M/S.K. GOVINDAN & SONS vs. C.I.T.,COCHIN

C.A. No.-001144-001144 - 1999Supreme Court01 December 2000Bench: S.P.BHARUCHA Y.K.SABHARWAKM D.P.MOHAPATRO7 pages
For Petitioner: BABY KRISHNANFor Respondent: RR-EX-PARTE
AI SummaryDismissed

What were the facts?

For assessment year 1984-85, the assessee filed a return in response to a notice under Section 148 of the Income Tax Act, 1961. The assessing authority charged interest under Sections 139(8) and 217. The Commissioner of Income Tax (Appeals) accepted the assessee's contention regarding interest under Section 139(8), holding that the assessment was not a 'regular assessment'. The Income Tax Appellate Tribunal upheld this view. The Revenue filed an appeal, and the High Court, in compliance with a direction, referred a question of law. The High Court answered the question in the affirmative, holding that an assessment made for the first time under Section 147(a) read with Section 148 is a 'regular assessment' and thus interest under Section 139(8) could be legally charged. This judgment is under challenge by the assessee.

What did the Supreme Court hold?

The Supreme Court held that a first or initial assessment under Section 147 of the Act is a 'regular assessment' within the meaning of Section 139(8) of the Act. The Court found that Explanation 2 to Section 139(8), introduced by the Taxation Laws (Amendment) Act, 1984, is merely a clarificatory provision, intended to remove doubts raised by certain High Court decisions that took a contrary view. The Court reasoned that the Parliament's intent in adding the explanation was to clarify the existing position rather than to amend the law. Therefore, the explanation has application to the assessment year 1984-85. The Court approved the decisions of the Madras, Delhi, and Kerala High Courts, which held that a first or initial assessment under Section 147 is a 'regular assessment'. The appeal filed by the assessee was dismissed.

What were the issues?

1. Whether, in an assessment made under Section 147 of the Income Tax Act, 1961, it is open to the assessing authority to charge interest for default in filing a return under Section 139(8) of the Act, and what constitutes a 'regular assessment' for the purpose of Section 139(8)? (Question of law) Assessee's contentions: - The assessment made under Section 147 was not a 'regular assessment' as defined in Section 2(40) of the Act, and therefore, no interest could be charged under Section 139(8). - Explanation 2 to Section 139(8), introduced by the Taxation Laws (Amendment) Act, 1984, is clarificatory in nature and has application to the assessment year 1984-85. Revenue's contentions: - The High Court held that Explanation 2 to Section 139(8) is clarificatory and that an assessment made for the first time under Section 147(a) read with Section 148 is a 'regular assessment', allowing for the levy of interest under Section 139(8).

Which sections of the Income-tax Act were involved?

Section 147,Section 139(8),Section 217,Section 2(40),Section 148,Section 143(3),Section 256(1),Section 144,Section 143,Section 142,Section 153,Section 214,Section 215

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 7 CASE NO.: Appeal (civil) 1144 1999 PETITIONER: M/S K. GOVINDAN & SONS. Vs. RESPONDENT: C.I.T. COCHIN DATE OF JUDGMENT: 01/12/2000 BENCH: S.P.Bharucha, Y.K.Sabharwakm D.P.Mohapatro

JUDGMENT: L.....I.........T.......T.......T.......T.......T.......T..J J U D G M E N T D.P.MOHAPATRA,J.

The question that arises for determination in this appeal is whether in an assessment made under Section 147 of the Income Tax Act, 1961 (for short ’the Act’) it is open to the assessing authority to charge interest for default in filing return under Section 139(8) of the Act? For answering this question it is necessary to determine what is a ’regular assessment’ for the purpose of Section 139(8) of the Act.

Shorn of unnecessary details the facts leading to the present proceeding may be stated thus: For the assessment@@ JJJJJJJJJJJJJJJJJJJJJJJJJJJJJJ year 1984-85 the assessee, appellant herein, filed a return of income in response to a notice issued under Section 148 of the Act. While completing the assessment the assessing authority charged interest under Section 139(8

The order continues below.

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