Salem Co-operative Sugar Mills Ltd. vs Commissioner of Income Tax

R. Jayasimha Babu, J.—The assessee has incurred liability for payment of interest by reason of delay in filing the return and not paying the

advance tax in time. While making the assessment accordingly interest was added. The assessee''s grievance is that before adding interest, the

assessee should have been given show-cause notice and heard in the matter.

Counsel for the assessee relied on the observation made by the Andhra Pradesh High Court in the case of M.G. Brothers Vs. Commissioner of

Income Tax, . Those observations, however, are purely obiter at the end of the paragraph relied on it has been recorded by the court thus.

Since, however, this question is not referred to us, we are not going into the matter.

That judgment, therefore, does not in any way support the case put forth by the assessee.

The duties of an assessee are amply made known by several provisions of the Act with which the assessee is required to comply. Filing a return

in time and paying the advance tax to the extent required and within the time allowed are obligations laid down in the Act itself. The assessee is also

made aware of the fact that failure to do so will result in his being made liable for payment of interest. The fact that power is conferred on the

authorities to reduce or waive the interest, if petition is filed for that purpose before the appropriate authority cannot have the effect of compelling

the authority to give a show-cause notice before adding interest and in having to make a separate order with regard to the levy of interest. The

provision made in the rules enabling the assessee to apply for reduction and the provision in the Act enabling the assessee to seek waiver from the

Commissioner are provisions made with a view to enable the assessee to secure relief, if the amount of interest added is high or the amount in the

circumstances which the assessee may demonstrate before the Commissioner and are circumstances recognised under the Act as relevant for

granting reduction or waiver.

Had it been the intention of Parliament to require show-cause notice being given to the assessee before interest is levied, such a requirement

could have been spelt out in the Act. In all cases where notice is given to the assessee before assessment, the assessee will have the opportunity to

place all the relevant facts before the Assessing Officer, That is the extent to which opportunity is required to be given under the provisions of the

Act. The Supreme Court in the case of Central Provinces Manganese Ore Co. Ltd. Vs. Commissioner of Income Tax, , has categorically laid

down that the levy of interest is a part of the process of assessment. It is also held that it is open to the assessee to dispute the levy in appeal

provided he limits himself to the ground that it is not liable to the levy at all. It is also open to the assessee to seek either waiver or reduction by

applying, initially to the Income Tax Officer, and later to the Commissioner.

We do not see any merit in the first question proposed.

As regards the second question proposed in Tax Case No. 312 of 1998, the finding of the Tribunal is that the so-called transit house was in fact

a guest house and, therefore, the expenditure incurred for its maintenance are not allowable. We do not see any error in law, in that finding.

These two petitions are, therefore, dismissed.