K.L. Narayana vs Income Tax Officer and Another

H.G. Balakrishna, J.—By consent of both counsel, this writ petition was taken up for hearing and arguments were heard and disposed of.

The short point for consideration is whether the first respondent has jurisdiction to enhance the interest in reassessment proceedings and whether he has jurisdiction to levy such enhanced interest.

The question is answered by the decision cited by learned counsel for the petitioner in paragraph 5 of the writ petition in Charles D''souza Vs. Commissioner of Income Tax, Karnataka-II, . It was held thus (headnote) :

"There can be levy of interest only in cases of regular assessment as defined by Section 2(40) of the Income Tax Act, 1961. The expression ''regular assessment'' as defined by Section 2(40) means assessment made u/s 143 or Section 144 in contradistinction to assessments u/s 140A, a provisional assessment before its abolition in 1971 and an assessment/reassessment u/s 147.

When the expression ''regular assessment'' is defined to mean only assessments made under certain sections of the Act, it would be beyond the jurisdiction of any court to give it a wider and comprehensive meaning so as to include all assessments done under the Act, whether u/s 143/144 or completed after issue of notice u/s 148.

Assessments u/s 143/144 fall under a distinct category of assessments and the assessments made u/s 147 are not covered by the expression '' regular assessment'' as defined in Section 2(40).

Therefore, interest under sections 139(8) and 217 cannot be levied in the case of an assessment or reassessment made u/s 147."

The ratio of the said decision is applicable to the facts of this case. I, therefore, pass the following order.

The writ petition is allowed and orders in annexures A, B and D are hereby quashed to the extent they purport to charge and recover interest under Sections 139(8) and 215 of the Act.