Bennett, Coleman And Co.Ltd vs The Deputy Commissioner Of Income ...
2021 Latest Caselaw 17647 Bom

                                                                    1                ITXA 100-02 Judgment.odt


                                           IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                                                ORDINARY ORIGINAL CIVIL JURISDICTION
                                                  INCOME TAX APPEAL NO.100 OF 2002
                            Bennett Coleman & Co. Ltd.                          ]
                            a Company incorporated under the Companies          ]
                            Act, 1956, having its registered office at          ]
                            Times of India Building, Dr. D. N. Road, Mumbai     ]
                            Mumbai - 400 001.                                   ]      ... Appellant

                                       Versus

                            1. The Deputy Commissioner of Income Tax,           ]
                               Special Range 18, Mumbai.                        ]

                            2. The Commissioner of Income Tax,                  ]
                               City III, having his office at Aayakar Bhavan    ]
                               M. k. Marg, Mumbai - 400 020.                    ]      ... Respondents

                            Mr. J. D. Mistri, Senior Advocate a/w Mr. Jas Sanghavi, Advocate i/b PDS
                            Legal for Appellant.
                            Mr. P. C. Chhotaray, Advocate, for Respondents.

                                                                    CORAM :-    K. R. SHRIRAM &
                                                                                AMIT B. BORKAR, JJ.

                                                          RESERVED ON        :- 03 DECEMBER, 2021
                                                       PRONOUNCED ON         :- 20 DECEMBER, 2021


                            ORAL JUDGMENT : (PER : AMIT B. BORKAR. J.) :-

1. In this appeal under Section 260-A of the Income Tax Act, 1961, three questions of law have been formulated, these being as follows:

(i) Whether on the facts and in the circumstances of the case and in law, the Tribunal was right in holding that a fresh assessment which has been made by the Assessing Officer to give effect to the directions of the Commissioner of Income Tax under Section 263 of the Act setting aside the original

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assessment, would constitute a 'regular assessment' for purposes of section 215 of the Act ?

(ii) Whether on the facts and in the circumstances of the case and in law, the Assessing Officer is entitled to charge interest under Section 215 of the Act despite the fact that the assessment order does not contain any direction that such interest would be charged ?

(iii) Whether on the facts and in the circumstances of the case and in law, the Tribunal ought to have held that in the light of the Judgment of this Hon'ble Court in the case of CIT Vs. Bennett Coleman & Co. Ltd. [217 ITR 216] and in the light of the finding in the order dated 20th March, 1989 passed under Rule 40(1) of the Rules that the delay in finalisation of the assessment was not attributable to the Appellant, the Assessing Officer was not justified in waiving only the interest chargeable for a period exceeding one year and he ought to have waived the entire interest ?

2. The Appeal, in this case, arises out of an order dated 30th

August 2001 passed by the Income Tax Appellate Tribunal for Assessment

Year 1985-86.

3. In respect of the assessment year 1985-86, on 4 th September

1985 the Appellant filed return of income, disclosing a total income of

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Rs.1,53,41,650/-. The Assessing Officer passed an assessment order

dated 28th March 1988 under Section 143(3) of the Act and, after making

various additions and disallowances to the income returned by the

Appellant, assessed a total income of Rs.2,74,47,780/-. In the assessment

order, the Assessing Officer, inter alia, directed interest under Section 215

of the Act to be charged. The Assessing Officer levied interest of

Rs.13,67,999/- under Section 215 of the Act vide the computation sheet.

4. Being aggrieved by the action of the Assessing Officer in

charging interest under Section 215 of the Act, the Appellant filed an

application dated 8th July 1988 for waiver of interest under Section

215(4) of the Act read with Ruled 40 of the Income-tax Rules, 1962 ('the

Rules). The Deputy Commissioner of Income Tax passed an order dated

20th March 1989 under Rule 40(1) of the Rules holding that the delay in

finalisation of the assessment was not attributable to the Appellant and

waived the interest under Section 215 of the Act beyond one year of the

filing of the return of income. The Deputy Commissioner of Income Tax

accordingly re-calculated the interest chargeable under Section 215 at

Rs.4,13,630/- and waived the balance of Rs.4,40,020/-.

5. The Appellant received a show cause notice dated 6 th March

1990 under Section 263 of the Act from the Commissioner of Income-tax.

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The Appellant filed its objections by letter dated 26 th March 1990,

objecting to the proposed action. The Commissioner of Income-tax passed

an order dated 30th March 1990 under Section 263 of the Act setting aside

the assessment in its entirety with directions to the Assessing Officer to

reframe the assessment after proper verification and application of mind.

6. In compliance with the order under Section 263 of the Act,

the Assessing Officer passed a fresh assessment order dated 9 th March

1992 under Section 143(3) of the Act read with Section 263 of the Act.

The Assessing Officer gave effect to order dated 30 th March 1990 by

making certain additions and disallowances and computed the income of

the Appellant at Rs.4,04,37,692/-. There was no direction in the said

order regarding the charging of interest under Section 215 of the Act.

However, in the computation sheet annexed to the said order, an interest

of Rs.23,91,413/- under Section 215 had been charged. The Assessing

Officer had also charged interest under Section 139(8) of the Act.

7. Being aggrieved by the various additions and disallowances

made and the interest under Sections 215 and 139(8) levied by the

Assessing Officer, the Appellant filed an appeal before the Commissioner

of Income Tax (Appeals). The said appeal was disposed of by the

Commissioner of Income Tax (Appeals) vide an order dated 28 th

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September 1992 holding that interest could not be charged under

Sections 215 or 139(8) unless it has been charged earlier or it falls within

the meaning of Sections 215(3) or 139(8)(b) of the Act.

8. Being aggrieved by order of the Commissioner (Appeals) with

regard to the issue of levy of interest under Section 215, the Assessing

Officer filed an appeal before the Tribunal. While challenging said order,

the Assessing Officer accepted that part of the order of the Commissioner

(Appeals), which deleted the levy of interest under Section 139(8) of the

Act and confined the Appeal to the deletion of interest under Section

215(6) of the Act. The Tribunal by impugned order restored interest

levied by assessing officer by way of computation sheet annexed to the

said order.

9. We have heard Mr. J. D. Mistri, Senior Advocate for

Appellant. He submits that Question of Law No.(i) is covered by the

Judgment of Supreme Court in the case of Modi Industries Ltd. And

Others Vs. Commissioner of Income-Tax And Another 1 wherein it has been

held that the phrase "regular assessment' in the Income Tax Act has been

used in no other sense than the first order of assessment passed under

Section 143 of 144 and any consequential order passed by the Income Tax

1 [1995] 216 ITR 759

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Officer giving effect to subsequent order passed by higher authority,

cannot be treated as regular assessment. He further submitted that in the

regular assessment, there was no direction to charge interest under

Section 215, and therefore in the re-assessment order, interest cannot be

charged. By inviting our attention to the order dated 28/03/1989 passed

by Deputy Commissioner of Income Tax, Bombay (Exh. C), he submitted

that the said authority had waived interest beyond the period of one year

of the filing of return in a proceeding challenging direction to pay interest

as per Section 215 of the Act. He placed reliance on the Judgment of this

Court in the case of CIT Vs. Bennett Coleman & Co. Ltd. (supra) in

support his submission that under Rule 40(1) of the Income Tax Rules,

1962, interest levied under Section 215 cannot be partially waived but

needs to be entirely waived.

10. Per contra, Mr. Chhotaray, learned Counsel for Revenue, fairly

accepted as an officer of the Court that the word "regular assessment"

needs to be interpreted as the original assessment. He submitted that if

the Appellant is seeking waiver of interest, the Appellant was required to

file a new application for waiver after the order of re-assessment and in

the absence of such application, the Tribunal was justified in restoring the

order of Assessing Officer directing Appellant to pay interest as per

Section 215 of the Act.

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11. We have heard the parties and perused the material on

record. Section 215 of the Act makes it clear that the Assessee is required

to pay interest where he has paid advance tax less than 75% of the

assessed tax, the Assessee is required to pay simple interest @ 15% p.a.

from the first day of April following the financial year up to the date of

regular assessment.

12. The Supreme Court has summed up in the case of Modi

Industries Ltd.(Supra) by saying that the expression "regular assessment"

has been used in the Income Tax Act in no other sense than the first order

of assessment under Section 143 or 144. Any consequential order passed

by the Income Tax Officer to give effect to an order passed by the higher

authority cannot be treated as a regular assessment.

13. For assessment year 1985-86, returned total income of

Appellant was Rs.1,63,41,650/-. In the regular assessment proceeding

completed on 28/03/1988, the total income was determined at

Rs.2,74,47,780/- and interest under Section 215 of the said Act

amounting to Rs.13,67,999/- was charged. In the Appeal filed by the

Assessee, the amount of interest was reduced to Rs.8,53,650/-. In the

facts of the case, since the interest under Section 215 was charged in the

regular assessment order, the Assessing Officer had the power to charge

interest under Section 215 of the Act, while carrying out reassessment.

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14. Section 215(4) empowers the Assessing Officer to waive or

reduce the amount of interest chargeable under section 215 under

circumstances prescribed in rule 40 of the Income Tax Rules, 1962. One

of such prescribed circumstance is :-

(1) When without any laches or delay on the part of assessee, the assessment is completed more than one year after the submission of the return; or (2) .....

(3) .....

(4) .....

15. In the light of facts of the case, Deputy Commissioner of

Income Tax, Bombay, by order dated 20/03/1989 in the exercise of power

under Rule 40 of Income Tax Rules, held that delay in finalization of

assessment is not attributable to Assessee and therefore the Assessee is

not liable to pay interest under Section 215 of the Act beyond the period

of one year from the date of filing of return. Accordingly, the Appellant

was held to be liable to pay an amount of Rs.4,40,020/-. The order of

Dy.CIT, Bombay, dated 20/03/1989, has not been challenged by Revenue

or Appellant, with the result said order attained finality. In the absence of

challenge to the order under Rule 40(1) of IT Rules, the Appellant is not

entitled to the benefit of Judgment of Division Bench of this Court in the

case of CIT Vs. Bennett Coleman & Co. Ltd. (supra). Therefore Appellant

is not entitled to waiver of interest for a period of one year. Appellant is

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entitled to the benefit of order dated 20/03/1989 passed under Rule

40(1) only to the extent stated therein.

16. We are, therefore, of the view that the Appellant was liable to

pay an amount of Rs.4,13,630/-as per order dated 20/03/1989 annexed

to this Appeal at Exh.C. The questions are answered accordingly.

17. Appeal stands disposed accordingly.

(AMIT B. BORKAR, J.)                                 (K. R. SHRIRAM, J.)




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