M. P. C. NARAYANA NADAR & BROS. v. FIRST INCOME TAX OFFICER
[Citation -1984-LL-0627-1]

Citation 1984-LL-0627-1
Appellant Name M. P. C. NARAYANA NADAR & BROS.
Respondent Name FIRST INCOME TAX OFFICER
Court ITAT
Relevant Act Income-tax
Date of Order 27/06/1984
Assessment Year 1980-81
Judgment View Judgment
Keyword Tags regular assessment • excess advance tax • unregistered firm • special bench
Bot Summary: The common contention of the assessee in these appeals is that the AAC should have cancelled the amounts of interest under s. 139(8) levied by the ITO on the assessee firms. In the case of Narayana Nadar Brothers the ITO had granted interest under s. 214 on excess advance tax paid, but at the same time levied interest of Rs. 1,477 under s. 139(8) treating the assessee as an unregistered firm for this purpose. The ITO rejected the assessee's application under s. 154 to waive interest the application being on the ground that the assessee registered firm as such was not liable to pay any tax resulting from the assessment, excess, advance tax having been paid. The assessee's appeals to the AAC were dismissed by the AAC holding that there was an express provision under s. 139(8) to deem a registered firm as URF for the application of s. 139(8) and hence the ITO's act of rejection of the assessee's petition under s. 154 was in order. 6 ITD 474 in which it was held that interest under s. 139(8) can be levied on the registered firm treating it as an URF under Explanation 2 thereto only if there is tax payable on the total income as determined on regular assessment after taking into account the advance tax paid and tax deducted at source and that the fiction of treating the registered firm as URF under Explanation 2 could be pressed into service only if there is tax payable by the registered firm on regular assessment. Our attention was also invited to the decision of the Madras High Court in CTR 58: 113 ITR 99 in which it was held that penalty under s. 271(1) could not be levied when there was no tax payable as such by the registered firm. Respectfully following the cited decision of the Special Bench, with which we agree, we are of the view that in the circumstances of the case interest under s. 139(8) is not leviable on the two assessee-firms, since no tax was payable by them resulting from the assessment, the advance tax paid by them being in excess of the tax demand.


These appeals are heard afresh pursuant to order of this Tribunal dt. 3rd March, 1984 in MP Nos. 49 & 50 (Mds)/1983. common contention of assessee in these appeals is that AAC should have cancelled amounts of interest under s. 139(8) levied by ITO on assessee firms. In case of Narayana Nadar & Brothers ITO had granted interest under s. 214 on excess advance tax paid, but at same time levied interest of Rs. 1,477 under s. 139(8) treating assessee as unregistered firm for this purpose. ITO rejected assessee's application under s. 154 to waive interest application being on ground that assessee registered firm as such was not liable to pay any tax resulting from assessment, excess, advance tax having been paid. Similar was position in case of second assessee-firm. assessee's appeals to AAC were dismissed by AAC holding that there was express provision under s. 139(8) to deem registered firm as URF for application of s. 139(8) and hence ITO's act of rejection of assessee's petition under s. 154 was in order. We have heard parties. assessee's ld. counsel before us relied on decision of Special Bench (Jaipur Bench) of Tribunal dt. 21st Oct., 1983 in ITA No. 198(Jp)/1982 in case of ITO vs. Lachmandas Raghunath Das Parihar. 6 ITD 474 (Jp) (SB) in which it was held that interest under s. 139(8) can be levied on registered firm treating it as URF under Explanation 2 thereto only if there is tax payable on total income as determined on regular assessment after taking into account advance tax paid and tax deducted at source and that fiction of treating registered firm as URF under Explanation 2 could be pressed into service only if there is tax payable by registered firm on regular assessment. Our attention was also invited to decision of Madras High Court in (1978) CTR (Mad) 58: (1978) 113 ITR 99 (Mad) (Addl. CIT vs. Murugan Timber Depot) in which it was held that penalty under s. 271(1) could not be levied when there was no tax payable as such by registered firm. Respectfully following cited decision of Special Bench, with which we agree, we are of view that in circumstances of case interest under s. 139(8) is not leviable on two assessee-firms, since no tax was payable by them resulting from assessment, advance tax paid by them being in excess of tax demand. In result assessee's appeals are allowed. *** M. P. C. NARAYANA NADAR & BROS. v. FIRST INCOME TAX OFFICER
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