Interest is not leviable on the tax assessed to the best of judgment under Sec. 144 after the assessee has filed the return under Sec. 139 of the Act.

Sachchidanand Jha, J.

1. The petitioner, a company registered under the Indian Companies Act, has challenged the validity of the assessment order and consequential demand notice under the Income-tax Act, 1961 (hereinafter referred to as "the Act"), for the assessment year 1991-92, so far as it relates to the levy of interest. It has also challenged the vires of the provisions of Secs. 234A and 234B of the Act.

2. I do not think there is any substance in the challenge to the vires of the provisions, for, as is evident from a plain reading of these provisions, they are not penal in nature and, therefore, no element of arbitrariness or violation of rules of natural justice, as alleged, can be attached to them. They merely provide for payment of interest by an assessee who commits default in furnishing the return either under Sec. 139(1) or Sec. 139(4), or in response to a notice under Sec. 142(1) of the Act has either failed to pay the advance tax or the advance tax already paid is less than 90 per cent. of the tax assessed against him. No person can make a grievance as to any provision which enjoins upon him the obligation to submit the return in respect of his taxable income or to pay advance tax at the appropriate time and within the prescribed period. It is clear, therefore, that any default committed in that regard even though likely to visit him with evil consequences is of his own making. The consequence thus cannot be said to be penal. The amount on which the interest is levied is the amount which can legitimately be said to be public revenue which although payable by the assessee, has actually not been paid by him. Levy of interest on such amount which the assessee withholds and makes use of cannot be said to be anything but a compensatory measure meant to offset the loss which the Revenue suffers on account of nonpayment of the said amount. This becomes evident also from the fact that the sections contain specific provisions in regard to the period for which this additional liability is imposed on the defaulting assessees.

3. The question that really arises for consideration is whether the levy of interest on the tax assessed to the best of judgment under Sec. 144 after the assessee has filed the return under Sec. 139 of the Act is legally sustainable. The assessment order does not mention about levy of any interest. It has merely held the sum of Rs. 1,58,000 described as "entrance fee" to be includible within the taxable income and assessed tax thereon as well. In the demand notice under Sec. 156 of the Act, the sum of Rs. 78,322 has, however, been mentioned as the interest payable on tax due, i.e., Rs. 69,434. The plea of the petitioner is that the interest under Secs. 234A and 234B of the Act can be levied only on the tax payable on the returned income and not on the tax payable on the assessed income. Reliance is placed on the decision of the apex court in J.K. Synthetics Ltd. V/s. CTO, AIR 1994 SC 2393 ; [1994] 94 STC 422 (SC).

4. The petitioner has preferred an appeal against the assessment order. The argument of counsel, however, is that what has been challenged before the appellate authority is the inclusion of the amount of "entrance fee" and the computation of the taxable income, and not levy of interest which is not appealable and that being the position, the petitioner has had no option but to approach this court under Articles 226 and 227 of the Constitution.

5. The assessment has been made under Sec. 144 of the Act after the petitioner failed to file the revised return under Sec. 139(4). Earlier there was a notice under Sec. 147 read with Sec. 148 pursuant to which the petitioner had appeared and taken the stand that since the return for the assessment year in question, i.e., 1991-92, had already been filed and the assessment was still pending, the question of filing a fresh return did not arise.

6. As stated above, the assessment order does not mention about the levy of interest. The demand notice