Madras H.C : The petitioner challenges the levy of penalty under s. 271(1)(a) of the IT Act, 1961, as confirmed by the CIT in revision under s. 264 of the Act. Notice of motion was ordered by S. Ramalingam J. on July 21, 1989.

High Court Of Madras

Ravi Steel Corporation vs. ITO & Anr.

Section 271(1)(a)

Bakthavatsalam, J.

Writ Petition No. 7298 of 1989

3rd October, 1989

Counsel Appeared

R. Janakiraman, for the Petitioner : C.V. Rajan, for the Respondent

BAKTHAVATSALAM ,J.:

The petitioner challenges the levy of penalty under s. 271(1)(a) of the IT Act, 1961, as confirmed by the CIT in revision under s. 264 of the Act. Notice of motion was ordered by S. Ramalingam J. on July 21, 1989.

Mr. C. V. Rajan, Government Advocate, appears for the Department. He points out the amendment made to s. 139 of the IT Act under the Taxation Laws .(Amendment) Act, 1970, w.e.f. April 1, 1971. Under the amended- provision, the levy of interest is automatic unlike the provision as. it was before the amendment. Therefore, in my view, the decision reported in CIT vs. M. Chandra Sekhar (1984) 41 CTR (Bom) 183 : (1985) 151 ITR 433 (SC) is not applicable to the facts of the present case. The assessment year in this case is 1981-82 to which the amended section applies.

Mr. R. Janakiraman, learned counsel for the petitioner, relies on the decision reported in Ajit Singh Rais vs. CIT(1988) 72 CTR (Gau) 244 : (1988) 174 ITR 418 (Gauhati). I find from the facts of that case, that that case related to the asst. yrs. 1963-64 to 1967-68. As such, it will not apply to the facts of the present case.

It is well settled that levy of interest Is not penal interest in nature and in appropriate cases, therefore, it will be permissible for the assessing authority to levy interest besides imposing a penalty see the decisions reported in Express Newspapers (P.) Ltd. vs. ITO (1973) 88 ITR 255 (Mad) and Kodur Orange Produce Co. vs. CIT 1977 CTR (Mad) 455 : (1977) 110 ITR 124 (Mad). There are no merits in the contention raised by learned counsel for the petitioner stating that once the assessing authority has extended the time, it should be presumed that penalty is not leviable. The writ petition will, therefore, stand dismissed. No costs.

[Citation : 187 ITR 684]

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