TMI Blog1994 (3) TMI 140X X X X Extracts X X X X X X X X Extracts X X X X ..... shed and in that view deleting the interest under section 139(8) for Rs. 36,611 for assessment year 1985-86." 2. Since common grounds and similar issues are involved in both the appeals they are disposed of together for the sake of convenience. 3. Briefly stated facts of the case are that the Assessing Officer (A.O.) has rectified the original assessment orders for the assessment years 1984-85 and 1985-86 under section 154 on the ground that both the returns of income for asst. years 1984-85 and 1985-86 were filed on 31-7-1984 and 31-7-1985, while they were due on 30-6-1984 and 30-6-1985 respectively, interest under section 139(8) was not charged inadvertently. As there occurred one completed month delay according to the A.O. in submitting both the returns, he issued notice of hearing to the assessee and the assessee objected to the proposed rectification under section 154 on the ground and for the reason that the fraction of a month is to be ignored and the delay is not of a full month in terms of rule 119A of the Income-tax Rules, 1962. The A.O. did not entertain the contention of the assessee as according to him the date of filing of return is also includible for the purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e CIT(A), but the Calcutta High Court has considered the matter of penalty under section 271(1)(a) in that case and has no occasion to discuss the matter with reference to the interest chargeable under section 139(8). On the basis of these arguments the D.R. contended that the CIT(A) has erred in deleting the interest charged under section 139(8) and, therefore, his order deserves to be quashed. 6. The Authorised Representative of the assessee (A.R.) vehemently argued and strongly supported the order of the CIT(A). He reiterated all the same arguments which were put forth before the CIT(A) and placed reliance on Karnataka High Court decision in the case of B. V. Aswathaiah Bros. 7. We have carefully considered the rival submissions, relevant facts and materials placed on the record and we have also gone through the High Courts' decisions on which reliance has been placed by the assessee. In our opinion, the controversy involved in these legal issues is so debatable and important that it needs thorough consideration in details covering the arguments of both sides before arriving at the final conclusion. We find that Karnataka High Court in the case of B. V. Aswathaiah Bros. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Karnataka High Court while following the Calcutta High Court and Madras High Court decisions. To that extent the contention of the learned D.R. that the Calcutta High Court has no occasion to discuss the matter with reference to levy of interest under section 139(8), prima facie, may appear to be correct. 9. In order to analyse and appreciate the contention of the D.R. it is necessary to find out the distinguishing features of penalty under section 271(1)(a) and interest under section 139(8). The main difference between the scheme of imposition of penalty under section 271(1)(a) and scheme of levying interest under section 139(8) for the same default, is that while penalty is imposed @ 2% of assessed tax per month, the interest is levied @ 15% per annum on amount of tax payable. Thus, there is nothing common between the scheme of penalty and the scheme of interest except the period of default which is reckoned from the day immediately following specified date to the date of furnishing of return or date of assessment under section 144 with only exception in the case of penalty when the time is extended on the basis of application in Form No. 6. 10. In order to consider the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6-1985 but were filed on 31-7-1984 and 31-7-1985 for the assessment years 1984-1985 and 1985-86 respectively. If ratio of the decision of Allahabad High Court is applied one month of 30 days is complete and interest is leviable. But if Karnataka High Court decision is applied and calendar month is followed, one month is not complete as according to Karnataka High Court decision for the term 'month' occurring in section 3(35) of the General Clauses Act, the British calendar for the months of July 1984 and July 1985 would also include July 31, 1984 and July 31, 1985. But the contrary to that the D.R.'s contention based on the instruction of the Board is that the date of furnishing of return, i.e., 31st July is to be included and if 31st July in both the assessment years is included even calendar month of July is complete and the interest charged under section 139(8) for one month is valid. Before putting this contention of the department to the test we will examine Board's instruction as to whether it has sanction of law or not. The operative and the relevant part of the instruction runs as under : "The question has been examined by the Board in consultation with the Ministry of La ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son... shall on or before due date, furnish a return of his income'. Here even on due date filing of return is allowed and if a return is furnished even on last day of the month by which it was due, it will be treated as the compliance of filing the return in time. For example, if due date is 30th June and return is filed on that day this date of 30th June is treated as day of compliance and not of default. If this analogy is drawn to the case of B. V. Aswathaiah Bros., 31st August, 1976 is to be excluded from the period of default and if last day on which return is filed is excluded calendar month of August is not complete. So is the position with month July 1984 and July 1985 in the case of assessee. 17. Going back to the contention of the D. R. that Calcutta High Court has no occasion to discuss this matter in the context of interest chargeable under section 139(8) we noticed that while taking the definition of 'month' as calendar month for the purpose of penalty under section 271(1)(a) the Calcutta High Court has mentioned that this definition will apply to the term 'month' occurring in the Income-tax Act, 1961 unless there is something in the context which will exclude suc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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