JUDGMENT
N.K Sud, J.
The petitioner is a private limited company engaged in the business of export of rice and other goods. For the assessment years 1997-98, it filed its return of income on 2-4-1998 declaring a total income of Rs. 7,00,610. It is claimed that the amount of Rs. 7,00,610 had been arrived at by computing the profits under section 115JA of the Income Tax Act, 1961 (hereinafter referred to as the Act’). The return was processed under section 143(1)(a) of the Act without making an adjustments in the returned income and an intimation dated 13-9-1999 was sent to the petitioner. A copy of this intimation has been produced as Annexure P-1 with the writ petition. As per this intimation, in addition to the tax due, the following interest was levied.
Rs.
Rs.
Interest under section 234A
Interest under section 234A
Interest under section 234B
Interest under section 234B
Interest under section 234C
Interest under section 234C
18,900
18,900
Total
Total
79,263
79,263
Feeling aggrieved, the petitioner challenged the levy of penalty interest in appeal filed before the Commissioner (Appeals), Shimla, on 4-11-1999. Notices for hearing in the appeal were issued for 14-12-2000, and 19-1-2001, which were not complied with. Accordingly, the Commissioner (Appeals) dismissed the appeal vide order dated 19-1-2001, in the following terms -:
“The appeal relates to intimation issued under section 143(1)(a). The only grievance is against charging of interest under section 234A, 234B and 234C.
2. The hearing was fixed on 14-12-2000, and 19-1-2001. None of the notices were complied with. Furthermore the grounds show that the only grievance is against the charging of interest under sections 234A, 234B & 234C. The charge of interest has not been provided as appealable unless there are other grounds. Therefore, the appeal is dismissed in limine.
3. In result, the appeal is dismissed.”
The petitioner did not challenge the order of the Commissioner (Appeals) which, therefore, became final.
It is in this factual background that the petitioner has now approached this court challenging the levy of interest under sections 234A, 234B and 234C of the Act.
2. Mr. A.K. Mittal, appearing on behalf of the petitioner, contended that since the liability to pay income-tax had arisen due to computation of profits under section 115JA of the Act, the petitioner was not liable to pay the penal interest in view of the decision of the Karnataka High Court in Kwality Biscuits Ltd. v. CIT (2000) 243 1TR 519 (Karn). He further submitted that the levy of such interest can only be justified under ExpIanation 1 to section 234B as substituted by the Finance Act, 2001, which had been made applicable retrospectively with effect from 1-4-1989. He pleaded that since the provision for charge of interest has to be construed as substantive law and not merely a machinery provision, it could not be made operative retrospectively. He, therefore, challenged the vires of ExpIanation 1 insofar it operated retrospectively on the ground that it was bad and arbitrary and violated articles 14, 19 and 265 of the Constitution of India.. He also relied on the decision of the Patna High Court in Ranchi Club Ltd. v. CIT & Ors (1996) 217 ITR 72 (Pat) which had been affirmed by the Supreme Court in CIT & Ors. v. Ranchi Club Ltd. (2001) 247 ITR 209 (SC).
2. Mr. A.K. Mittal, appearing on behalf of the petitioner, contended that since the liability to pay income-tax had arisen due to computation of profits under section 115JA of the Act, the petitioner was not liable to pay the penal interest in view of the decision of the Karnataka High Court in Kwality Biscuits Ltd. v. CIT (2000) 243 1TR 519 (Karn). He further submitted that the levy of such interest can only be justified under ExpIanation 1 to section 234B as substituted by the Finance Act, 2001, which had been made applicable retrospectively with effect from 1-4-1989. He pleaded that since the provision for charge of interest has to be construed as substantive law and not merely a machinery provision, it could not be made operative retrospectively. He, therefore, challenged the vires of ExpIanation 1 insofar it operated retrospectively on the ground that it was bad and arbitrary and violated articles 14, 19 and 265 of the Constitution of India.. He also relied on the decision of the Patna High Court in Ranchi Club Ltd. v. CIT & Ors (1996) 217 ITR 72 (Pat) which had been affirmed by the Supreme Court in CIT & Ors. v. Ranchi Club Ltd. (2001) 247 ITR 209 (SC).
3. On a query from the Bench as to why the petitioner had not appeared before the Commissioner (Appeals), Shimla, and as to why no further appeal had been preferred before the Tribunal against the order of the Commissioner (Appeals), Shri Mittal stated that the appeal had been filed erroneously as there is no provision for appeal against an intimation under section 143(1)(a) of the Act.
3. On a query from the Bench as to why the petitioner had not appeared before the Commissioner (Appeals), Shimla, and as to why no further appeal had been preferred before the Tribunal against the order of the Commissioner (Appeals), Shri Mittal stated that the appeal had been filed erroneously as there is no provision for appeal against an intimation under section 143(1)(a) of the Act.
4. After hearing the counsel for the petitioner, we are of the view that the challenge to the vires of the retrospective operation of ExpIanation1 to section 234B of the Act was substituted by the Finance Act, 2001, is of academic interest only. In the case in hand, the interest under sections 234A, 234B and 234C had been levied on 13-9-1999 under the unamended provisions. There is no order seeking to justify this levy under Explanation 1 to section 234B as substituted by the Finance Act, 2001. In this view of the matter, it is not necessary for us to go into the validity of the retrospective operation of the said ExpIanation 1.
4. After hearing the counsel for the petitioner, we are of the view that the challenge to the vires of the retrospective operation of ExpIanation1 to section 234B of the Act was substituted by the Finance Act, 2001, is of academic interest only. In the case in hand, the interest under sections 234A, 234B and 234C had been levied on 13-9-1999 under the unamended provisions. There is no order seeking to justify this levy under Explanation 1 to section 234B as substituted by the Finance Act, 2001. In this view of the matter, it is not necessary for us to go into the validity of the retrospective operation of the said ExpIanation 1.
5. Coming to the challenge of the petitioner to the levy of penal interest as per intimation dated 13-9-1999, we are of the view that the writ petition deserves to be dismissed on the ground of delay and laches alone. The interest had been levied vide intimation under section 143(1)(a) of the Act, dated 13-9-1999 and as per the petitioner’s own showing, no appeal was provided against the intimation. The petitioner has explained that the appeal before the Commissioner (Appeals), Shimla, had been filed “erroneously”. There is no explanation for the delay of about two years in approaching this court. Further, even if it were to be assumed that the petitioner had been pursuing a wrong remedy of appeal under a mistaken belief of law, it had, at least by December, 2000, realised that the appeal had been erroneously filed, when it did not comply with the notices of hearing issued by the Commissioner (Appeals). There is no explanation for the delay after December, 2000. Still further, the appeal was also dismissed by the Commissioner (Appeals) in January, 2001 and yet no steps were taken to challenge the levy of penal interest thereafter. In the absence of any explanation, much less a satisfactory explanation, for this delay, we are satisfied that the writ petition deserves to be dismissed on the ground of delay and laches.
5. Coming to the challenge of the petitioner to the levy of penal interest as per intimation dated 13-9-1999, we are of the view that the writ petition deserves to be dismissed on the ground of delay and laches alone. The interest had been levied vide intimation under section 143(1)(a) of the Act, dated 13-9-1999 and as per the petitioner’s own showing, no appeal was provided against the intimation. The petitioner has explained that the appeal before the Commissioner (Appeals), Shimla, had been filed “erroneously”. There is no explanation for the delay of about two years in approaching this court. Further, even if it were to be assumed that the petitioner had been pursuing a wrong remedy of appeal under a mistaken belief of law, it had, at least by December, 2000, realised that the appeal had been erroneously filed, when it did not comply with the notices of hearing issued by the Commissioner (Appeals). There is no explanation for the delay after December, 2000. Still further, the appeal was also dismissed by the Commissioner (Appeals) in January, 2001 and yet no steps were taken to challenge the levy of penal interest thereafter. In the absence of any explanation, much less a satisfactory explanation, for this delay, we are satisfied that the writ petition deserves to be dismissed on the ground of delay and laches.
6. We may also mention that the writ petition does not disclose as to what was the income as a result of normal computation under the Act. In the case of Kwality Biscuits Ltd. (supra), the Karnataka High Court was dealing with a case, where income as per the normal computation under the Act led to a negative figure and still the assessee was made liable to pay tax on the basis of computation of income under section 115J of the Act. It was under these circumstances that levy of interest under sections 234B and 234C had been cancelled. Further, this judgment is no authority for cancellation of interest under section 234A which is leviable on account of delay in filing of return. The decision of Patna High Court in the case of Ranchi Club Ltd. (supra) is also not applicable to the facts of the present case. In that case, the dispute was whether penal interest under sections 234A and 234B was leviable on the returned income or on the assessed income. There is no such dispute in the present case, The returned income in the present case is the same as has been determined as taxable income as per the intimation dated 13-9-1999.
6. We may also mention that the writ petition does not disclose as to what was the income as a result of normal computation under the Act. In the case of Kwality Biscuits Ltd. (supra), the Karnataka High Court was dealing with a case, where income as per the normal computation under the Act led to a negative figure and still the assessee was made liable to pay tax on the basis of computation of income under section 115J of the Act. It was under these circumstances that levy of interest under sections 234B and 234C had been cancelled. Further, this judgment is no authority for cancellation of interest under section 234A which is leviable on account of delay in filing of return. The decision of Patna High Court in the case of Ranchi Club Ltd. (supra) is also not applicable to the facts of the present case. In that case, the dispute was whether penal interest under sections 234A and 234B was leviable on the returned income or on the assessed income. There is no such dispute in the present case, The returned income in the present case is the same as has been determined as taxable income as per the intimation dated 13-9-1999.
In view of the aforesaid discussion, the writ petition is dismissed in Iimine.
OPEN