Law:

Section:

Section 139(8), read with section 154 of the Income-tax Act, 1961 - Return of income - Interest for late filing of - Assessment year 1971-72 - ITO omitted to levy interest under section 139(8) - He, therefore, rectified order under section 154 by levying interest on assessed sum - Tribunal held that ITO had waived charging of interest - Whether ITO had no discretion to waive interest without prior approval of IAC - Held, yes - Whether since such approval from IAC was not obtained, waiver of interest could not be implied - Held, yes - Whether non-charging of interest was clearly an error apparent on face of record and, therefore, ITO was correct in charging interest by taking recourse to section 154 - Held, yes FACTS The assessee filed late return for the assessment year in question. The ITO was bound to charge interest in terms of the provisions contained in section 139(8), which was not charged. He, therefore, initiated proceedings under section 154 and rectified the order by charging interest on the assessed sum. The AAC set aside the order of the ITO on the footing that the ITO who had made the assessment must be deemed to have waived the charging of interest. The Tribunal upheld the decision of the AAC following the decision of the Supreme Court in S.A.L. Narayan Row v.Ishwarlal Bhagwan Das [1965] 57 ITR 149 . On reference: HELD The decision of the Supreme Court in the case of S.A.L. Narayan Row (supra) was no more the law of the land after the amendment of section 139(8) and the enactment of rule 117A of the Income-tax Rules. The liability to charge interest had been made obligatory under section 139(8). The only relief which an assessee could expect was an order for reduction or for waiver in terms of rule 117A. Rule 117A empowers an ITO to waive charging of interest in terms of clauses (iv) and (v) of rule 117A. Those provisions, however, are hedged in by a proviso which laid down that where the amount of interest exceeds Rs. 1,000, reduction or waiver can be ordered only with the previous approval of the IAC. In the instant case, it was nobody's case that the approval of the IAC had been obtained. In that view of the matter, waiver could not be implied.…

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