1974-VIL-346-DEL-DT

Equivalent Citation: [1974] 97 ITR 639

DELHI HIGH COURT

Date: 28.05.1974

GARG AND CO.

Vs

COMMISSIONER OF INCOME-TAX, NEW DELHI.

BENCH

Judge(s)  : M. R. A. ANSARI., P. N. KHANNA.

JUDGMENT

The judgment of the court was delivered by

KHANNA J.-At the instance of the assessee, Messrs. Garg & Co., the Income-tax Appellate Tribunal, Delhi Bench " B ", referred to this court under section 256(1) of the Income-tax Act, 1961, the following questions :

" (1) Whether, on the facts and in the circumstances of the case and on a correct interpretation of the provisions of section 139(4) of the Income-tax Act, 1961, interest could be legally charged on the assessee as provided in proviso (iii) of section 139(1) of the Act?

(2) Whether, on the facts and in the circumstances of the case, the Tribunal was legally right in holding that sub-section (4) of section 139 of the Income-tax Act, 1961, does not require an assessee to apply for extension of time for filing its return of income as a condition precedent for charging of interest as provided in proviso (iii) of section 139(1) of the Income-tax Act, 1961? "

The assessment year in question is 1962-63 corresponding to the previous year ending on March 31, 1962. The assessee is a registered firm carrying on business of building contractor. The due date for filing the return of income was November 30, 1962, but it was filed on February 14, 1966. There was, thus, a delay of 38 months. The Income-tax Officer charged interest under section 139(1) of the Act for the late filing of the return. The Appellate Assistant Commissioner confirmed the said order in appeal. Before the Income-tax Appellate Tribunal, in second appeal, the assessee contended that interest could be charged if all the conditions mentioned in section 139(1)(iii) of the Income-tax Act, 1961, were satisfied. The return in the instant case was filed before the assessment was made, under subsection (4) of section 139 and not within the period prescribed in clause (a) or (b) of section 139(1) of the Act. No application for extension of time was filed and no extension had been granted by the Income-tax Officer. The liability to pay interest, contended the assessee, therefore, did not arise. It was also contended that there was no specific form of return prescribed under section 139(4) of the Act. The return that was filed was under section 139(1). The revenue conceded the proposition that section 139(4) of the Act did not provide for " any specific class of return and that all returns filed under section 139(4) were in discharge of the obligation to file the return under section 139(1) and as such provisions of section 139(1) were applicable to the case. Referring to section 139(4), the Tribunal was of the opinion that it does not require an application to be made by an assessee for extension of time, and that if the assessee wanted to avail of the benefit of filing the return beyond the period provided for in clause (a) or (b) of section 139(1), the provisions regarding payment of interest had to be applied. The revenue was, therefore, held justified in charging interest for late filing of the return. The relevant portions of section 139 of the Income-tax Act, 1961, read as follows :

" 139. Return of income -(1) Every person, if his total income... in respect of which he is assessable exceeded the maximum amount which is not chargeable to income-tax, shall furnish a return of his income ... during the previous year, in the prescribed form ......

(a) in the case of every person whose total income,...includes any income from business or profession, before the expiry of six months from the end of the previous year ... or before the 30th day of June of the assessment year, whichever is later; ...

Provided that, on an application made in the prescribed manner, the Income-tax Officer may, in his discretion, extend the date for furnishing return-......

(ii) up to any period falling beyond the dates mentioned in clauses (i) and (ii), in which case, interest at nine per cent. per annum shall be pay able from the 1st day of October or the 1st day of January, as the case may be, of the assessment year to the date of the furnishing of the return-...

(2) In the case of any person who, in the Income-tax Officer's opinion is assessable under this Act,...the Income-tax Officer may, before the end of the relevant assessment year, serve a notice upon him requiring him to furnish within thirty days from the date of service of the notice a return of his income...... in the prescribed form ......

Provided that on an application made in the prescribed manner the Income-tax Officer may, in his discretion, extend the date for the furnishing of the return,.......whether fixed originally or on extension, falls beyond the 30th day of September or, as the case may be, the 31st day of December of the assessment year, the provisions of sub-clause (iii) of the proviso to sub-section (1) shall apply.....

(4) Any person who has not furnished a return within the time allowed to him under sub-section (1) or sub-section (21 may, before the assessment is made, furnish the return for any previous year at any time before the end of four assessment years from the end of the assessment year to which the return relates and the provision of sub-clause (iii) of the proviso to sub-section (1) shall apply in every such case ".

[Sub-section (4) as reproduced above is applicable in the present case It was amended with effect from April 1, 1968].

Mr. B. N. Kirpal, the learned counsel for the revenue, contended that any person who has not furnished a return within the time allowed under sub-section (1) or (2), but who furnishes the return in pursuance of subsection (4) before the assessment is made, subjects himself to the provisions of clause (iii) of the proviso to the sub-section. According to him, the only part of that provision, which is relevant in such a case and which will, therefore, be applicable, is the provision regarding the obligation of the assessee to pay interest at 9% per annum up to the date of the furnishing of the return.

The contention of the learned counsel is not sound. It is admitted that the assessee in this case did not make an application for extension of the date for furnishing the return and the Income-tax Officer did not extend such date. The question of levying interest under the proviso to sub-section (1) of section 139, therefore, does not arise. Mr. Kirpal contended that such assessee should be deemed to have made an oral application when he furnished the return and the Income-tax Officer be taken as having extended the time up to the date when the return was actually filed. This contention has no basis. In the first place, if the time is taken to have been extended by the Income-tax Officer on an oral application of the assessee, then the return would be a return within the time allowed to him under sub-section (1) or sub-section (2), as the case may be. Sub-section (4), which is being invoked by the revenue, would not be applicable at all. Secondly, 'the proviso to sub-section (1) of section 139 requires an application to be made in the prescribed manner, which requires the use of the prescribed form for getting the extension. The statute itself rules out specifically an oral application. There is no question of an oral application or an oral order extending the date for furnishing the return.

Mr. Kirpal then contended that sub-section (4) does not apply the whole of the proviso to subsection (1) to the case. It is the interest part of the proviso, which alone is relevant in the context of the language of subsection (4), which according to him, would apply. This contention again is without merit. Sub-clause (iii) torn from its context, in itself, would hardly make much sense. It would remain an incomplete sentence. Sub-clause (iii) has to be read along with the opening part of the proviso, which says that the Income-tax Officer may in his discretion extend the date for furnishing the return " up to any period falling beyond the date mentioned in clauses (i) and (ii), in which case interest at 9 % per annum shall be payable ". The part of sub-clause (iii) which requires the assessee to pay interest comes into operation only in case the extension of the date for furnishing the return beyond the prescribed dates is given by the Income-tax Officer in his discretion, This power is exercisable only when an application is made in the prescribed manner. Various parts of the proviso including sub-clause (iii) are so inter-dependent that no one part can stand by itself. We, therefore, hold that interest could be demanded from the assessee only in case an application in the prescribed manner had been made by him and the Income-tax Officer in his discretion had extended the date for furnishing the return.

Mr. Kirpal contended that in order to make the section work, it is necessary to read the language of the proviso in the manner suggested by him. He submitted that a literal reading of the proviso would render sub-section (4) completely unworkable. This contention of the learned counsel has no substance. We are not privileged to read the language of a section in a manner different from the one in which the language is incorporated in the section. We cannot incorporate words in the statute which the legislature in its wisdom has not incorporated, nor can we ignore the words which the legislature has incorporated. This is more so when the statute to be interpreted is a fiscal statute. It is now well-settled that the language of such a statute has to be construed in its strict sense. The assessee is always entitled to the benefit of doubt, if any left in the language of the statute.

Sub-section (4) applies the provisions of clause (iii) of the proviso to the cases falling under it. The phrase " in which case ", occurring in clause (iii) makes the subsequent portion of the clause dealing with interest dependent on the earlier portion of the clause, which read with the opening part of the proviso makes the making of an application in the prescribed manner and the actual grant of extension by the Income-tax Officer, conditions precedent for the payment of interest. There may be a lacuna in the language, which we are afraid, we cannot fill up. We are fortified in this view by the subsequent amendment effected by the Finance Act, 1972, by which the lacuna has been filled up by substituting the old sub-section (8), by a new sub-section (8), which reads as follows:

"(8) (a) Where the return under sub-section (1) or sub-section (2) or sub-section (4) for an assessment year is furnished after the specified date, or is not furnished, then whether or not the Income-tax Officer has extended the date for furnishing the return under subsection (1) or sub-section (2) the assessee shall be liable to pay simple interest at twelve per cent. per annum, reckoned from the day immediately following the specified date to the date of the furnishing of the return or, where no return has been furnished, the date of completion of the assessment under section 144, on the amount of the tax payable on the total income as determined on regular assessment, as reduced by the advance tax, if any, paid, and any tax deducted at source:

Provided that the Income-tax Officer may in such cases and under such circumstances as may be prescribed, reduce or waive the interest payable by any assessee under this sub-section..."

The very fact that sub-section (8) has been amended shows that the legislature became conscious of the lacuna that had been left in the language of this section before its amendment and which has now been removed by introducing the amendment. The assessee, therefore, was entitled to the benefit of the said lacuna, and could not be called upon to pay interest, unless he had applied for extension of time and the extension sought for had been granted.

Mr . S. B. Gupta, the learned counsel for the assessee, relied on a judgment of the Division Bench of the Andhra Pradesh High Court in Kishanlal Harichandran v. Income-tax Officer, Nizamabad , where it was held that the assessee was liable to pay penal interest under clause (iii) only if he had asked for extension of time for submission of the return. In the absence of such a request, clause (iii) did not apply, although other consequences like the assessee subjecting himself to the penalty provided in section 271 of the Act may follow. We are in respectful agreement with this view. This judgment of the Andhra Pradesh High Court was noticed by the Gauhati High Court in Ganesh Das Sreeram v. Income-tax Officer, A-Ward, Shillong, where it was dissented from. The Gauhati High Court hold that an application by the assessee and a consequent order extending the time for furnishing the returns are not conditions precedent for authorising the Income-tax Officer to charge interest under clause (iii) of the proviso to section 139(1). According to the learned judge, the assessee, having failed to furnish the return within the time allowed, had taken the benefit of sub-section (4), which attracted clause (iii) of the proviso to sub-section (1) and empowered the Income-tax Officer to charge interest for the late filing of the return. The relevant language of clause (iii) was not discussed in detail. We must say with profound respect that we are unable to persuade ourselves to agree with this view. As there was no application by the assessee for extension of time for submitting the return, nor was there any extension granted by the Income-tax Officer, the question of the assessee's liability to pay interest did not arise in the instant case.

In the result, the contention raised on behalf of the assessee must be accepted. The answer to question No. 1 referred to above is in the negative, while the answer to question No. 2 is in the affirmative. Both the answers, thus, are in favour of the assessee and against the revenue.

In the peculiar circumstances of the case, there shall be no order as to costs.

Reference answered accordingly.

 

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