JUDGMENT
Satish Chandra, C.J. – These three writ petitions raise common questions. They are all directed against an order of the Income Tax Officer, Kanpur dated October 30, 1975, dismissing a revision filed by the petitioners u/s. 264 of the Income Tax Act, refusing to waive or reduce the interest imposed upon the petitioners for late filing of the return as well as u/s. 217(1) of the Act, for failure to file the requisite estimate of income.
2. It appears that the petitioners premises were raided on October 18, 1973 and the books of account for the current year beginning April 1, 1973, were seized. The last date for filing of the return in the ordinary circumstances for the year 1974-75 and July 31, 1974. It appears that the petitioners applied for inspection of the account books which had been seized by the Department. This prayer was allowed. The petitioners also applied for extension of time for filing of the return which prayer was also acceded to. Ultimately, the petitioners filed a return of income on November 30, 1974 disclosing an income of Rs. 4,10,317/-. It seems that initially the petitioners wanted to disclose an income of Rs. 60,317/- but ultimately in accordance with an oral settlement with the Commissioner of Income Tax the actual return filed was for Rs. 4,10,317/-. This return was accepted and the Income Tax Officer passed an assessment order on its basis.
3. In due course, the petitioners received a notice of demand. Under it, in addition to demand of tax, the Income Tax Officer had charged interest u/s. 139(8) for late filing of the return as well as for failure to file estimate u/s. 217(1) of the Act.
4. Aggrieved, the petitioners filed a revision u/s. 264 of the Act. By the impugned order, the revision was dismissed. The Commissioner held that the raid was conducted on October 18, 1973, the assessee was always free to inspect his books of account and to extract the necessary information. The assessee had sufficient time to prepare the accounts and file the return in time. He did not see any reason for waiving or reducing the penalty of Rs. 23,866/-.
5. In regard to the levy of interest, the Commissioner of Income Tax observed :-
“Similarly for the levy of interest u/s. 217 there is hardly any merit in the petition of the assessee. The assessee when he made a disclosure and sought certain concession under other penal sections of the Act he has to bear the responsibility for the payment of interest under S. 215, chargeable in accordance with the law.”
Mr. Gulati, learned counsel for the petitioners submitted that the notice of demand was bad. The Income Tax Officer had not given any reasoned order imposing the interest under the two counts and also because no notice was given to the assessee to show cause as to why interest should not be charged. There is no merit in either of the two submissions. The provisions of the statute, namely, S. 139(1) as well as S. 227(1) specifically provided for automatic charging of interest. In the case of late filing of the return, the provision says that interest will be chargeable notwithstanding that time may have been extended for filing the return. There is a specific provision authorising the Income Tax Officer to waive or reduce the interest which is so chargeable under the main provision. In addition even if the requirement of a notice prior to imposition of interest is construed to be there yet it is not a case for interference because the petitioners had ample opportunity to have their say before the Commissioner when they filed a revision.
6. Similarly, we are not satisfied that the order imposing interest has to be a speaking order, because the imposition is automatic. It is only a matter of calculation. The power to waive or reduce is given in a different provision under which a speaking order can be expected. In the present case, the petitioners directly applied to the Commissioner who had passed a speaking order. His order, therefore, cannot be set aside on either of the two aforesaid grounds.
7. On merits, it was argued that under Rule 117-A(5), penalty could he waived because the assessee had produced evidence to satisfy the Income Tax Officer that he was prevented by sufficient cause from filing the return. The Commissioner has found that the assessee had sufficient time in which he could prepare his return, after preparation of the books of account. We are not satisfied that this finding suffers from any manifest error of law. The books were seized on October 18, 1973. The assessee had enough time from October 18, 1973 till July 31, 1974 when the accounting period ended to inspect the books and to file the return. We are unable to hold that the view taken by the Commissioner is unreasonable much less, arbitrary.
8. In relation to the interest levied under S. 217, the position is that according to the appellate order dated December 2, 1977 which disposed of the appeal filed by the petitioners against the imposition of penalty for the default in not filing the estimate in time, it appears that the estimate in Form No. 29 was filed on March 12, 1974 and the tax as per this estimate, was paid. The estimate had to be filed on or before April 1, 1974. So it appears that the estimate was in fact filed before the prescribed time for it. Consequently, it is difficult to say that the assessee failed to file the return within the time as contemplated under the Act. Learned counsel invited our attention to the fact that this appellate order has been filed along with the rejoinder affidavit in respect of which he had no opportunity to verify the facts. We are, however, not disposed to adjourn the hearing of the case. In this view, the case will have to be sent back for redecision on this point.
9. Another question which cropped up during the hearing was whether the estimate which was said to have been filed on March 12, 1974 was a correct estimate. In this connection, it may be noticed that the assessee originally intended to file a return of income of Rs. 60,317/-. But ultimately he filed the return at Rs. 4,10,317/-. It has not been indicated as to whether the estimate filed under S. 217(1) showed an income of Rs. 60,000/- and odd or Rs. 4 lacs and odd. If it showed an income of Rs. 60,000/- and odd, the question would again be whether the levy of interest under S. 217(1) was liable to be waived in toto or in part. This and the other relevant circumstances will have to be gone into and found by the Commissioner.
10. The petitions, therefore, succeed and are allowed in part. The order of the Commissioner insofar as it refused to interfere with order of the Income Tax Officer imposing interest for late filing of the return is concerned, is maintained. The part of order relating to levy of interest u/s. 217 is set aside and the matter is sent back to the Commissioner for redecision of the petitioners application in that respect.
11. In the result, writ petitions Nos. 51 and 53 of 1976 are allowed in part as mentioned above. Writ petition No. 52 of 1976 is dismissed. In view of the divided success, the parties shall bear their own costs.
