LexM/S. K. GOVINDAN AND SONS versus COMMISSIONER OF INCOME-TAX, COCHIN
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MIS. K. GOVINDAN AND SONS
A
v.
COMMISSIONER OF INCOME-TAX, COCHIN
DECEMBER I, 2000
[S.P. BHARUCHA, D.P. MOHAPA TRA AND Y.K. SABHARWAL, JJ.]
B
lncome-Tax Act, {96/-Section 139 (8) Explanation 2 as added by
Taxation laws (Amendment) Act, 1984, Sections 147, 148, 217~ -lnterest-
liability of assessee to pay-Income escaping assessment- -Assessment made C
u/s 147-Whether it is open to assessing authority to charge interest for
default in filing return u!s I 39 (8) of the Act-Held, Yes-Term 'regular
assessment' for purpose of section I 39 (8)-Meaning o/-Held, First or
initial assessment u/s I 47 is a regular assessment-·-Explanation 2 to Section
I 39(8), introduced by (Amendment) Act, 1984 is merely a clarificatory
provisio11c-lt has application to period of assessment I 984-85.
The appellant-assessee filed a return of income in response to a notice
issued under Section 148 of the Income-tax Act, 1961, on which the assessing
authority charged interest under Section 139(8) and also u/s 217 of the Act.
The assessee challenged the order alleging that the assessment in the case
D
was not a 'regular assessment' within the meaning of section 2(40) of the E
Act, and therefore, no interest could be charged under Section 139(8) of the
Act. The assessee's case was accepted by the Tribunal holding that the
assessment was not a 'regular assessment' but only a 're-opened assessment'
under Section 147(a) of the Act. The Tribunal, on a petition filed by the
Revenue under Section 256(1) of the Act, referred the question to the High F
Court as to whether on the facts and circumstances of the case levy of interest
under Section 139(8) in an assessment under Section 143(3) read with section
147(a) is valid in law. The High Court answering the question in the
affirmative held that the assessment made for the first time under Section
147(a) read with section 148 is a 'regular assessment' and explanation 2 to
section 139(8) is clarificatory in nature, and therefore, the assessing officer G
could legally charge interest under Section 139(8) of the Act. This appeal
had been filed by the Assessee against the judgment of the High Court. The
question raised for consideration was whether in an assessment made under
Section 147, it is open to the assessing authority to charge interest for default
in filing return u/s 139(8) of the Act.
H
285
286
SlPRE~E COl:RT RFPURfS [2000] SCPP. S S.C.R.
A
Dismissing the appeal, the Court,
HELD : 1.1. An initial assessment made by the assessing officer either
on the assessee voluntarily furnishing a return of the income or furnishing
such a return on being served a notice under section 148, is- a 'regular
assessment' under section 2(4) of the Act, but an order passed by the
B Assessing officer making a re-assessment or revised assessment in a case
where an assessment had been made, does not come within the meaning of
the said expression. In both the cases the manner of making the assessment
is similar. The position that follows is that while making the assessment under
Section 147 in a case where the assessee furnishes a return in pursuance of
C the notice served on him under section 148 of the Act the provision for
charging interest under Section 139(8) is applicable and it is open to the
assessing officer to charge interest on the assessee in such proceedings. This
construction of the statutory provisions is in accord with the intent and
purpose for which the power to charge interest on a defaulting assessee has
been vested in the assessing officer. To hold otherwise will mean that an
D assessee who files a delayed return will be liable to pay interest while an
assessee who does not file any return is free from such a liability. Such an
interpretation of statutory provisions, which will result in an absurd situation,
cannot be accepted. (291-C, D, E, F]
E
l.2. A first or initial assessment under Section 147 of the Act is a
'regular assessment' within the meaning of Section 139(8) of the Act, has
been the position of law even before the explanation in Section 139(8) was
added by amendment In that view of the matter the explanation merely clarified
the position taking it beyond pale of doubt The Parliament thought it necessary
to add the explanation with a view to remove the doubt raised in certain
f
decisions of High Courts in which a contrary view was taken. Thus the
explanation is merely a clarificatory provision and has application to the Excerpt shown. Read the full judgment & AI analysis in Lexace.