SANTOSH ELECTRICALS vs INCOME TAX OFFICER and Another

G. SIVARAJAN, J. :

The matter arises under the IT Act, 1961. The petitioner, a partnership firm engaged in electrical repair works at Karuvelippady is an assessee on the files of the ITO, C Ward, Circle I, Ernakulam. For the asst. yrs. 1978-79 to 1982-83 the petitioner filed returns under the IT Act beyond the period prescribed therefore under the Act. The assessing authority did not take any action on the said returns filed by the petitioner. Subsequently, the ITO issued notice to the petitioner under s. 148 of the Act directing it to file its returns for the years 1978-79 to 1982-83. In compliance with the said notices the petitioner filed separate returns for the aforesaid years. Based on these returns, the ITO completed the assessment for the aforesaid years and levied penal interest under s. 139(8) for non-filing of return on due dates and also levied interest under s. 217 for non-remittance of advance tax and for not filing of estimate in terms of s. 209 of the IT Act. The assessment orders for the above five years are evidenced by Exts. P1 to P5. On receipt of the said assessment orders, the petitioner filed five separate applications before the ITO as per rr. 40 and 117A of the IT Rules. The said applications were rejected by the ITO without assigning any reason. So the petitioner preferred revision before the CIT under s. 264 of the IT Act. The CIT also rejected the applications for the year 1978-79 to 1981-82 and granted partial relief for the asst. yr. 1982-83. Aggrieved by those orders, the petitioner filed writ petition O.P. No. 8439 of 1988 before this Court and this Court by its judgment dt. 28th October, 1988 quashed the orders of the authorities and directed the ITO to look into the matter afresh and ITO dismissed the applications by a common order. The revision preferred against the said order was also dismissed by the CIT. The said order was also challenged by the petitioner before this Court in O.P. 1010 of 1991 and this Court passed a consent order dt. 7th October, 1991 quashing the order passed by the CIT and directed him to pass fresh orders on merits in accordance with law after giving an opportunity to the petitioner. Thereafter the matter again come up before the second respondent for fresh consideration. At the time of hearing the assessee raised various contentions. The first contention was that the returns of income for all these years were filed beyond the statutory period and such belated returns were invalid in law and so no assessments could be made on the basis of such invalid returns and in that sense the levy of interest was not correct. In other words, the contention of the petitioner was that the levy of interest under s. 139(8) and under s. 217 in assessments pursuant to invalid returns is illegal and should be cancelled. The said contention was rejected by the CIT holding that the assessment for the year 1978-79 to 1982-83 were not made pursuant to the belated returns filed by the petitioner, but only on the basis of the returns filed by the petitioner for the aforesaid years pursuant to the notice issued under s. 148 of the Act and therefore, no invalidity can be attached to the assessment orders. A new contention was urged before the CIT to the effect that interest under s. 139(8) or under s. 217 was not leviable in an order of assessment made in pursuance to a notice under s. 148. The contention was that the interest under the aforesaid provision can be levied only in a regular assessment as defined in s. 2(40) of the Act. According to the appellant, it is only those orders which are passed either under s. 143 or under s. 144 could be considered as regular assessment and that it was not permissible to expand the scope of the expression regular assessment to include any other order.

The CIT observed that in the present case the assessments have been made for all the five years after the issue of a notice under s. 148 as the assessee had not filed the return under s. 139(1) or under s. 139(2) and, therefore, these assessments were not in fact reassessments under s. 147 in the sense that the assessments made originally were not reopened under s. 147. The CIT further observed that these are assessments made for the first time under s. 143(3) r/w s. 147, and that a Full Bench of this Court by judgment dt. 10th April, 1982 in the case of Mrs. Lally Jacob in O.P. No. 23 of 1987-C Lally Jacob Vs. Income Tax Officer and Others, held that any assessment made for the first time by resort to s. 147 is a regular assessment for the purpose of invoking s. 217 of the Act. The said contention was accordingly rejected. The assessing authority has considered the question of waiver with reference to the provisions of rr. 40 and 117A of the Rules and found that there is no case for waiver or reduction of interest under s. 139(8) or under s. 217 of the Act, and that no case was made out before the CIT for grant of such relief.

Though the learned counsel for the petitioner has argued before me that the respondents were not justified in refusing to grant the relief of waiver/reduction of interest levied under s. 139(8) and under s. 217, I do not find any reason to interfere with the orders passed by the authorities below. It is seen that CIT has considered the matter on all its aspects in Ext. P9 order. As stated by the CIT, the assessments in these cases were not made on the basis of the returns filed by the petitioner beyond the time prescribed under the Act and the assessments were completed only on the basis of the returns filed by the petitioner pursuant to the notice under s. 148 issued by the first respondent. In that sense the assessments made as per Exts. P1 to P5 are only the assessment made for the first time. This Court in the decision in Laly Jacobs case (mentioned supra) held that the assessments made for the first time on the basis of the returns filed pursuant to a notice under s. 148 is a regular assessment, which decision has also been relied on by the CIT. The CIT has also observed that no valid reason has been urged on behalf of the petitioner for waiver of interest levied under s. 139(8) or under s. 217 of the Act. In these circumstances, I am of the view that the CIT has rightly rejected the various contentions of the petitioner.

There is no merit in this original petition.

It is accordingly dismissed. But in the circumstances of the case, there will be no order as to costs.