AI Structured Summary
Not yet generated for this judgment
Judgment
N.K. Sud, J.—The petitioner is a private limited company engaged in the business of export of rice and other goods. For the assessment year 1997-98, it filed its return of income on April 2, 1998, declaring a total income of Rs. 7,00,610. It is claimed that the amount of Rs. 7,00,610 had been arrived at by computing the profits u/s 115JA of the Income Tax Act, 1961 (for short "the Act"). The return was processed u/s 143(1)(a) of the Act without making any adjustments in the returned income and an intimation dated September 13, 1999, was sent to the petitioner. A copy of this intimation has been produced as annexure P1 with the writ petition. As per this intimation, in addition to the tax due, the following interest was levied :
Rs.
Interest u/s 234A 24,144
Interest u/s 234B 36,219
Interest u/s 234C 18,900
Total 79,260
Feeling aggrieved, the petitioner challenged the levy of penal interest in appeal filed before the Commissioner of Income Tax (Appeals), Shimla, on November 4, 1999. Notices for hearing in the appeal were issued for December 14, 2000, and January 19, 2001, which were not complied with. Accordingly, the Commissioner (Appeals) dismissed the appeal vide order dated January 19, 2001, in the following terms :
"The appeal relates to intimation issued u/s 143(1)(a). The only grievance is against charging of interest u/s 234A/234B and 234C.
The hearing was fixed on December 14, 2000, and January 19, 2001. None of the notices were complied with. Furthermore the grounds show that the only grievance is against the charging of interest under Sections 234A, 234B and 234C. The charge of interest has not been provided as appealable unless there are other grounds. Therefore, the appeal is dismissed in limine.
In result, the appeal is dismissed."
The petitioner did not challenge the order of the Commissioner (Appeals) which, therefore, became final.
It is in this factual background that the petitioner has now approached this court challenging the levy of interest under Sections 234A, 234B and 234C of the Act.
Mr. A.K. Mittal, appearing on behalf of the petitioner, contended that since the liability to pay Income Tax had arisen due to computation of profits u/s 115JA of the Act, the petitioner was not liable to pay the penal interest in view of the decision of the Karnataka High Court in Kwality Biscuits Ltd. Vs. Commissioner of Income Tax, . He further submitted that the levy of such interest can only be justified under Explanation 1 to Section 234B as substituted by the Finance Act, 2001, which had been made applicable retrospectively with effect from April 1, 1989. He pleaded that since the provision for charge of interest has to be construed as substantive law and not merely a machinery provision, it could not be made operative retrospectively. He, therefore, challenged the vires of Explanation 1 in so far it operated retrospectively on the ground that it was bad and arbitrary and violated Articles 14, 19 and 265 of the Constitution of India. He also relied on the decision of the Patna High Court in Ranchi Club Ltd. Vs. Commissioner of Income Tax and Others which had been affirmed by the Supreme Court in Commissioner of Income Tax and Others Vs. Ranchi Club Ltd., .
On a query from the Bench as to why the petitioner had not appeared before the Commissioner of Income Tax (Appeals), Shimla, and as to why no further appeal had been preferred before the Tribunal against the order of the Commissioner (Appeals), Shri Mittal stated that the appeal had been filed erroneously as there is no provision for appeal against an intimation u/s 143(1)(a) of the Act.
After hearing counsel for the petitioner, we are of the view that the challenge to the vires of the retrospective operation of Explanation 1 to Section 234B of the Act as substituted by the Finance Act, 2001, is of academic interest only. In the case in hand, the interest under Sections 234A, 234B and 234C had been levied on September 13, 1999, under the unamended provisions. There is no order seeking to justify this levy under Explanation 1 to Section 234B as substituted by the Finance Act, 2001. In this view of the matter, it is not necessary for us to go into the validity of the retrospective operation of the said Explanation 1.
Coming to the challenge of the petitioner to the levy of penal interest as per intimation dated September 13, 1999, we are of the view that the writ petition deserves to be dismissed on the ground of delay and laches alone. The interest had been levied vide intimation u/s 143(1)(a) of the Act dated September 13, 1999, and as per the petitioner''s own showing, no appeal was provided against the intimation. The petitioner has explained that the appeal before the Commissioner of Income Tax (Appeals), Shimla, had been filed "erroneously". There is no explanation for the delay of about two years in approaching this court. Further, even if it were to be assumed that the petitioner had been pursuing a wrong remedy of appeal under a mistaken belief of law, it had, at least by December, 2000, realised that the appeal had been erroneously filed when it did not comply with the notices of hearing issued by the Commissioner (Appeals). There is no explanation for the delay after December, 2000. Still further, the appeal was also dismissed by the Commissioner of Income Tax (Appeals) in January, 2001, and yet no steps were taken to challenge the levy of penal interest thereafter. In the absence of any explanation, much less a satisfactory explanation, for this delay, we are satisfied that the writ petition deserves to be dismissed on the ground of delay and laches.
We may also mention that the writ petition does not disclose as to what was the income as a result of normal computation under the Act. In the case of Kwality Biscuits Ltd. Vs. Commissioner of Income Tax, , the Karnataka High Court was dealing with a case where income as per the normal computation under the Act led to a negative figure and still the assessee was made liable to pay tax on the basis of computation of income u/s 115J of the Act. It was under these circumstances that levy of interest under Sections 234B and 234C had been cancelled. Further, this judgment is no authority for cancellation of interest u/s 234A which is leviable on account of delay in filing of return. The decision of the Patna High Court in the case of Ranchi Club Ltd. Vs. Commissioner of Income Tax and Others is also not applicable to the facts of the present case. In that case, the dispute was whether penal interest under Sections 234A and 234B was leviable on the returned income or on the assessed income. There is no such dispute in the present case. The returned income in the present case is the same as has been determined as taxable income as per the intimation dated September 13, 1999.
In view of the aforesaid discussion, the writ petition is dismissed in limine.