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Section 139(8) of the Income-tax Act, 1961 - Return of income - Interest for late filing of - Assessment year 1974-75 - Whether Assessing Officer as well as Commissioner can reject explanation for delay in filing return for purpose of waiver of interest when same has been accepted for purpose of dropping penalty proceedings - Held, no HELD Rule 117A(3) shows that the Assessing Officer has the power to reduce or waive the interest on the assessee provided he produces evidence to the satisfaction of the Assessing Officer that he was prevented by sufficient cause from furnishing the return in time. The explanation given by the petitioner with regard to the delay in filing of the return was accepted by the Assessing Officer for dropping the penalty proceedings. However the same reasoning was not accepted for granting relief to the petitioner by way of waiver of interest. The Assessing Officer exercises quasi-judicial functions. Therefore, the decision to drop the penalty proceedings has to be supported by valid reasons. [Para 6] While exercising the discretion under rule 117A(5) also the Assessing Officer cannot act arbitrarily. Thus, the respondent could not have rejected the explanation for delay in filing the return for the purpose of waiver of interest when the same had been accepted for purpose of dropping the penalty proceedings. Accepting such a position would negative the equality clause enshrined in article 14 of the Constitution. Thus, the impugned orders were held to be suffering from the vice of arbitrariness. [Para 7] S.C. Nagpal for the Petitioner. N.L. Sharma for the Respondent. JUDGMENT 1. In this writ petition under article 226/227 of the Constitution of India, the prayer is made for the issuance of a writ in the nature ofcertiorari quashing the order dated March 6, 1981 (annexure P2), passed by respondent No. 1 and the order dated February 25, 1986, of respondent No. 2 upholding the order of respondent No. 1 passed under rule 117A of the Income-tax Rules, 1962, read with section 139(8) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"). The petitioner is a Regis- tered firm under the Partnership Act as well as under the Income-tax…

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