This appeal by assessee is against order of AAC in his appeal No. Ak-III-25/82-83 dt. 5th April, 1982 upholding order of ITO under s. 154 levying interest under s. 139(8) for late submission of he return of income. facts in this regard, rival submissions and our conclusion thereon are briefly discussed hereunder. assessee filed its return of income for asst. yr. 1980-81 on 17th Nov., 1980 whereas, it was due under s. 139 by 30th Jun., 1980. In assessment for this year, ITO omitted to charge interest under s. 139(8) through oversight, though same was mendatorily chargeable in accordance with provision of sub-s. (8) of s. 139 vide proviso to s. 139(1) (b). To make good this omission, ITO initiated proceedings under s. 154 to rectify assessment with view to charging interest under s. 139(8) for late submission of return. assessee objected to proposed rectification in its letter dt. 15th Feb, 1983 stating that, all facts relating to this mater were before ITO at time of assessment; non-charging of interest under s. 139(8) for belated submission of return was not omission but only result of deliberate exercise of discretion on his part not to levy such interest in exercise of powers conferred upon him in proviso to sub-s. (8) particularly in view of waive of interest being well within his powers, considering that interest chargeable was less than Rs. 1,000 and , therefore, there was no omission in this regard in assessment which required to be rectified under s. 154. alternative submission was also made, that interest could be waived at that stage. ITO declined to accept above view of matter. He held, that, failure to charge interest in assessment was mere omission that happened due to inadvertence and nothing more could be read into that. He held, that levy of interest under s. 139(8) was mandatory even when time limit for submission of return was extended beyond due dates prescribed under Act. and, therefore, interest under s. 139(8) was prima facie chargeable question of waiver of same under proviso to s. 139(8) r/w r. 117 would arise only when conditions prescribed for such waiver were shown to have been satisfied and as in this case, that stage had not been reached, failure to charge interest in assessment was nothing but omission simpliciter. He therefore, rectified assessment and charged interest under s. 139(8) amounting to Rs. 965. Aggrieved with same, assessee preferred appeal to AAC. More or less, similar arguments were adduced before him on behalf of assessee. It was submitted, that ITO had power of waiver vested in him under proviso to sub-s. (8) of s. 139 r/w r. 117A and since amount of interest chargeable was less than Rs. 1,000 ITO himself could have waived interest without reference to higher authority as per proviso to this rule and, therefore, non-charging of interest in assessment should be taken to be equivalent to waiver by ITO Reliance was placed on M. Chockalingam & M. meyyappan vs. CIT & Anr. (1963) 48 ITR 34 (SC) and certain other decisions. AAC did not accept this view point He held, that, on basis of facts and circumstances of case, there was no warrant to come to conclusion, that ITO had deliberately exercised discretion of waiver conferred upon him by proviso when he failed to charge interest in assessment According to him, waiver should be preceded by examination b y ITO of he circumstance under which return was belatedly filed and only when any one of he conditions specified in this behalf in r. 117A, which governs waiver or are satisfied, ITO can exercise discretion vested in him under proviso in favour of assessee either fully or partially. In present case, he held that there were no materials on record on basis of which ITO could have come to conclusion, that this was fit case for waiver on basis of any one of reasons specified in rule. In absence of any information in this regard as to whether assessee satisfied any of he conditions prescribed for waiver, failure to charge interest in assessment would only amount to omission on part of ITO. He, did not agree with assessee, that quantum of interest chargeable being less than Rs, 1,000 would amount automatically to assessee having satisfied conditions prescribed in Rule, merely because ITO could waive interest upto Rs. 1,000 unilaterally without reference to higher authority. In fine, he held that certain procedure has been prescribed under r. 117A and unless same has been gone through, it cannot be held, that interest chargeable under this section should be presumed to have been waived even when such failure to charge should be presumed to have been waived even when such failure to charge interest was due to inadvertent omission without any overtones about it. He relied on Gujarat High Court s decision in CIT vs. Ramjibhai Hirjibhai & Sons 1977 CTR (Guj) 2: (1977) 110 ITR 411 (Guj) as facts in that case were identical to facts of instant case and Gujarat High Court held, that, there could be no presumption of waiver when ITO merely on its to charge interest in first instance. Aggrieved with same, assessee is in appeal before us. Shri Thakar made following submissions for our consideration. assessee, no doubt, filed return on 17th Nov., 1980 but, however, same was preceded by application in Form 6 for extension of time which was allowed by ITO. Since return was filed within extended time, it should be presumed, that assessee had satisfied residuary conditions prescribed for such waiver under r. 117A. There was no statutory bar against ITO considering question of warier of interest at time of assessment itself if any one of conditions prescribed for such waiver was satisfied, and as in present case ITO had not charged interest in assessment order, it should be presumed, that ITO had considered requirements of rule and only thereafter, refrained from charging interest, which in other words, would amount to waiver as per proviso to s. 139(8). Reliance was also placed on decision of Supreme Court in S. A. L. Harayan Raw & Anr. vs. Ishwarlal Bhagwandas & Ors. (1965) 57 ITR 149 (SC) wherein it was held that, when law gave taxing authority discretion to impose or not impose liability, namely, interest under s. 18A (6) for short payment of advance tax, action under s. 35 corresponding to s. 154 would be lie for correcting any omission to charge such interest in regular assessment. On behalf of Revenue, Shri Charles, senior Departmental Representative made following submissions. There can be no waiver by implication or by assumption. In this context, he invited our attention to decision of Bombay High Court in Ratanlal Dhondiram vs. CIT (1983) 141 ITR 363 (Bom). In this case, it was held, that mere non-mention on part of ITO in assessment order of penal interest under s. 217(1) for failure to file estimate of advance tax and pay advance tax as required by s. 212 (3) could lead to assumption that ITO had waived levy of penal interest. With reference to this decision, he argued, that, in present cases as well, it was omission simplicities on part of ITO to charge interest under s. 139 (8) and same cannot be construed as waiver of such interest under proviso to s. 139 (8) r/w r. 117A particularly when requirements of rule have not been satisfied and moreover, at time of assessment, there was absolutely no information on record as to whether requirements of rule were at all satisfied. He relied heavily on decision of Gujarat High Court in 1977 CTR (Guj) 2: (1977) 110 ITR 411 (Guj) which was also relied upon by AAC wherein, Supreme Court s decision in (1965) 57 ITR 149 (SC) was also considered and it was held by Gujarat High Court, on absolutely identical facts and circumstances, that, action under s. 154 was available to ITO when interest under s. 139(8) was originally omitted to be charged in regular assessment. He also invited our attention to decision of this Bench in I. T. A. No. 557 (Nag)/79 dated 5th Nov., 1980 in which similar action under s. 154 for charging interest under s. 154 (1A) omitted to be charged in first instance, was upheld after with discussions of various decisions in this regard and particular reference to decision of Gujarat High Court in 1977 CTR (Guj) 2: (1977) 110 ITR 411 (Guj). Shri Thakar, in reply, submitted that when time limit for submission of return was extended by ITO he had done so only after being satisfied about genuineness of request for extension and, therefore, it should be presumed, that requirement of residuary condition in r. 117A was satisfied in present case and, therefore, ITO should be presumed to have waive interest in first instance. After careful consideration of facts and circumstance and various decision in this regard, we are of considered opinion, that non-levy of interest in first instance was due to omission on part of ITO and not due to deliberate exercise of power of waiver conferred on him by Act and, therefore, subsequent rectification of assessment to make good omission to charge interest under s. 13(8) was quite justified and, therefore, omission to charge interest under s. 13(8) was quite justified and, therefore, AAC was correct in upholding order of ITO in this behalf. Under s. 139, returns of income have to be filed with certain prescribed dates. Provisos to ss. 139 (1) and 139 (2) allow ITO to extend date for submission of returns of income but, however, these provisos themselves clearly indicate that interest shall be charged notwithstanding such extension as per provisions of sub-s. (8) Therefore, one of arguments of learned counsel for assessee, that, once time limit for submission of return of income has been extended by ITO, one of requirements of waiver is automatically satisfied, is not correct inasmuch as proviso clearly stipulates, that, interest shall be charged under sub-s. (8) notwithstanding extension granted to assessee in this behalf. In other words. interest under s. 139 (8) is mandatory, in sense it is automatically attracted moment there is failure on part of assessee to adhere to dates prescribed in s. 139 (1) or 139 (2). Sec. 139 (8) lays down, that, simple interest at 12 per cent per annum shall be charged for period of delay that ensues subsequent to specified dates. proviso confers power of waiver or reduction of interest on ITO subject to requirements of r. 117 A. Rule 117A is in following terms: " 117 Reduction or waiver of interest payable under s. 139. ITO may reduce or waive interest payable under s. 139 in cases and in circumstances mentioned below, namely: (i) where return of income is furnished by person who has been treated under s. 163 as agent of non-resident and is assessed in respect of latter s income; (ii) where return of income is furnished by assessee whose only source of income during relevant previous year is share in income of unregistered firm which has been assessed on its total income in respect of that previous year under cl. (b) of s. 183; (iii) where return of income of deceased individual is furnished by his legal representative and legal representative satisfies ITO that he had sufficient cause for not furnishing such return within time; (iv) where return of income has been furnished in pursuance of notice issued under s. 148; (v) any case in which assessee produces evidence to satisfaction o f ITO that he was prevented by sufficient cause from furnishing rerun within time: Provided that previous approval of IAC has been obtained where amount of interest reduced or waived, as case may be, under cl. (iv) or cl. (v) exceeds one thousand rupees. " It is nobody s case, that assessee, in present case satisfies conditions at (i), (ii), (iii), (iv) of above rule. Sub-r. (v) is residuary clause which enables ITO to waive or reduce interest provided assessee satisfied with evidence, that he was prevented by sufficient cause from furnishing return within time. In present case, there was absolutely no information or explanation in this regard at time of assessment whether assessee was prevented by sufficient cause from furnishing return. mere fact, that assessee had applied for extension of time and ITO had also granted same, would not amount to full satisfaction of requirement in sub-r. (v) as it would require examination of reasons in this behalf and application of mind of ITO to same before he can reach to conclusion, that, assessee was prevented be sufficient cause from furnishing return. Moreover, it has to be mentioned at this stage, that assessee has not elucidated reasons for asking for time. We are, therefore, not aware as to what was cause that prevented assessee from furnishing return. At any rate, application on part of assessee would not automatically amount to satisfaction of requirement specified in this sub-rule. This has to be examined independently and conclusion has to be arrived at as to whether there was sufficient justification for belated submission of return so as to necessitate waiver or reduction of interest. All this exercise had never taken place at time of assessment and, therefore, it would be absurd to hold, that act of ITO to charge interest was result of deliberate exercise of power of waiver on part of ITO. On identical facts and circumstances Gujarat High Court in 1977 CTR (Guj) 2: (1977) 110 ITR 411 (Guj) has held, that, there can be no presumption of waiver with reference to mere omission to charge interest under s. 139 (8) and, therefore, under s. 154 was available. following headnote from this decision quite illuminating in this context: " On application of assessee, time for filing return was finally extended up to 15th Nov., 1967. assessee filed return only on 23rd Dec., 1967. ITO completed assessment on 26th May, 1969. However, he did not charge interest under s. 139 of Act for late submission of return. Later. ITO rectified order under s. 154 and levied penal interest of Rs. 2,610. On appeal, AAC accepted contention to assessee that Income-tax Officer must be deemed to have exercised his discretion in favour of assessee in not charging penal interest in original assessment order and cancelled ITO s order passed under s. 154. In further appeal, Tribunal was of opinion that there was divergence of judicial opinion as to whether or not interest was liveable in such case and that, therefore, provisions of s. 154 of Act would not be applicable. " In fact in above decision their Lordships have mentioned, that, waiver is separate proceeding and assessee has to move ITO to condone or waive penal interest. Their Lordships have also referred to decision of Supreme Court in (1965) 37 ITR 149 (SC) and distinguished same. facts i n present case are in all respects identical to those of decided cases mentioned above. Moreover, this Bench in earlier mentioned order, have held, that action under s. 154 was available to make good omission to charge interest under s. 217(1A). In that decision there is elaborate discussion relating to various other decisions of High Courts in this regard. There also, reliance has been placed on decision of Gujarat High Court in 1977 CTR (Guj) 2: (1977) 110 ITR 411 (Guj). In that case, it was particularly mentioned, that since interest was statutory levy, omission to charge same in first instance, would amount to statutory omission and, therefore, provisions of s. 154 would be available to rectify same. In present case as well, facts are identical. None of conditions necessary for waiver existed or at nay rate even if they existed, they were not brought to notice of ITO at time of original assessment. It is also relevant to notice of ITO at time of original assessment. It is also relevant to note, that, Bombay High Court in (1983) 141 ITR 363 (Bom) has clearly laid down, that, there cannot be any waiver by implication or assumption. following passage from judgement make his point very clear: " We fail to see how merely by reason of non-mention of penal interest in order of assessment, it can be assumed that ITO waived levy of penal interest. There is nothing in order at all to show that ITO had applied his mind to question of penal interest, or found that any conditions existed by reason of which penal interest should be waived. On other hand, plain reading of sub-s. (1) of s. 217 of said Act, would clearly show that where condition laid down therein are satisfied, penal interest at rate of twelve percent, per annum has to be levied. It is true that r. 40 of IT Rules, 1962, provides for reduction or waiver of interest leviable under s. 215 or s 217 in circumstances set out in that rule There is, however, nothing in assessment order which would suggest that assessee had applied for penal interest being waived of reduced of submitted that was nay circumstance in case which could come within scope or r. 40 In fact, even before Tribunal it was never contended by assessee that by reason of circumstances set out in r. 40 levy of penal interest against assessee should have been waived. In these circumstances, we utterly fail to see that it could be said that merely because ITO failed to mention penal interest in assessment order he had waived same. As such, we are fortified in our conclusion based on decision of Gujarat High Court in 110 ITR 411, that ITO was justified in rectifying assessment under s. 154 assessee may, however, pursue any other remedies available to him under Act and Rules. only other contention in this appeal relates to treatment of firm as unregistered firm for purposes of levy of interest under s. 139(8) This is in pursuance of Explanation 2 to s. 139(8) which lays down, that, for purposes of this sub-section, where assessee is registered firm. tax payable on total income shall be amount of tax which would have been payable if firm had been assessed as unregistered firm. Sec. 139(8) lays down that, interest payable shall be calculated with reference to tax payable on total income as determined on regular assessment Reading this Explanation with sub-section, it is clear, that interest has to be charged on tax payable treating firm as unregistered firm. This Tribunal cannot also sit in judgment over vires of this section We, therefore, agree with AAC and confirm order of ITO in this behalf. Accordingly, we confirm order of AAC and dismiss appeal filed by assessee. *** VIDARBHA HARDWARE INDUSTRIES v. INCOME TAX OFFICER