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Explanation 2 to sub-section (8)(a) of section 139 of the income-tax Act, 1961 - Return-Interest for late filing of return by firm-Interest calculated on basis of tax payable treating it as unregistered firm-Whether provisions ultra vires of article 14 of the constitution-Held, no Facts For the assessment year 1974-75, the return by the assessee-firm was due by 30-06-1974 but it was actually filed on 13-09-1974. The ITO raised a demand on account of interest under section 139(8) treating it as an unregistered firm and also rejected its application for waiver of interest. The revision petition before the CIT against such rejection was also dismissed. On reference: Held 1. The provisions of section 139(8) are compensatory in nature, having been enacted on the principle that the Revenue should not suffer the loss for the default of the assessee for not filing the return in time and thus evade payment of tax for the time being. The Legislature has placed the registered firm in a special category for purposes of payment of tax. But there is nothing wrong if the Legislature simultaneously imposes a condition that the entity enjoying such a privileged position must conform to the provisions of law in order to continue enjoying such privileges. The Legislature thought it fit not to give any concessions to registered firms as regards payment of interest with a view to compensate the Revenue loss suffered for nonpayment of tax in time by treating the registered firms on the same footing as the unregistered firms if, by their own default, the imposition of interest (and penalty) becomes leviable. The payment of double of penalty is out of question because penal interest is not penalty at all. It is only by way of compensation. As such, there is also no question of double jeopardy. 2. Hence, the provisions of Explanation 2 to section 139(8)(a) do not suffer from any vice of unconstitutionality. The writ was, accordingly, dismissed. Case review Mahendrakumar Ishwarlal & Co. v. Union of India [1973] 91 ITR 101 (Mad.), Ganesh Das Sreeram v.ITO [1974] 93 ITR 19 (Gauhati), Mahendrakumar Ishwarlal & Co. v. Union of India [1974] 94 ITR 65(Mad.), Chhotalal & Co. v. ITO…

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