion that the delay caused by him in filing the return in compliance with the statutory requirement was not wilfully attributable to any blameworthy state of mind, but it may not be found to be sufficient ..... X X X X Extracts X X X X X X X X Extracts X X X X
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