Ravi Steel Corporation vs Income Tax Officer and Others

Bakthavatsalam, J.—The petitioner challenges the levy of penalty u/s 271(1)(a) of the Income Tax Act, 1961, as confirmed by the

Commissioner of Income Tax in revision u/s 264 of the Act.

Notice of motion was ordered by S. Ramalingam J. on July 21, 1989.

Mr. C. V. Rajan, Government Advocate, appears for the Department. He points out the amendment made to section 139 of the Income Tax

Act under the Taxation Laws (Amendment) Act. 1970, with effect from April 1, 1971. Under the amended provision, the levy of interest is

automatic unlike the provision as it was before the amendment. Therefore, In my view, the decision reported in Commissioner of Income Tax,

Andhra Pradesh Vs. M. Chandra Sekhar, is not applicable to the facts of the present case. The assessment year in this case is 1981-82 to which

the amended section applies.

Mr. R. Janakiraman, learned counsel for the petitioner, relies on the decision reported in AJIT SINGH RAIS Vs. COMMISSIONER OF

Income Tax., . I find from the facts of that case, that that case related to the assessment years 1963-64 to 1967-68, as such, it will not apply to the

facts of the present case.

It is well-settled that levy of interest is not penal interest in nature and in appropriate cases, therefore, it will be permissible for the assessing

authority to levy interest besides imposing a penalty : see the decisions reported in Express Newspapers (P.) Ltd. Vs. Income Tax Officer,

Administration and Collection and Another, and Kodur Orange Produce Co. Vs. Commissioner of Income Tax, . There are no merits in the

contention raised by learned counsel for the petitioner stating that once the assessing authority has extended the time, it should be presumed that

penalty is not leviable. The writ petition will, therefore, stand dismissed. No Costs.