JUDGMENT
Mian Jalal-Ud-Din, J.
1. The petitioner is a registered firm. It filed the return for the assessment year 1967-68 before the Income-tax Officer, “C” Ward, Jammu (hereinafter referred as “Income-tax Officer”). Assessment was made by the Income-tax Officer as indicated in the order dated July 12, 1969, and the petitioner was asked to pay tax. In the demand notice issued, interest under Sections 139(1) and 217 of the Income-tax Act (hereinafter referred as “the Act”) was shown to have been charged (vide annexure “A”). Aggrieved by the levy of interest, the petitioner filed an appeal before the Appellate Assistant Commissioner of Income-tax, Jammu, who rejected the same. A further appeal was taken to the Appellate Tribunal of Income-tax, Chandigarh, but the petitioner was unsuccessful. The petitioner’s contention before these two forums was that interest charged under Sections 139(1) and 217 of the Act was wrongly levied by the Income-tax Officer as under law no such interest could be charged from the petitioner unless a specific order in this behalf was made in the assessment order itself by the Income-tax Officer. As no such order was made by the Income-tax Officer interest could not be levied in the demand notice. It was also urged before the appellate authorities that the provisions of Section 139(1) of the Act were not attracted to the case inasmuch as the petitioner never applied for any extension of time and unless a specific prayer in writing was made to the Income-tax Officer for grant of extension of time and the time was extended, the relevant provisions of Section 139(1) and (3) of the Act could not be attracted for the purpose of charging interest. These contentions of the petitioner, however, were not entertained by the appellate authorities and the appeals were dismissed on the preliminary legal ground that no appeals were competent under the Act against the levy of interest under Sections 139 and 217 of the Act (vide order annexure “B”), By the present petition, the petitioner now seeks to quash the aforementioned orders calling upon the petitioner to pay the interest. It is claimed that interest under Sections 139(1) and 217 of the Act has been charged by the Income-tax Officer in contravention of the requirement of the section. No application seeking extension of time for filing the return was made and no extension was granted by respondent No. 1. Therefore, no interest could be charged.
2. Nobody has appeared on behalf of the respondents. The ‘record however, reveals that a number of opportunities were given to the respondents to file the returns in the case. Notwithstanding the fact that several opportunities were given and costs were also imposed and even a peremptory order was made, respondents did not file the returns. Even nobody appeared on behalf of the respondents. On March 30, 1976, however, Mr. S.P. Gupta, advocate, appeared on behalf of Mr. J.N. Bhan, the standing counsel for the income-tax department and sought time to argue the case. The court passed a detailed order granting time to enable Mr. Bhan to come to Jammu to argue the case also observing that the case would be heard on merits without objections of the respondents. The case was accordingly adjourned to 19th April, 1976. On this date when the case was called, nobody appeared on behalf of the respondents. Therefore, the arguments were heard on behalf of the petitioner alone.
3. Appearing for the petitioner, Mr. Subash Dutt submitted that the demand notice calling upon the petitioner to pay the total amount of Rs. 2,183 (Rs. 565 by way of tax and Rs. 1,995 and Rs. 188 by way of interest) under Sections 139 and 217, respectively, was bad in law, inasmuch as it was in violation of the express provisions of Sections 139(1) and 217 and other provisions of the Act. It is submitted that, firstly, without incorporating in the order itself that the assessee was liable to pay interest under Sections 139 and 217, no demand notice could be issued ; secondly, that without extending time under Section 139, the Income-tax Officer was not justified in charging interest under the section.
4. The case of the petitioner lies within a narrow compass. Initially, it may be mentioned here that when the petition was admitted rule nisi was issued, respondents were asked to appear and show cause as to why the impugned order be not quashed. Nobody has appeared on behalf of the respondents to contest the points raised in the petition by the assessee-petitioner. Therefore, on this ground alone when the respondents have not furnished any reply to the petition, the writ can be issued.
5. Even on merits it is found that there is considerable force in the contention raised by Mr. Dutt that as no application for extension of the date for furnishing of the return was made in terms of Section 139 and as the time was not extended by the Income-tax Officer, therefore, Section 139 of Act did not come into operation. It is noticed that under Section 139 every person whose total income in respect of which he is assessable during the previous year exceeds the maximum amount which is not chargeable to income-tax has to furnish the return to his Income-tax Officer of his income in the prescribed form setting forth the relevant particulars; provided that on an application made in the prescribed manner the Income-tax Officer may in his discretion extend the date for furnishing the return, under Sub-clause (iii) up to any period falling beyond the dates mentioned in Clauses (i) and (ii) in which case interest at 9% per annum shall be payable from the first day of October or first day of January, as the case may be, of the assessment year to the date of furnishing of the returns. Now, in the present case, no application for extension of the date for furnishing the return was made by the assessee-petitioner and the Income-tax Officer did not extend the date for submitting the return. The charging of interest under the proviso to Section 139(1) was not, therefore, warranted. It is only when an application is made and extension is sought and granted that the Income-tax Officer would be justified under the section to charge interest. Fortunately, the matter is no longer res integra as this very point came up for consideration before a Division Bench of the Delhi High Court in the case of Garg & Co. v. Commissioner of Income-tax [1974] 97 ITR 639 (Delhi) and also before the Andhra Pradesh High Court in Kishanlal Haricharan v. Income-tax Officer [1971] 82 ITR 660 (AP). The view has been expressed in these authorities that the assessee is liable to pay penal interest under Clause (iii) only if he had asked for extension of time for filing the return, otherwise not. It was, therefore, to meet this situation that an amendment was introduced in the proviso to Section 139(1) in the year 1970. The proviso reads as under :
“Provided that on an application made in the prescribed manner, the Income-tax Officer may, in his discretion extend the date for furnishing the return, and, notwithstanding that the date is so extended, interest shall be chargeable in accordance with the provisions of Sub-section (8).” Sub-section (8) was amended by the Finance Act of 1972 which reads as follows :
“(8) (a) Where the return under Sub-section (1) or Sub-section (2) or Sub-section (4) for an assessment year is furnished after the specified date, or is not furnished, then [whether or not the Income-tax Officer has extended the date for furnishing the return under Sub-section (1) or Sub-section (2)] the assessee shall be liable to pay simple interest at twelve per cent. per annum, reckoned from the day immediately following the specified date to the date of the furnishing of the return or, where no return has been furnished, the date of completion of the assessment under Section 144, on the amount of the tax payable on the total income as determined on regular assessment, as reduced by the advance tax, if any, paid, and any tax deducted at source.”
6. All this lends support to the view that the position obtaining in the relevant assessment year was that unless an application seeking extension in the date was made and the date was extended by an order of the Income-tax Officer no interest under Section 139 could be charged.
7. Again, it is argued that it is not incorporated in the order of assessment of the Income-tax Officer that penal interest was charged in consequence of the default of the petitioner-assessee to have filed the returns in time and for his not having paid the advance tax. No such assessment order has been brought to the notice of the court. Unless the assessment order makes a clear mention of these facts, the petitioner cannot be asked by means of a simple demand notice to pay the penal tax both under Sections 139 and 217 of the Act.
8. For the foregoing reasons the writ petition must succeed. I, therefore, allow the petition, quash the impugned order asking the petitioner to pay interest under Sections 139(1) and 217 of the Income-tax Act. I, however, make no order as to costs.
