S. Bandyopadhyay, A.M.
The only issue in this departmental appeal relates to whether the Commissioner (Appeals) has been correct in considering the question of charging of interest under section 158BFA(1) and in restoring the matter back to the file of the assessing officer for fresh consideration.
2. The facts of the case, in a nutshell, are that a search and seizure operation was conducted in the premises of Late Ratan Lal Jain on 7-8-1997. A notice was issued by the assessing officer under section 158BC on 5-11-1997, asking the assessee to produce his block return of undisclosed income in relation to the search. The said notice was served on the assessee on 7-11-1977. The assessee requested the assessing officer repeatedly to provide the xerox copies of the seized documents so that he might be able to file his return of undisclosed income. The said copies were not provided to the assessing officer for a long time. Ultimately, however, the assessing officer agreed to provide photocopies of the seized documents to the assessee on 28-9-1998. Meanwhile, however, the assessee, Shri Ratan Lal Jain had died on 20-8-1998.
Since Late Ratan Lal Jain used to manage the entire affairs of his business, his death is stated to have created a total vacuum in functioning of his business, inasmuch as it became very difficult to decipher what had been written in the seized documents. Professional help was, therefore, sought for and finally, the cost from xeroxing the seized documents was deposited by the legal heir of the late assessee on 4-11-1998, with the department. It is also stated in this connection that along with the filing petitions for being provided with the copies of the seized documents, the late assessee had been careful enough to deposit a total amount of Rs. 15,00,000 on 16-2-1998. His legal heir also deposited another amount of Rs. 15,00,000 on 22-12-1998. All these deposits were made against the demand which might arise out of the undisclosed income of the assessee as a result of the search and seizure proceeding.
3. After stating the abovementioned facts, the Commissioner (Appeals) referred to the judgment of the Hon'ble Madhya Pradesh High Court in the case of Khemchand Chandwan v. Dy. CIT (2000) 164 CTR (MP) 163, in which the Hon'ble Madhya Pradesh High Court had directed the assessing officer in that case to supply the assessee with copies of seized materials and to condone the delay involved in filing of the block return by that assessee in the process. The Commissioner (Appeals) discussed in this connection that there was no default on the part of the assessee or his successors towards filing of the block return of undisclosed income, but that the delay had occurred due to two reasons beyond the control of the assessee, viz., that the assessee had not been supplied with the copies of the seized documents in spite of repeated requests and that the assessee Shri Ratan Lal Jain, expired on 20-8-1998, leaving his successors in a chaotic condition. The Commissioner (Appeals) thus came to the conclusion that the assessing officer should, therefore, condone the delay in filing of the block return caused due to the abovementioned two factors.
4. The Commissioner (Appeals) thereafter discusses that the photocopies of the seized documents were provided to the assessee on 4-11-1998, and, therefore, the legal heir of the assessee got time of further thirty days therefrom to file the block return. The Commissioner (Appeals) mentions that the amount of Rs. 25,00,000 having been deposited, meanwhile against the probable demand likely to arise in respect of the undisclosed income. Ultimately, the Commissioner (Appeals) considered it fit to refer the matter back to the file of the assessing officer for scrutinizing as to how and when and in what manner the xerox copies had been supplied by the department to the assessee/his successors and whether whatever had been supplied were enough for the successors of the assessee to file return of income for the block period. The Commissioner (Appeals) furthermore held that if it be demonstrated by the successors of the assessee before the assessing officer that the delay was not attributable to the assessee, then as per the judgment of the Hon'ble Madhya Pradesh High Court (as cited above), the delay would have to be condoned.
5. At the stage of the hearing of this appeal before us, the learned Departmental Representative strongly assails the order of the Commissioner (Appeals) by arguing that charging of interest under section 158BFA being mandatory, the question of condoning the delay and not charging such interest cannot arise. On the other hand, the learned counsel for the assessee supports the order of the learned Commissioner (Appeals).
6. In our view, although the provisions for charging interest under section 158BFA, in case of delayed filing of block return, seems to be mandatory, yet, inasmuch as, interest is of penal nature, at least to some extent, in such a case, it has got to be considered that if the delay be not attributable to the assessee, the assessee cannot be penalised by way of charging of interest under section 158BFA. So far as the present case is concerned, the facts, as discussed by the learned Commissioner (Appeals) clearly show that it was beyond the control of the assessee to file his block return within the time-limit as allowed by the assessing officer. The department cannot ask the assessee to do something impossible and at the same time, penalise him for not being able to do so. In the instant case, because of the inability on the part of the assessing officer to supply the assessee with the copies of the seized documents, the delay mainly arose. Thereafter, the other factor, viz., the death of the assessee also caused difficulty, in filing the block return. Again, the Commissioner (Appeals) has not exactly deleted the levy of the penalty. He has merely directed the assessing officer to find out whether the delay could be considered to be attributable to the assessee or not. We fully agree with the view expressed by him that if the delay be not found to be attributable to the assessee, then the levy of interest under section 158BFA cannot be considered to be mandatory. Whatever language might be used in the relevant section, the purpose of enacting the provision and the possibilities of the situation are certainly required to be taken into account in considering the leviability of interest. Finally, we uphold the order of the learned Commissioner (Appeals).
7. In the result, the departmental appeal is dismissed.