SMT. BHUWANKUMAR BHANDARI v. COMMISSIONER OF WEALTH-TAX & ANR
[Citation -2005-LL-0831-8]

Citation 2005-LL-0831-8
Appellant Name SMT. BHUWANKUMAR BHANDARI
Respondent Name COMMISSIONER OF WEALTH-TAX & ANR.
Court ITAT
Relevant Act Wealth-tax
Date of Order 31/08/2005
Assessment Year 1992-93
Judgment View Judgment
Keyword Tags business or profession • return of net wealth • income from business • interest chargeable • regular assessment • inadvertent lapse • levy of interest • wealth-tax act • advance tax
Bot Summary: The petitioner has submitted that on account of the inadvertent lapse of her accountant, the said return could not be filed by the due date but the amount of tax along with interest thereon as required under section 17B of the Wealth- tax Act, was deposited on March 30, 1994. Learned counsel for the petitioner submits that although it was stressed before the assessing authority that the amount of wealth-tax having been deposited along with the interest chargeable thereon for the period of delay till the said amount of tax was deposited, the interest under section 17B would not be chargeable till the date of the filing of the return. Prescribed in section 17B of the Wealth-tax Act is chargeable up to the date of furnishing of the return or the same would get truncated up to the period when the amount of tax and interest has been deposited. Where the return of net wealth for any assessment year under subsection of section 14 or section 15, or in response to a notice under clause of sub-section of section 16, is furnished after the due date, or is not furnished, the assessee shall be liable to pay simple interest at the rate of two per cent. For every month or part of a month comprised in the period commencing on the date immediately following the due date, and, where the return is furnished after the due date, ending on the date of furnishing of the return, or where no return has been furnished, ending on the date of completion of the assessment under sub-section of section 16, on the amount of tax payable on the net wealth as determined (under sub- section of section 16) or on regular assessment. At the relevant time section 139(8) of the Income-tax Act provided as under: Where the return under sub-section or sub-section or subsection for an assessment year is furnished after the 30th day of September of the assessment year, or is not furnished, then whether or not the Income-tax Officer has extended the date for furnishing the return under sub-section or sub- section, the assessee shall be liable to pay simple interest at nine per cent. Having regard to the reason for levy and the circumstances in which the interest was imposed, it was held that interest was levied by way of compensation and not by way of penalty.


JUDGMENT S. K. Kulshrestha J. By this petition, petitioner assails order dated December 9, 1999 (annexure P/7), passed by first respondent, Commissioner of Wealth-tax, Indore, by which said respondent has rejected revision and declined claim of petitioner for deleting interest charged under section 17B of Wealth-tax Act, 1957. facts not in dispute before this court are that petitioner is assessee under Wealth-tax Act and for assessment year 1992-93, she was required to furnish return by July 31, 1992 for year ending on March 31, 1992. petitioner has submitted that on account of inadvertent lapse of her accountant, said return could not be filed by due date but amount of tax along with interest thereon as required under section 17B of Wealth- tax Act, was deposited on March 30, 1994. To substantiate said contention, petitioner has submitted exhibit P/3 indicating calculations and amount of tax and interest worked out by her. Learned senior counsel for petitioner submits that although sum of Rs. 62,613 has been deposited along with interest and returns under said Act for subsequent periods were duly filed, notice was received from Department informing that return for period ending on March 31, 1992, relevant to assessment year 1992-93 had not been filed. It was on receipt of this notice that realisation dawned that on account of sheer carelessness of accountant though tax and interest had been deposited, return had not been filed. Immediate steps were taken and return was submitted on March 30, 1998. Learned counsel for petitioner submits that although it was stressed before assessing authority that amount of wealth-tax having been deposited along with interest chargeable thereon for period of delay till said amount of tax was deposited, interest under section 17B would not be chargeable till date of filing of return. Assessing Officer charged tax at rate of 2 per cent. up to date of filing of return under section 17B of Wealth-tax Act. revision filed against said order of assessing authority has been dismissed by Commissioner of Wealth-tax vide order dated December 9, 1999 (annexure P/7). Learned counsel, therefore, submits that on rigid and dogmatic construction of provision, decision of authorities with regard to calculation of interest beyond period amount had already been deposited is illegal and against legislative intent and order (annexure P/7), therefore, deserves to be quashed. Learned senior standing counsel has controverted stand of counsel for petitioner. He has submitted that on plain language of section 17B of Wealth-tax Act, it is manifest that interest is to be charged in such cases of lapse/default up to date of furnishing of return as is clear from clause (a) of section 17B(1) and, therefore, Revenue has, in no way, erred in charging amount of interest. Commissioner of Wealth-tax has accordingly, rightly dismissed revision vide his order (annexure P/7). short controversy that arises for determination in this petition is as to whether on payment of tax and interest on date anterior to date of filing of return under Wealth-tax Act, interest at rate of 2 per cent. prescribed in section 17B of Wealth-tax Act is chargeable up to date of furnishing of return or same would get truncated up to period when amount of tax and interest has been deposited. Section 17B(1)(a) and (b) of Wealth-tax Act, 1957, reads as under: Interest for defaults in furnishing return of net wealth. (1) Where return of net wealth for any assessment year under subsection (1) of section 14 or section 15, or in response to notice under clause (i) of sub-section (4) of section 16, is furnished after due date, or is not furnished, assessee shall be liable to pay simple interest at rate of two per cent., for every month or part of month comprised in period commencing on date immediately following due date, and, (a) where return is furnished after due date, ending on date of furnishing of return, or (b) where no return has been furnished, ending on date of completion of assessment under sub-section (5) of section 16, on amount of tax payable on net wealth as determined (under sub- section (1) of section 16) or on regular assessment. Learned senior counsel Shri Chaphekar has invited attention to decision of Supreme Court reported in Central Provinces Manganese Ore Co. Ltd. v. CIT [1986] 160 ITR 961, in which somewhat similar provision of Income-tax Act contained in section 139(8) came up for consideration of their Lordships. At relevant time section 139(8) of Income-tax Act provided as under (page 964): Where return under sub-section (1) or sub-section (2) or subsection (4) for assessment year is furnished after 30th day of September of assessment year, or is not furnished, then whether or not Income-tax Officer has extended date for furnishing return under sub-section (1) or sub- section (2), assessee shall be liable to pay simple interest at nine per cent. per annum, reckoned from 1st day of October of assessment year to date of furnishing of return or, where no return has been furnished, date of completion of assessment under section 144, on amount of tax payable on total income as determined on regular assessment, as reduced by advance tax, if any, paid and any tax deducted at source: Provided that in case of any person whose total income includes any income from business or profession, previous year in respect of which expired after 31st day of December of year immediately preceding assessment year, such interest shall be reckoned from 1st day of January, instead of 1st day of October of assessment year: Provided further that Income-tax Officer may, in such cases and under such circumstances as may be prescribed, reduce or waive interest payable by any person under this sub-section. In dealing with similar contention, their Lordships observed that provision of levy of interest under sub-section (8) of section 139 could not be referred to as penal. Having regard to reason for levy and circumstances in which interest was imposed, it was held that interest was levied by way of compensation and not by way of penalty. On basis of said observation of apex court, learned counsel submits that when provisions of section 17B are read apposite provision construed by their Lordships in said case, there is no room for doubt that charging of interest on delayed deposit of wealth-tax is also compensatory and not punitive. It is clear from provision itself that it is not on account of delay in not furnishing return but amount due from assessee, that provision has been incorporated to compensate Revenue for loss occasioned by delayed deposit. Under these circumstances, it clearly appears that intention of Legislature in providing for charging of interest on account of delay/default is only to make provision to compensate Department. I am of view that interpretation of section 17B by learned Commissioner of Wealth-tax, Indore does not indicate its true legislative intent. Consequently, this petition is allowed. order (annexure P/7) passed by first respondent is quashed and matter is remanded to him for decision afresh in light of observations made hereinabove. There shall be no orders as to costs. *** SMT. BHUWANKUMAR BHANDARI v. COMMISSIONER OF WEALTH-TAX & ANR.
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