MCC Projects Private Limited, Hyderabad, Hyderabad V. ACIT,Cent Cir-2(4), Hyderabad, Hyderabad

ITA 1643/HYD/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2560 (ITAT-HYDERABAD)
• Duration Of Justice: 9 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 20-06-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 05-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MOHAN REDDY
• Assessee Lawyers: S RAMA RAO
• Keywords: Revised return; Reassessment proceedings
• Section: 143(3); 153A; 234B; 147; 154; 15; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NOS. 1643, 1644, 1645 & 1646/HYD/2016 ASSESSMENT YEARS: 2008-09, 2011-12, 2012-13 & 201 3-14 MCC PROJECTS PVT. LTD., HYDERABAD. PAN AADCM 6098G VS. ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE 2(4), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S. RAMA RAO REVENUE BY : SHRI MOHAN REDDY DATE OF HEARING : 26-09-2017 DATE OF PRONOUNCEMENT : 29-09-2017 O R D E R PER S. RIFAUR RAHMAN, A.M.: THESE APPEAL OF THE ASSESSEE ARE DIRECTED AGAINST SEPARATE ORDERS OF THE LEARNED COMMISSIONER OF INCOME-TAX(A) - 12,(IN SHORT CIT(A) ,HYDERABAD, ALL DATED, 05/08/2016 FOR AY 200 8-09 & TO 2011- 12 TO 2013-14. AS IDENTICAL ISSUE IS INVOLVED IN AL L THESE APPEALS, THEY WERE CLUBBED AND HEARD TOGETHER AND, THEREFORE, FOR THE SAKE OF CONVENIENCE, A COMMON ORDER IS PASSED. 2. TO DISPOSE OF THESE APPEALS, WE REFER TO THE FAC TS FROM AY 2008-09 BEING ITA NO. 1643 /HYD/2016. 3. BRIEFLY THE FACTS OF THE CASE ARE THAT IN THE A SSESSMENT COMPLETED U/S.143(3) RWS 153C, DATED.30-01-2015, TH E AO DETERMINED THE TOTAL INCOME AT RS.2,33,63,020/- AND RAISED TOTAL 2 ITA NOS. 1643 TO 1646/H/16 MCC PROJECTS PVT. LTD., HYD. DEMAND OF RS.13,61,217/-, WHICH INCLUDES INTEREST U /S.234B TO THE EXTENT OF RS. 9,59,717/- AND LATER, THE ASSESSEE TH ROUGH PETITION DATED.09-03-2015 HAD CONTENDED THAT THERE IS A MIST AKE IN CALCULATION OF INTEREST U/S.234B AND REQUESTED FOR RECTIFICATION, WHICH WAS REJECTED BY THE AO ON THE GROUND THAT THE ASSES SMENT IN THIS CASE FOR THE YEAR UNDER CONSIDERATION WAS MADE FOR THE FIRST TIME U/S.153C, AS SUCH THE SAID ASSESSMENT WAS TREATED A S REGULAR ASSESSMENT, AS PER EXPLANATION(2) TO SECTION 234B(1 ) OF THE IT ACT AND FOR PURPOSE OF CALCULATING INTEREST U/S.234B, T HE INCOME DETERMINED U/S.143(3) RWS 153C, HAD TO BE TAKEN INT O CONSIDERATION AND THE PERIOD OF CHARGING OF INTEREST U/S.234B WOU LD BE AS PER THE PROVISIONS OF SECTION 234B(1), WHICH IS FROM THE BE GINNING OF THE ASSESSMENT YEAR, TO THE DATE OF REGULAR ASSESSMENT. 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE P REFERRED AN APPEAL BEFORE THE CIT(A) CONTENDING THAT THE AO CAL CULATED THE INTEREST U/S.234B AS PER THE PROVISIONS OF SEC.234B (1), BY CONSIDERING THE EXPLANATION 1 AND 2 TO SEC.234B(1) WHILE IGNORI NG EXPLANATION 3 AND PROVISIONS OF SEC.234B(3) WHICH ARE APPLICABLE TO THIS CASE. WHILE REFERRING TO THE PROVISIONS OF SEC.234B(3), THE AS SESSEE RELIED ON DECISION OF ITAT, CHENNAI, IN THE CASE OF ACIT, CC- 3, CHENNAI VS. SRI V.N.DEVADOSS (ITA NO.1219 ITR 21) DTD. 04-02-2013. 5. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, EXAMINED THE ISSUE BY REFERRING TO THE PROVISIONS O F SECTION 234B(1) AND 234B(3) AS WELL AS THE DECISION RELIED ON BY TH E ASSESSEE, OBSERVED AS UNDER: 5.3.4 REVERTING TO THE FACTS OF THE CASE, WHERE TH E RETURN OF INCOME FILED ORIGINALLY ON 30-09-2008, WAS PROCESSE D/ASSESSED U/S.143(1) AND THERE WAS NO ASSESSMENT U/S.143(3) A ND ASSESSMENT WAS MADE FOR THE FIRST TIME U/S.153C RWS 143(3) ON 30-01-2015 AND AS SUCH THE ASSESSMENT U/S.143(3) RW S 153C DATED.30-01-2015, IS TREATED AS REGULAR ASSESSMENT, AS PER THE 3 ITA NOS. 1643 TO 1646/H/16 MCC PROJECTS PVT. LTD., HYD. EXPLANATION(2) TO SECTION 234B(1) AND INTEREST NEED TO BE CHARGED AS PER PROVISIONS OF SECTION 234B(1) OF IT ACT, AND IN SUCH A CASE THE PERIOD OF INTEREST STARTS ON FIRST DAY OF ASSESSMENT YEAR OR THE DAY FOLLOWING THE PREVIOUS Y EAR, WHICH IS 01-04-2008, AND END UP WITH THE DATE OF ASSESSME NT U/S.153C RWS 143(3), WHICH IS 30-01-2015, IN THIS C ASE. HOWEVER, IT IS THE CLAIM OF THE ASSESSEE THAT INTER EST U/S.234B SHOULD HAVE BEEN COMPUTED UNDER SUB-SECTION (3) RAT HER THAN SUB-SECTION (1). IT WAS ALSO CLAIMED THAT INTEREST WAS CALCULATED FROM 01-04-2008 TO DATE OF ASSESSMENT U/S.143(3) RW S 153C I.E., 30-01-2015, AS AGAINST FROM DATE OF ASSESSMEN T U/S.143(1) RWS 153C TO ASSESSMENT U/S.153C RWS 143(3) DATED.30 -01- 2015. 5.3.5 IN THIS CONTEXT, IT MAY BE RELEVANT TO OBSERV E THAT INTIMATION U/S.143(1) IS AN ORDER ONLY FOR THE PURP OSE OF SECTION 154,246 AND 264 AND FOR ALL OTHER PURPOSES, IT IS O NLY A NOTICE OF DEMAND. THIS VIEW WAS EXPRESSED IN IT'S DECISION BY KERALA HIGH COURT IN CASE OF CIT VS. K.V.MANAKRAM & CO., ( 245 ITR 353) AND A SIMILAR VIEW TAKEN BY DELHI HIGH COURT I N CASE OF MTNL VS. CBDT (246 ITR 173) AND CALCUTTA HIGH COURT IN CASE OF HILLTOP HOLDINGS INDIA LTD., VS. CIT & ORS. (278 ITR 501). THUS, ON FACTS OF THE CASE AND RATIOS OF JUDICIAL D ECISIONS, IT IS REASONABLE TO HOLD THAT WHERE AN INTIMATION U/S.143 ( 1) CANNOT BE TREATED AS ASSESSMENT AND WHERE THERE IS NO INTE RVENING ORDER OF ASSESSMENT, THE ORDER U/S.143(3) RWS 153C, DATED.30- 01-2015, IS REQUIRED TO BE CONSIDERED AS REGULAR AS SESSMENT AS REFERRED TO IN EXPLANATION(2) OF SECTION 234B(1) AN D IT IS CORRECT TO HOLD THAT INTEREST U/S.234B REQUIRED TO BE COMPU TED/CHARGED AS PER THE PROVISIONS OF SECTION 234B(1), FOR THE P ERIOD OF 01- 04-2008 TO 30-01-2015. THUS, ON THESE LINES, THE ST AND TAKEN BY THE AO IN ORDER U/S.154, DATED.14-08-2015 IS FOU ND TO BE IN ORDER, AND ACCORDINGLY, HIS ACTION OF CHARGING INTE REST U/S 234B, AS PER PROVISIONS OF SECTION 234B(1) IS UPHELD. 6. AGGRIEVED WITH THE ORDER OF THE CIT(A), THE ASSE SSEE IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF A PPEAL, WHICH ARE COMMON IN ALL THE APPEALS UNDER CONSIDERATION : 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME- TAX (APPEALS) IS ERRONEOUS TO THE EXTENT IT IS PREJUDIC IAL TO THE APPELLANT. 2. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFIRMING THE CHARGING OF INTEREST U/S 234B OF THE INCOME-TAX ACT. 4 ITA NOS. 1643 TO 1646/H/16 MCC PROJECTS PVT. LTD., HYD. 3. THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS) OUGHT TO HAVE SEEN THAT INTEREST U/S 234B IS CHARGEABLE FROM THE DATE ON WHICH THE RETURN OF INCOME WAS PROCESSED U/S 143(1) TILL THE DATE OF REGULAR ASSESSMENT AND NOT FROM THE FIRST OF APR IL OF THE ASSESSMENT YEAR. 4. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME O F HEARING. 7. BEFORE US, THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE ISSUE UNDER CONSIDERATION IS SQUARELY COVERED BY THE DECI SION OF THE COORDINATE BENCH IN THE CASE OF MEENAKSHI INFRASTRU CTURE P. LTD. IN ITA NOS. 1647 TO 1651/HYD/2016 VIDE ORDER DATED 07/ 03/2017, A COPY OF WHICH IS PLACED ON RECORD. 8. LD. DR, HOWEVER, RELIED ON THE ORDERS OF REVENUE AUTHORITIES AS WELL AS ON THE CIRCULAR NO. 657, DATED 30/08/1993 A ND CIRCULAR NO. 19/2015, DATED 27/11/2015. 9. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL FACTS ON RECORD. WE FIND THAT SIMILAR ISSUE CAME UP FOR C ONSIDERATION BEFORE THE TRIBUNAL IN THE CASE OF MEENAKSHI INFRASTRUCTU RE P. LTD. (SUPRA) WHEREIN THE COORDINATE BENCH HAS HELD AS UNDER: 9. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED TH E MATERIAL FACTS ON RECORD AS WELL AS THE DECISIONS C ITED BY THE LD. AR. 9.1 IN THE CASE OF CIT VS. B. LAKSHMIKANTHAN (SUPRA ), THE HONBLE KERALA HIGH COURT HAS HELD AS UNDER: THERE IS NO SUBSTANCE IN THE CONTENTION RAISED BY THE REVENUE THAT IN A REASSESSMENT COMPLETED UNDER S. 153A INTEREST FOR NON-PAYMENT OR SHORT PAYMENT OF ADVANCE TAX IS PAYABLE UNDER S. 23 4B(3) MERELY BECAUSE THE SAID REASSESSMENT UNDER S. 153A IS COMP LETED BY ACCEPTING THE RETURN FILED UNDER S. 143(1). INTERES T FOR NON-PAYMENT OR SHORT PAYMENT OF ADVANCE TAX IS PAYABLE UNDER S. 23 4B FOR DIFFERENT PERIODS UNDER SUB-SS. (1) AND (3) OF THE SAID SECTI ON. IN ALL CASES OF REGULAR ASSESSMENTS COMPLETED UNDER S. 143(1) INTER EST IS TO BE CHARGED FOR THE PERIODS PROVIDED UNDER S. 234B(1). FURTHER, IF THE FIRST ASSESSMENT ITSELF IS INCOME ESCAPING ASSESSMENT MAD E UNDER S. 147 OR UNDER S. 153A, THEN SUCH ASSESSMENT WILL BE TREA TED AS REGULAR ASSESSMENT AND INTEREST FOR NON-PAYMENT OR SHORT PA YMENT OF ADVANCE TAX IN SUCH CASES WILL BE PAYABLE UNDER S. 234B(1). HOWEVER 5 ITA NOS. 1643 TO 1646/H/16 MCC PROJECTS PVT. LTD., HYD. WHEN AN ORIGINAL ASSESSMENT COMPLETED UNDER S. 143 IS REVISED EITHER UNDER S. 147 OR UNDER S. 153A, THEN INTEREST FOR NO N-PAYMENT OR SHORT PAYMENT OF ADVANCE TAX IS PAYABLE ONLY FOR THE PERI OD MENTIONED IN S. 234B(3), WHICH PROVIDES FOR INTEREST FROM THE DATE OF COMPLETION OF REGULAR ASSESSMENT UNDER S. 143(1) TILL THE DATE OF COMPLETION OF REASSESSMENT OR RECOMPUTATION UNDER S. 147 OR S. 15 3A. FOR THE PURPOSE OF LEVY OF INTEREST UNDER S. 234B(3), IT IS IMMATERIAL WHETHER RECOMPUTATION OR REASSESSMENT UNDER S. 147 OR UNDER S. 153A IS MADE BY ACCEPTING THE REVISED RETURN FILED AND BY PROCES SING THE SAME UNDER S. 143(1) OR WHETHER REASSESSMENT IS MADE BY REJECTING SUCH RETURNS AND BY DETERMINING THE INCOME. THE FACT THA T THE PROCEDURE FOR CALLING FOR RETURN AND ASSESSMENT AFTER SEARCH OR REQUISITION UNDER S. 153A IS THE SAME AS PROVIDED UNDER S. 139 DOES N OT MEAN THAT A REASSESSMENT COMPLETED UNDER THE SAID PROVISION IS A REGULAR ASSESSMENT OR ORIGINAL ASSESSMENT. ON THE OTHER HAN D, WHATEVER BE THE PROCEDURE ADOPTED FOR ASSESSING ESCAPED INCOME OR UNDISCLOSED INCOME PURSUANT TO SEARCH OR REQUISITION, SUCH ASSE SSMENT WILL ALWAYS BE A REASSESSMENT OR RECOMPUTATION UNDER S. 153A, A ND UNLESS IT IS A FIRST ASSESSMENT, THAT COULD BE TREATED AS THE REGU LAR ASSESSMENT IN TERMS OF EXPLN. 2 TO S. 234B(1), THEN INTEREST CAN BE CHARGED ONLY UNDER S. 234B(3). IN THIS CASE, THE ORIGINAL RETURN S WERE PROCESSED UNDER S. 143(1) AND THE PROCEEDINGS SO COMPLETED WE RE ISSUED TO THE ASSESSEE. IT IS ONLY THEREAFTER THE DEPARTMENT COND UCTED SEARCH AND MADE REVISED ASSESSMENTS UNDER S. 153A THOUGH BY AC CEPTING RETURNS OF UNDISCLOSED INCOME FILED AND BY ISSUING PROCEEDI NGS UNDER S. 143(1) R/W S. 153A. WE, THEREFORE, HOLD THAT THE ASSESSMEN TS UNDER S. 153A ARE REVISED ASSESSMENTS AND SO MUCH SO, INTEREST CO ULD BE DEMANDED FOR THE PERIOD MENTIONED IN S. 234(B)(3) AS HELD BY THE TRIBUNAL. IN THIS VIEW OF THE MATTER, THE ORDER OF THE TRIBUNAL IS UPHELD AND THE DEPARTMENT APPEALS ARE DISMISSED FOR BOTH THE YEARS . 9.2 IN THE CASE OF MBG COMMODITIES (P) LTD., (SUPRA ), THE COORDINATE BENCH OF ITAT HYDERABAD, HAS OBSERVED AS UNDER: 11. BE THAT AS IT MAY, ASSESSEES CONTENTION IS T HAT INTERESTS ARE TO BE CONSIDERED U/S. 234B(3) RATHER THAN U/S 234B(1) AS WAS DONE BY THE AO IN THE ORDERS U/S. 15 4. THE ENTIRE SUBMISSIONS MADE BY ASSESSEE ARE ON THE NOTI ON THAT INTEREST U/S. 234B(1) AND INTEREST U/S. 234B(3 ) ARE MUTUALLY EXCLUSIVE. THIS IS NOT CORRECT. AS PER THE SCHEME OF ACT, INTEREST U/S. 234B(1) IS LEVIABLE FROM THE PERIOD 1ST APRIL OF THE ASSESSMENT YEAR FOLLOWING THE CLOSURE OF THE FINANCIAL YEAR TILL THE DATE OF INTIMATION U/S. 143 (1) OR COMPLETION OF ASSESSMENT U/S. 143(3). THE EXPLANATI ON PROVIDED U/S. 234B(1) STATES THAT WHERE THE ASSESSM ENT WAS DONE U/S. 147 OR U/S. 153A FOR THE FIRST TIME, THEN, THE INTEREST IS TO BE LEVIED U/S. 234B(1). IN OTHER WOR DS, THE INTEREST LIABILITY U/S. 234B(1) IS ATTRACTED IF THE RE IS ANY SHORTFALL OF ANY ADVANCE TAX FROM THE FIRST DAY OF THE ASSESSMENT YEAR TILL THE COMPLETION OF/PROCESSING O F RETURN FOR THE FIRST TIME. INTEREST IS COMPENSATORY IN NAT URE. THEREFORE, THE LEGISLATURE HAS PROVIDED FOR LEVY OF INTEREST 6 ITA NOS. 1643 TO 1646/H/16 MCC PROJECTS PVT. LTD., HYD. FOR SHORTFALL OF ADVANCE TAX AND THE INTEREST IS CA LCULATED FROM THE FIRST DAY OF THE ASSESSMENT YEAR TILL ASSE SSEE DISCHARGES ITS LIABILITY U/S. 140A OR IF THERE IS A FURTHER SHORTFALL, TILL THE COMPLETION OF ASSESSMENT FOR TH E FIRST TIME EITHER UNDER 143(3) OR 147 OR 153A OR PROCESSING U/ S. 143(1). THE AO ACCORDINGLY LEVIED INTEREST U/S. 234 B(1) IN THE INTIMATIONS GIVEN IN RESPECTIVE ASSESSMENT YEAR S (AS STATED ABOVE IN PARA 10). 11.1. IN CASE OF RE-ASSESSMENT AND RE-DETERMINATION OF INCOME EITHER U/S. 147 OR U/S. 153A, THE STATUTE PR OVIDES FOR FURTHER LEVY OF INTEREST ON THE HIGHER AMOUNT O F TAX DETERMINED IN THE RE-ASSESSMENT PROCEEDINGS. THE PE RIOD OF LEVY IS FROM THE DATE OF FIRST ORDER EITHER U/S 143(1) OR 143(3) OR 147 OR 153A AS THE CASE MAY BE TO THE DAT E OF REVISED ORDER. THUS, THERE IS LEVY OF INTEREST FROM THE FIRST DAY OF THE ASSESSMENT YEAR TILL THE COMPLETION OF ASSESSMENT/PROCESSING FOR THE FIRST TIME ON THE RET URNED INCOME/ASSESSED INCOME U/S 234B(1) AND A FURTHER ENHANCEMENT OF INTEREST U/S. 234B(3) ON THE ADDITIO NAL TAX DETERMINED IN THE REASSESSMENT PROCEEDINGS FOR THE LATER PERIOD.. THUS, THERE ARE TWO SEPARATE CALCULATIONS OF INTEREST U/S. 234B(1) AND 234B(3). SINCE INTEREST W AS ALREADY DEMANDED IN EARLIER PROCEEDINGS ONLY FRESH DEMAND IS RAISED U/S 234B(3). THUS THE LEVY OF INTE REST ARE COMPLIMENTARY AND NOT EXCLUSIVE. 12. THIS MECHANISM OF LEVY OF INTEREST WAS ELABORAT ELY EXPLAINED IN THE CO-ORDINATE BENCH DECISION IN THE CASE OF ACIT VS. RONALD NARDI [14 SOT 24 (MUMBAI)], WHEREIN IT WAS HELD: ONCE AN ORDER OF REASSESSMENT IS PASSED UNDER SECT ION 143(3)/148, THE ORIGINAL ORDER DETERMINING THE TOTA L INCOME UNDER SECTION 143(1) OR 143(3) OR 144 GETS MERGED W ITH THE ORDER OF REASSESSMENT FOR THE SIMPLE REASON THAT TW O ORDERS DETERMINING THE TOTAL INCOME CANNOT STAND TO GETHER. IT, THEREFORE, LOGICALLY FOLLOWS THAT THE FIGURES O F TOTAL INCOME DETERMINED AND TAX, INTEREST, ETC., THEREON HAVE TO BE INCORPORATED IN THE REASSESSMENT ORDER PASSED UN DER SECTION 143(3)/147 AND IN THE COMPUTATION SHEET ACCOMPANYING THEREWITH. IF THE ASSESSING OFFICER HA D NOT FOLLOWED THE AFORESAID COURSE OF ACTION, THE TOTAL INCOME ORIGINALLY DETERMINED UNDER SECTION 143(1) OR 143(3 ) OR 144 AND TAX, INTEREST, ETC., THEREON WOULD HAVE ESCAPED TAXATION. THE ASSESSEE DID NOT CHALLENGE THE LEVY O F INTEREST UNDER SECTION 234B(1) AS PER THE INTIMATIO N ORIGINALLY ISSUED UNDER SECTION 143(1). THE ASSESSI NG OFFICER WAS, THEREFORE, JUSTIFIED IN INCORPORATING THE SAID FIGURE OF INTEREST ORIGINALLY CHARGED UNDER SECTION 234B(1) 7 ITA NOS. 1643 TO 1646/H/16 MCC PROJECTS PVT. LTD., HYD. AS PER THE INTIMATION ISSUED UNDER SECTION 143(1) I N THE COMPUTATION SHEET ACCOMPANYING THE ORDER OF REASSESSMENT PASSED UNDER SECTION 143(3)/147. WHILE SUB-SECTION (1) OF SECTION 234B IS APPLICABL E TO CASES INVOLVING DETERMINATION OF TOTAL INCOME UNDER SECTION 143(1) OR REGULAR ASSESSMENT MADE UNDER SECTION 143 (3) OR UNDER SECTION 144, SUB-SECTION (3) OF SECTION 23 4B IS APPLICABLE, INTER ALIA, TO A CASE WHERE THE AMOUNT OF TAX ON THE TOTAL INCOME DETERMINED ON THE BASIS OF REASSES SMENT OR RE-COMPUTATION UNDER SECTION 147 EXCEEDS THE TAX ON THE TOTAL INCOME ORIGINALLY DETERMINED UNDER SUB-SE CTION (I) OF SECTION 143. IT WAS NOT IN DISPUTE THAT THE ASSE SSING OFFICER HAD ORIGINALLY DETERMINED THE INCOME UNDER SECTION 143(1) AND CHARGED INTEREST UNDER SECTION 234B(1) T HEREON. PROVISIONS OF SECTION 234B(1) WERE RELEVANT TILL TH AT STAGE, I.E., THE STAGE OF DETERMINATION OF TOTAL INCOME UN DER SECTION 143(1). THE ASSESSING OFFICER, SUBSEQUENTLY , ISSUED A NOTICE UNDER SECTION 147 AND REASSESSED TH E INCOME WITH THE RESULT THAT THE TAX ON TOTAL INCOME DETERMINED ON SUCH REASSESSMENT EXCEEDED THE TAX ON TOTAL INCOME EARLIER DETERMINED UNDER SUB-SECTION ( I) OF SECTION 143. RESULTANTLY THE ASSESSEE BECAME LIABLE TO PAY INCREMENTAL INTEREST FOR EVERY MONTH OR PART OF A M ONTH COMPRISED IN THE PERIOD COMMENCING ON THE DAY FOLLO WING THE DAY OF DETERMINATION OF TOTAL INCOME UNDER SUB- SECTION (1) OF SECTION 143 AND ENDING ON THE DAY OF REASSES SMENT OR RE-COMPUTATION UNDER SECTION 147. IT IS NOT PERM ISSIBLE UNDER SECTION 234B(3) TO CHARGE INTEREST FROM THE F IRST DAY OF THE ASSESSMENT YEAR TILL THE DATE OF REASSESSMEN T OR RE- COMPUTATION UNDER SECTION 147 WHERE THE INCOME HAS BEEN DETERMINED UNDER SECTION 143(1) AND ALLOWED TO BECO ME FINAL. THEREFORE, THE ASSESSING OFFICER WAS DIRECTE D TO MODIFY THE ORDER UNDER SECTION 154 AS : (A) THE FIGURE OF INTEREST ORIGINALLY CHARGED UNDER SECTION 234B(1) AS PER THE INTIMATION ISSUED UNDER SECTION 143(1) WAS TO BE INCORPORATED AND INCLUDED IN THE COMPUTAT ION SHEET ACCOMPANYING THE REASSESSMENT ORDER PASSED UN DER SECTION 143 (3)/148; AND (B) IN ADDITION TO THE ABOVE, THE INCREMENTAL INTER EST REQUIRED TO BE CHARGED UNDER SECTION 234B(3) WAS AL SO TO BE CHARGED FOR EVERY MONTH OR PART OF A MONTH COMPR ISED IN THE PERIOD COMMENCING ON THE DAY FOLLOWING THE DATE OF DETERMINATION OF TOTAL INCOME UNDER SUB-SECTION (I) OF SECTION 143 AND ENDING ON THE DATE OF REASSESSMENT UNDER SECTION 143(3)/147 ON THE AMOUNT BY WHICH THE TAX O N THE TOTAL INCOME DETERMINED ON THE BASIS OF THE REASSES SMENT 8 ITA NOS. 1643 TO 1646/H/16 MCC PROJECTS PVT. LTD., HYD. EXCEEDED THE TAX ON THE TOTAL INCOME DETERMINED UND ER SECTION 143(1). 13. THE HON'BLE HIGH COURT OF KARNATAKA IN THE CASE OF SRI VIJAY KUMAR SABOO (HUF) VS. ACIT, BANGALORE [201 TAXMAN 366 (KARNATAKA)] HAS HELD THAT INTEREST U/S. 234B(3) IS ATTRACTED IN THE CASE OF RE ASSESSMENT COMPLETED AND AO IS BOUND TO GIVE A FINDING WHETHER IT IS AN ORDER MADE FOR THE FIRST TIME U/S. 147 OR IT IS A CASE OF RE-ASSESSMENT OR RE-COMPUTATION U/S. 147. IT WAS HE LD THAT IN A CASE WHERE THERE IS DETERMINATION OF TAX U/S. 143(1) OR WHERE REGULAR ASSESSMENT ORDER IS PASSED U/S. 143(3 ), THEN, ORDER PASSED U/S. 147 IS TREATED AS AN ORDER OF RE- ASSESSMENT OR RECOMPUTATION AND IN SUCH CASE, INTER EST U/S. 234B IS LEVIABLE NOT FROM THE FIRST DAY OF APR IL NEXT FOLLOWING SUCH FINANCIAL YEAR, BUT FROM THE DATE OF DETERMINATION OF TAX U/S. 143(1) OR ORDER OF REGULA R ASSESSMENT U/S. 143(3). THE HON'BLE HIGH COURT IN T HE ABOVE REFERRED CASE VIJAY KUMAR SABOO (HUF) VS. ACI T, BANGALORE [201 TAXMANN 366 (KARNATAKA)](SUPRA) HAS HELD AS UNDER: A HARMONIOUS READING OF ENTIRE SECTION 234B MAKES IT CLEAR THAT IF NO ADVANCE TAX IS PAID OR WHAT IS PAI D IS LESS THAN 90 PER CENT OF THE ASSESSED TAX, THE ASSESSEE IS LIABLE TO PAY INTEREST ON THE DIFFERENCE IN THE TAX. FOR T HE PURPOSE OF LEVYING TAX, IT IS COMPUTED FROM FIRST DAY OF AP RIL NEXT FOLLOWING, TILL THE DATE OF DETERMINATION OF TAX UN DER SUB- SECTION (1) OF SECTION 143 OR FROM THAT DAY TILL TH E DATE OF REGULAR ASSESSMENT. IF IN A GIVEN CASE, THERE IS NO DETERMINATION OF TAX UNDER SUB-SECTION (1) OF SECTI ON 143 OR REGULAR ASSESSMENT AND THE ASSESSMENT IS MADE FOR T HE FIRST TIME UNDER SECTION 147, SUCH ASSESSMENT IS AL SO TREATED AS A REGULAR ASSESSMENT AND INTEREST IS PAY ABLE FROM THE FIRST DAY OF APRIL NEXT FOLLOWING TILL THE DATE OF ASSESSMENT ORDER. HOWEVER, IF PROCEEDINGS UNDER SEC TION 147 ARE INITIATED IN A CASE WHERE THERE IS DETERMIN ATION OF TAX UNDER SUB-SECTION (1) OF SECTION 143 OR WHERE A REGULAR ASSESSMENT ORDER IS PASSED UNDER SUB-SECTION (3) OF SECTION 143, THEN THE ORDER PASSED UNDER SECTION 14 7 IS TREATED AS AN ORDER OF REASSESSMENT OR RECOMPUTATIO N. IN THE CASE OF ORDER OF REASSESSMENT OR RECOMPUTATION, THE INTEREST IS LEVIABLE NOT FROM THE FIRST DAY OF APRI L NEXT FOLLOWING, BUT FROM THE DATE OF DETERMINATION OF TA X UNDER SUBSECTION (1) OF SECTION 143 OR ORDER OF REGULAR ASSESSMENT UNDER SECTION 143(3). THEREFORE, WHEN TH E ASSESSMENT ORDER IS PASSED UNDER SECTION 147 AND TH AT IS MADE THE BASIS FOR LEVYING INTEREST, THE ASSESSING AUTHORITY HAS TO FIND OUT WHETHER IT IS AN ORDER MADE FOR THE FIRST TIME 9 ITA NOS. 1643 TO 1646/H/16 MCC PROJECTS PVT. LTD., HYD. UNDER SECTION 147 OR IS IT A CASE OF REASSESSMENT O R RECOMPUTATION UNDER SECTION 147. DEPENDING ON THAT FINDING, THE INTEREST IS TO BE CALCULATED EITHER FR OM THE DATE OF FIRST DAY OF APRIL NEXT FOLLOWING SUCH FINANCIAL YEAR OR FROM THE DATE OF DETERMINATION OF TAX UNDER SUB-SEC TION (1) OF SECTION 143 OR REGULAR ASSESSMENT UNDER SECTION 143(3). IN THE INSTANT CASE, THERE WAS A DETERMINATION OF T AX UNDER SECTION 143(1)(A) AND RETURN FILED BY THE ASSESSEE WAS ACCEPTED BY THE DEPARTMENT BY ITS ORDER DATED 24-6- 1991. IT WAS THEREAFTER, PROCEEDINGS WERE INITIATED UNDER SECTION 147. IN PURSUANCE OF THE NOTICE ISSUED, REVISED RET URN WAS FILED ON 30-12-1993. IT WAS ON THAT RETURN THAT THE ORDER CAME TO BE PASSED UNDER SECTION 143(3) ON 28-1-1994 . THEREFORE, IT WAS NOT A CASE OF ASSESSMENT MADE FOR THE FIRST TIME. IT WAS A CASE OF ORDER OF REASSESSMENT OR RECOMPUTATION UNDER SECTION 147. THEREFORE, THE INT EREST WAS TO BE CALCULATED FROM 24-6-1991, THE DATE ON WH ICH DETERMINATION OF TAX WAS MADE UNDER SECTION 143 (1) (A). TO THAT EXTENT, THE ORDER PASSED BY THE AUTHORITIES WA S ILLEGAL AND REQUIRED TO BE SET ASIDE. 14. SIMILAR VIEW IS ALSO HELD BY THE HON'BLE HIGH C OURT OF KERALA IN THE CASE OF CIT(CENTRAL), COCHIN VS. B. LAKSHMIKANTHAN [198 TAXMAN 485 (KER)], WHEREIN ON A SIMILAR CASE AS THAT OF ASSESSEE WHERE PROCEEDINGS U/S. 153A WERE INITIATED, IT WAS HELD THAT: THERE WAS NO SUBSTANCE IN THE CONTENTION RAISED BY THE REVENUE THAT IN A REASSESSMENT COMPLETED UNDER SECT ION 153A INTEREST FOR NONPAYMENT OR SHORT PAYMENT OF AD VANCE TAX WAS PAYABLE UNDER SECTION 2348(3) MERELY BECAUS E THE SAID REASSESSMENT UNDER SECTION 153A WAS COMPLETED BY ACCEPTING THE RETURN FILED UNDER SECTION 143(1). IN TEREST FOR NON-PAYMENT OR SHORT-PAYMENT OF ADVANCE TAX IS PAYA BLE UNDER SECTION 2348 FOR DIFFERENT PERIODS UNDER SUB- SECTIONS (I) AND (3) OF THE SAID SECTION. IN ALL CASES OF RE GULAR ASSESSMENT COMPLETED UNDER SECTION 143(1), INTEREST IS TO BE CHARGED FOR THE PERIOD PROVIDED UNDER SECTION 23 48(1). FURTHER, IF THE FIRST ASSESSMENT IS ITSELF INCOME E SCAPING ASSESSMENT MADE UNDER SECTION 147 OR UNDER SECTION 153A, THEN SUCH ASSESSMENT WILL BE TREATED AS REGUL AR ASSESSMENT AND INTEREST FOR NON-PAYMENT OR SHORT PA YMENT OF ADVANCE TAX IN SUCH CASES WILL BE PAYABLE UNDER SECTION 2348(1). HOWEVER, WHEN AN ORIGINAL ASSESSMENT COMPL ETED UNDER SECTION 143 IS REVISED EITHER UNDER SECTION 1 47 OR UNDER SECTION 153A, THEN INTEREST FOR NON-PAYMENT O R SHORT- PAYMENT OF ADVANCE TAX IS PAYABLE ONLY FOR PERIOD MENTIONED IN SECTION 2348(3), WHICH PROVIDES FOR IN TEREST 10 ITA NOS. 1643 TO 1646/H/16 MCC PROJECTS PVT. LTD., HYD. FROM THE DATE OF COMPLETION OF THE REGULAR ASSESSME NT UNDER SECTION 143 (1) TILL DATE OF COMPLETION OF REASSESSMENT OR RECOMPUTATION UNDER SECTION 147 OR SECTION 153A. FOR THE PURPOSE OF LEVY OF INTEREST U NDER SECTION 234B(3), IT IS IMMATERIAL WHETHER RECOMPUTA TION OR REASSESSMENT UNDER SECTION 147 OR UNDER SECTION 153 A IS MADE BY ACCEPTING THE REVISED RETURN FILED AND BY PROCESSING THE SAME UNDER SECTION 143(1) OR WHETHER REASSESSMENT IS MADE BY REJECTING SUCH RETURNS AND BY DETERMINING THE INCOME. THE FACT THAT THE PROCEDURE FOR CALLING FOR RETURN AND ASSESSMENT AFTER SEARCH OR REQUISITION UNDER SECTION 153A IS THE SAME AS PROVI DED UNDER SECTION 139 DOES NOT MEAN THAT A REASSESSMENT COMPLETED UNDER THE SAID PROVISION IS A REGULAR ASS ESSMENT OR ORIGINAL ASSESSMENT. ON THE OTHER HAND, WHATEVER BE THE PROCEDURE ADOPTED FOR ASSESSING ESCAPED INCOME OR UNDISCLOSED INCOME PURSUANT TO SEARCH OR REQUISITIO N, SUCH AN ASSESSMENT WILL ALWAYS BE A REASSESSMENT OR RECOMPUTATION UNDER SECTION 153A, AND UNLESS IT IS A FIRST ASSESSMENT, THAT CAN BE TREATED AS THE REGULAR ASSE SSMENT IN TERMS OF THE EXPLANATION (2) TO SECTION 234B(1), INTEREST CAN BE CHARGED ONLY UNDER SECTION 234B(3). IN THE I NSTANT CASE, THE ORIGINAL RETURNS WERE PROCESSED UNDER SEC TION 143(1) AND THE PROCEEDINGS SO COMPLETED WERE ISSUED TO THE ASSESSEE. IT WAS ONLY THEREAFTER THAT THE DEPAR TMENT CONDUCTED SEARCH AND MADE REVISED ASSESSMENT UNDER SECTION 153A, THOUGH BY ACCEPTING RETURN OF UNDISCL OSED INCOME FILED AND BY ISSUING PROCEEDINGS UNDER SECTI ON 143(1), READ WITH SECTION 153A. THEREFORE, THE ASSESSMENTS UNDER SECTION 153A WERE REVISED ASSESSMENTS AND, SO MUCH SO, INTEREST COULD BE DEMA NDED FOR THE PERIOD MENTIONED IN SECTION 234(B)(3) AS HE LD BY THE TRIBUNAL. 15. THE PRINCIPLE LAID DOWN BY THE HONBLE MADRAS H IGH COURT IN THE CASE OF TEXTILE DYE-CHEM CORPN. (SUPRA ) ALSO SUPPORT THE ABOVE. INFACT, THERE WAS A FINDING THAT THE ASSESSMENT MADE ON ASSESSEE WAS FOR THE FIRST TIME UNDER SECTION 147 AND ON THAT FACT THE HONBLE HIGH COURT HELD THAT INTEREST WAS LEVIABLE UNDER 234B(1). THUS, THE PROVISIONS OF THE ACT AND VARIOUS CASE LAW SUPPORT THE VIEW THAT WHERE INTIMATION U/S. 143(1) WAS ISSUED LEVYIN G INTEREST U/S 234B(1), THE SUBSEQUENT PROCEEDINGS WI LL ATTRACT ONLY 234B(3) ON THE ENHANCED INCOME/TAX WHE REAS INTEREST LEVIED ORIGINALLY U/S. 234B(1) WILL STAND AS SUCH. THUS, INTEREST U/S. 234B(1) IS TO BE LEVIED, FROM 1 ST APRIL FOLLOWING THE FINANCIAL YEAR TILL THE DATE OF PROCE SSING U/S. 143(1) US 234B(1) AND THEN ON ENHANCED 11 ITA NOS. 1643 TO 1646/H/16 MCC PROJECTS PVT. LTD., HYD. INCOME/ENHANCED TAX U/S. 234B(3). VIEWED IN THIS PERSPECTIVE, THERE IS NO CONFLICT IN THE PROVISIONS OF THE ACT. 16. IN THIS CASE, THE DISPUTE IS WITH REFERENCE TO WHETHER THE 143(1) ORDER PASSED EARLIER IS TO BE CONSIDERED AS AN ASSESSMENT? LD. CIT(A) WAS OF THE OPINION THAT 143( 1) IS NOT AN ASSESSMENT AND IS ONLY AN INTIMATION. THIS V IEW CAN BE ACCEPTED IN THE CONTEXT OF RE-OPENING OF ASSESSM ENT AS HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF RA JESH JHAVERI STOCK BROKERS PVT. LTD., [291 ITR 500] OR F OR ANY OTHER PROVISIONS ON ASSESSMENT. FOR THE PURPOSE OF LEVY OF INTEREST U/S. 234B WHERE IT IS VERY CLEARLY MENTION ED THAT EVEN PROCESSING U/S. 143(1) IS ALSO TO BE CONSIDERE D AS AN ASSESSMENT BY SPECIFICALLY MENTIONING IN THE SECTIO N THE PERIODS THEREIN THEN, FOR THE PURPOSE OF LEVY OF IN TEREST U/S. 234B(3), THE PERIOD IT WAS ALREADY CONSIDERED IN AN INTIMATION U/S. 143(1) IS TO BE EXCLUDED WHILE CALC ULATING THE INTEREST U/S. 234B(3). THE PROVISIONS OF SECTIO N 234B(3) ARE AS UNDER: SECTION 234B : 1.. . (3) WHERE, AS A RESULT OF AN ORDER OF REASSESSMENT OR RECOMPUTATION UNDER SECTION 147 (OR SECTION 153A), THE AMOUNT ON WHICH INTEREST WAS PAYABLE UNDER SUB-SECT ION (1) IS INCREASED, THE ASSESSEE SHALL BE LIABLE TO P AY SIMPLE INTEREST AT THE RATE OF [ONE] PER CENT FOR EVERY MO NTH OR PART OF A MONTH COMPRISED IN THE PERIOD COMMENCING ON TH E DAY FOLLOWING [THE DATE OF DETERMINATION OF TOTAL INCOM E UNDER SUB-SECTION (1) OF SECTION 143 [AND WHERE A REGULAR ASSESSMENT IS MADE AS IS REFERRED TO IN SUBSECTION (1) FOLLOWING THE DATE OF SUCH REGULAR ASSESSMENT]] AND ENDING ON THE DATE OF THE REASSESSMENT OR RECOMPUTATION UN DER SECTION 147 [OR SECTION 153A], ON THE AMOUNT BY WHI CH THE TAX ON THE TOTAL INCOME DETERMINED ON THE BASIS OF THE REASSESSMENT OR RECOMPUTATION EXCEEDS THE TAX ON TH E TOTAL INCOME DETERMINED [UNDER SUB-SECTION (1) OF S ECTION 143 OR] ON THE BASIS OF THE REGULAR ASSESSMENT AFOR ESAID. ( EMPHASIS SUPPLIED) IN VIEW OF THE SPECIFIC EXCLUSION OF THE PERIOD CON SIDERED U/S. 234B(1), THE BALANCE OF THE PERIOD TILL THE CO MPLETION OF ASSESSMENT U/S. 147/153A AS THE CASE MAY BE WAS ONLY BE CONSIDERED FOR LEVY OF INTEREST U/S. 234B(3) ON THE ENHANCED AMOUNT OF TAX. 17. THE AMENDMENT BROUGHT OUT BY THE FINANCE ACT, 2 015 IN FACT MODIFIES THE THEN EXISTING PROVISIONS WHICH ARE APPLICABLE FOR THE IMPUGNED ASSESSMENT YEARS. IN FA CT 12 ITA NOS. 1643 TO 1646/H/16 MCC PROJECTS PVT. LTD., HYD. UNDER THE NEW SUBSECTION (3), IT WAS PROVIDED THAT INTEREST WILL BE CALCULATED ON THE ENHANCED AMOUNT FROM THE PERIOD COMMENCING ON 1ST APRIL NEXT FOLLOWING THE RELEVANT FINANCIAL YEAR FOR WHICH ADVANCE TAX WAS PAYABLE AN D ENDING ON THAT DATE OF THE RE-ASSESSMENT OR RECOMPU TATION U/S. 147/153A. THUS, WHERE IN A CASE INTEREST U/S. 234B(1) WAS LEVIED ON REGULAR ASSESSMENT U/S. 234B(1), ENHA NCED INTEREST WAS PAYABLE FOR THE ENTIRE PERIOD AND NOT ON BROKEN PERIOD AS IT WAS PROVIDED EARLIER. THIS IS T HE SUBSTANCE OF THE AMENDMENT BROUGHT TO SUB-SECTION(3 ) BY THE FINANCE ACT, 2015. IN VIEW OF THIS, WE ARE OF T HE OPINION THAT THE INTEREST U/S. 234B(1) IS TO BE CAL CULATED ON THE ORIGINALLY ACCEPTED AMOUNT U/S. 143(1) AS WAS D ONE BY THE AO IN THE INTIMATIONS AND THE ENHANCED AMOUNT I S TO BE LEVIED FROM THE DATE OF INTIMATION TILL THE DATE OF CONSEQUENTIAL ORDER PASSED U/S. 143(3) R.W.S. 153A R.W.S. 245D(4) IE ON 03-12- 2013. 18. WE ARE NOT SURE WHETHER THE AO IS CORRECT ABOUT THE LEVY OF INTEREST IN THE ORDERS U/S. 154, AS THE PER IOD AND CALCULATIONS WERE NOT PROVIDED FOR OUR EXAMINATION. IN FACT THERE IS REDUCTION OF DEMAND IN AYS 2005-06 AND 200 9-10. IN VIEW OF THIS, WE, WHILE ALLOWING THE APPEALS OF ASSESSEE, DIRECT THE AO TO MODIFY THE INTEREST LEVIED AS PER THE PROVISIONS OF THE ACT. THE APPEALS ARE CONSIDERED A LLOWED FOR STATISTICAL PURPOSES. 9.3 AS THE CASE UNDER CONSIDERATION IS MATERIALLY I DENTICAL TO THAT OF THE SAID DECISIONS, RESPECTFULLY FOLLOWING THE SAME, WE SET ASIDE THE ORDER OF THE CIT(A) IN ALL THE APPEAL S UNDER CONSIDERATION AND DIRECT THE AO TO CALCULATE THE IN TEREST U/S 234B(1) ON THE ORIGINALLY ACCEPTED AMOUNT U/S 143(1 ) AS WAS DONE BY THE AO IN THE INTIMATIONS AND THE ENHANCED AMOUNT IS TO BE LEVIED FROM THE DATE OF INTIMATION TILL THE D ATE OF CONSEQUENTIAL ORDER PASSED U/S 143(3) RWS 153A OF T HE ACT. AS THE ISSUE UNDER CONSIDERATION IS ALSO MATERIALLY IDENTICAL TO THE ABOVE DECISION, FOLLOWING THE DECISION THEREIN, WE SET ASIDE THE ORDER OF THE CIT(A) IN ALL THE APPEALS UNDER CONSIDERATIO N AND DIRECT THE AO TO CALCULATE THE INTEREST U/S 234B(1) ON THE ORIGIN ALLY ACCEPTED AMOUNT U/S 143(1) AS WAS DONE BY THE AO IN THE INTI MATIONS AND THE ENHANCED AMOUNT IS TO BE LEVIED FROM THE DATE OF IN TIMATION TILL THE DATE OF CONSEQUENTIAL ORDER PASSED U/S 143(3) RWS 1 53C OF THE ACT. LD. DR RELIED ON THE CIRCULAR NO. 19/2015 AND CIRCU LAR NO. 657, BUT, 13 ITA NOS. 1643 TO 1646/H/16 MCC PROJECTS PVT. LTD., HYD. BOTH ARE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. HENCE, NOT CONSIDERED FOR ADJUDICATION. 10. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE ARE ALLOWED. PRONOUNCED IN THE OPEN COURT ON 29 TH SEPTEMBER, 2017. SD/- SD/- (P. MADHAVI DEVI) (S. RIFAUR RA HMAN) JUDICIAL MEMBER AC COUNTANT MEMBER HYDERABAD, DATED: 29 TH SEPTEMBER, 2017. KV COPY TO:- 1) MCC PROJECTS PVT. LTD., HYDERABAD C/O SHRI S. RA MA RAO, ADVOCATE, FLAT NO. 102, SHRIYAS ELEGANCE, 3-6 -643, STREET NO. 9, HIMAYAT NAGAR, HYDERABAD 29. 2) ACIT, CENTRAL CIRCLE 2(4), HYD. 3) CIT(A) - 12, HYDERABAD 4 PR. CIT (CENTRAL), HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. 6) GUARD FILE