Bharath Bhushan Aggarwal , Hyderabad V. Dy. Commissioner of Income Tax , Circle-14(1), Hyderabad

ITA 1854/Hyd/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 3566 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-06-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 22-04-2021
• Assessment Year: 2018-2019
• Appeal Filed On: 23-12-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ROHIT MUJUMDARDR
• Assessee Lawyers: M V ANIL KUMAR
• Keywords: TDS
• Section: 143(1); 264; 90; 154

Judgement Text

ITA NO 1854 OF 2019 BHARAT BHUSHAN AGARWAL HYDERA BAD PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD (THROUGH VIDEO CONFERENCING) BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO.1854/HYD/2019 ASSESSMENT YEAR: 2018-19 SRI BHARATH BHUSHAN AGARWAL, HYDERABAD PAN: VS. DY.CIT CIRCLE 14(1) HYDERABAD (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI M.V. ANIL KUMAR REVENUE BY : SRI ROHIT MUJUMDAR,DR DATE OF HEARING: 22/04/2021 DATE OF PRONOUNCEMENT: 09/06/2021 ORDER PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y 2018-19 AGAIN ST THE ORDER OF THE CIT (A)-6, HYDERABAD, DATED 22.10 .2019. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IN DIVIDUAL FILED HIS RETURN OF INCOME FOR THE A.Y 2018-19 ON 3 0.11.2018 DECLARING GROSS TOTAL INCOME OF RS.5,07,03,257/-. T HE RETURN OF INCOME WAS PROCESSED BY CPC BANGALORE U/S 143(1) OF THE ACT AND WHILE COMPUTING THE TAX PAYABLE ON THE ASSESSED INCOME, THE INTEREST U/S 234A OF THE ACT FOR A PERIOD OF 3 MONT HS WAS LEVIED I.E. AT RS.4,33,764/- AS AGAINST RS.89,176/- COMPUT ED BY THE ASSESSEE IN HIS RETURN OF INCOME. ITA NO 1854 OF 2019 BHARAT BHUSHAN AGARWAL HYDERA BAD PAGE 2 OF 6 3. AGGRIEVED, BY THE INTIMATION, THE ASSESSEE FILED AN APPLICATION U/S 154 OF THE ACT. HOWEVER, THE SAME W AS REJECTED. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT (A) STATING THAT THE ASSESSEE WAS A WORKING PARTNER IN TWO PART NERSHIP FIRMS WHOSE ACCOUNTS WERE SUBJECTED TO TAX AUDIT. HE SUBM ITTED THAT BY MISTAKE, INADVERTENTLY, THE ASSESSEE HAD CHOSEN ITR FORM-II INSTEAD OF ITR-III. HE SUBMITTED THAT FOR THE RELEV ANT A.Y, THE DUE DATE FOR FILING OF THE RETURN FOR THE INDIVIDUAL WA S 31.08.2008 AND FOR THE FIRMS, THE DUE DATE WAS 30.09.2018. IT WAS SUBMITTED THAT THE ASSESSEE HAVING EARNED INCOME FROM PARTNERSHIP FIRMS WHOSE ACCOUNTS WERE AUDITED, THE ASSESSEE SHOULD HAVE FIL ED ITR-III ON OR BEFORE 30.09.2018 WHEREAS THE ASSESSEE HAS FILED THE RETURNS ON 31.11.2018. HE SUBMITTED THAT THE CBDT HAD EXTEN DED THE TIME FOR FILING OF THE RETURN OF INCOME FOR THE REL EVANT A.Y, BUT FOR THE PURPOSES OF INTEREST U/S 234A, IT WAS CLARIFIED THAT INTEREST WAS APPLICABLE FROM THE ORIGINAL DUE DATE FOR FILIN G OF RETURN. THEREFORE, IT WAS PRAYED THAT THE INTEREST U/S 234A SHOULD BE LEVIED ONLY FOR TWO MONTHS AS AGAINST THREE MONTHS LEVIED BY THE ASSESSING OFFICER. THE CIT (A) GRANTED RELIEF TO TH E ASSESSEE. HOWEVER, THE ASSESSEE HAD ALSO RAISED AN OBJECTION THAT SINCE THE ASSESSEE HAS PAID SELF-ASSESSMENT TAX BEFORE THE DU E DATE OF FILING OF THE RETURN OF INCOME, NO INTEREST U/S 234 A SHOULD BE CHARGED. THIS CONTENTION OF THE ASSESSEE WAS NOT AC CEPTED BY THE CIT (A). THEREFORE, THE ASSESSEE IS IN SECOND APPEA L BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS OF APPEAL : 1. THE CIT (A) ERRED IN LAW AND FACTS OF THE CASE IN CONFIRMING THE LEVY OF INTEREST U/S 234A IGNORING T HE FACT THAT ENTIRE TAX WAS PAID BEFORE THE DUE DATE OF FIL ING OF THE RETURN. 2. THE CIT (A) HAVING RELIED ON CBDT CIRCULAR OUGHT TO HAVE RELIED ON THE DECISION OF THE HON'BLE SUPREME COURT DECISION IN THE CASE OF VIT VS. PRANOY ROY 309 ITR 231 (SC) AND DELETED THE INTEREST U/S 234A. ITA NO 1854 OF 2019 BHARAT BHUSHAN AGARWAL HYDERA BAD PAGE 3 OF 6 3. YOUR APPELLANT SUBMITS THAT THE ENTIRE TAX DUE F OR THE A.Y 2018-19 AS PER RETURN OF INCOME WAS PAID BEFORE THE DUE DATE OF FILING OF THE RETURN AND THERE WAS NO T AX PAYABLE ON THE DATE OF FILING OF THE RETURN, INTERE ST U/S 234A IS NOT PAYABLE, THE INTEREST MAY BE DELETED. 4. FOR THESE GROUNDS AND SUCH GROUNDS AS MAY BE URG ED AT THE TIME OF HEARING, YOUR APPELLANT PRAYS THAT T HE ADDITIONS MAY BE DELETED. 3.1 THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT SIMILAR ISSUE HAD COME UP BEFORE THE HON'BLE SUPREM E COURT IN THE CASE OF CIT VS. PRANOY ROY REPORTED IN (2009) ( 179 TAXMAN 53 S.C) AND THE HON'BLE SUPREME COURT HAS HELD THAT WH ERE THE TAX DUE HAD ALREADY BEEN PAID ON THE DUE DATE OF FILING OF THE RETURN OF INCOME AND WHICH WAS NOT LESS THAN THE TAX PAYAB LE ON THE RETURNED INCOME WHICH WAS ACCEPTED, QUESTION OF LEV Y OF INTEREST U/S 234A DOES NOT ARISE. HE ALSO DREW OUR ATTENTION TO THE CBDT CIRCULAR NO.2 OF 2015 DATED 10.02.2015 WHEREIN AFTE R CONSIDERING THE HON'BLE SUPREME COURTS DECISION IN THE CASE OF CIT VS. PRANOY ROY (SUPRA), THE BOARD HAS DIRECTED THAT NO INTEREST U/S 234A OF THE ACT IS CHARGEABLE ON THE AMOUNT OF SELF -ASSESSMENT TAX PAID BY THE ASSESSEE BEFORE THE DUE DATE OF FIL ING OF THE RETURN OF INCOME. THEREFORE, HE SUBMITTED THAT THE CIRCULA R IS APPLICABLE TO THE ASSESSEES CASE AND THE INTEREST U/S 234A CH ARGED BY THE ASSESSING OFFICER IS TO BE DELETED. 4. THE LEARNED DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 5. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT THE RETURNED INCOM E OF THE ASSESSEE WAS ACCEPTED BY THE ASSESSING OFFICER AND BECAUSE THERE WAS A DELAY IN FILING OF THE RETURN OF INCOME , THE CPC HAS CHARGED INTEREST U/S 234A OF THE ACT FOR A PERIOD O F 3 MONTHS BY ITA NO 1854 OF 2019 BHARAT BHUSHAN AGARWAL HYDERA BAD PAGE 4 OF 6 TREATING THE RETURN AS THE RETURN FILED BY AN INDIV IDUAL INSTEAD OF A RETURN FILED BY A FIRM. THE CIT (A) HAS ACCEPTED THE ASSESSEES CONTENTION THAT THE INTEREST IS CHARGEABLE FOR TWO MONTHS ONLY. 6. HOWEVER, AS REGARD THE QUANTUM OF INTEREST IS CONCERNED, WE FIND THAT THE TAX ON BOTH THE SELF-AS SESSMENT AND ALSO THE ASSESSED INCOME IS THE SAME AND THE ASSESS EE HAD PAID RS.1.00 CRORE ON 29.9.2018 I.E. BEFORE THE DUE DAT E OF FILING THE RETURN OF INCOME, WHILE THE BALANCE OF RS.45,52,980 /- WAS PAID ON 28.11.2018. THEREFORE, THE DECISION OF THE HON'B LE SUPREME COURT IN THE CASE OF CIT VS. PRANOY ROY (SUPRA) IS CLEARLY APPLICABLE TO THE CASE BEFORE US. FOR THE SAKE OF C LARITY AND READY REFERENCE, THE RELEVANT PARAGRAPHS OF THE ORDER OF THE HON'BLE SUPREME COURT ARE REPRODUCED HEREUNDER: 2. THE RESPONDENT-ASSESSEES EARNED SUBSTANTIAL CAPI TAL GAINS FOR THE ASST. YR. 1995-96 FOR WHICH IT RETURN WAS DUE TO BE FILED ON 31ST OCT., 1995. THE RETURN WAS FILED ON 29TH SEPT., 1996, I.E., AFTER A DELAY OF ABOUT 11 MONTHS. HOWEVER, TAXES DUE WERE PAID ON 25TH SEPT., 1995, I .E., BEFORE THE DUE DATE OF FILING OF THE RETURN. THOUGH THE RETURNED INCOME WAS ACCEPTED ON 29TH JAN., 1998, YET INTEREST WAS CHARGED UNDER THE PROV ISIONS OF S. 234A OF THE IT ACT, 1961 (FOR SHORT THE ACT) ON THE GROUND THAT TAX PAID ON 25TH SEPT., 1995 COULD NOT BE REDUCED FROM THE TAX DUE ON ASSESSMENT . 3. BEING AGGRIEVED, THE ASSESSEES FILED REVISION PE TITION UNDER S. 264 OF THE ACT ON 9TH NOV., 1998 BEFORE THE ADMINISTRATIVE CIT REQUESTING TO DELETE INTEREST CHARGED UNDER S. 234A OF THE ACT. THE ADMI NISTRATIVE CIT, VIDE ORDER DT. 9TH MARCH, 1999, UPHELD THE ACTION OF THE ASSES SING AUTHORITY AND DISMISSED THE REVISION PETITION. 4. THE ASSESSEES, BEING FURTHER AGGRIEVED, FILED WR IT PETITION IN THE HIGH COURT OF DELHI WHICH HAS BEEN DISPOSED OF BY THE IMPUGNED ORDER. THE HIGH COURT, WHILE ACCEPTING THE WRIT PETITION AND SETTING ASIDE THE INTEREST CHARGED UNDER S. 234A OF THE ACT, HAS COME TO THE CONCLUSION THAT INTEREST IS NOT A PENALTY AND THAT THE INTEREST IS LEVIED BY WAY OF COMPENSAT ION TO COMPENSATE THE REVENUE IN ORDER TO AVOID IT FROM BEING DEPRIVED OF THE PAYMENT OF TAX ON THE DUE DATE. THE HIGH COURT ALSO HELD THAT INTEREST WO ULD BE PAYABLE IN A CASE, WHERE TAX HAS NOT BEEN DEPOSITED PRIOR TO THE DUE D ATE OF FILING OF THE IT RETURN. 5. THE REVENUE HAS CHALLENGED THE AFORESAID DECISIO N BY FILING SPECIAL LEAVE PETITION BEFORE THIS COURT WHEREIN LEAVE WAS GRANTE D ON 20TH JAN. 2003. 6. HAVING HEARD COUNSEL ON BOTH SIDES, WE ENTIRELY AGREE WITH THE FINDING RECORDED BY THE HIGH COURT AS ALSO THE INTERPRETATI ON OF S. 234A OF THE ACT AS IT STOOD AT THE RELEVANT TIME. SINCE THE TAX DUE HA D ALREADY BEEN PAID WHICH ITA NO 1854 OF 2019 BHARAT BHUSHAN AGARWAL HYDERA BAD PAGE 5 OF 6 WAS NOT LESS THAN THE TAX PAYABLE ON THE RETURNED I NCOME WHICH WAS ACCEPTED, THE QUESTION OF LEVY OF INTEREST DOES NOT ARISE. THUS, WE FIND NO MERIT IN THIS APPEAL AND THE SAME IS DISMISSED. 7. THE CBDT CIRCULAR NO.2 OF 2015 IS ALSO REPRODUCE D HEREUNDER: F. NO. 385/03 /2015-IT(B) GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE CENTRAL BOARD OF DIRECT TAXES (CBDT) NORTH BLOCK, NEW DELHI 10 TH FEBRUARY, 2015 SUBJECT: CHARGEABILITY OF INTEREST UNDER SECTION 2 34A OF THE INCOME- TAX ACT, 1961 ON SELF-ASSESSMENT TAX PAID BEFORE TH E DUE DATE OF FILING OF RETURN OF INCOME- REGARDING INTEREST UNDER SECTION 234A OF THE INCOME-TAX ACT, 1961(HEREINAFTER THE ACT) IS CHARGED IN CASE OF DEFAULT IN FURNISHIN G RETURN OF INCOME BY AN ASSESSEE. THE INTEREST IS CHARGED AT THE SPECIFI ED RATE ON THE AMOUNT OF TAX PAYABLE ON THE TOTAL INCOME, AS REDUC ED BY THE AMOUNT OF ADVANCE TAX, TDS/TCS, ANY RELIEF OF TAX ALLOWED UNDER SECTION 90 AND SECTION 90A, ANY DEDUCTION ALLOWED UNDER SECTIO N 91 AND ANY TAX CREDIT ALLOWED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 115JAA AND SECTION 115JD OF THE ACT. SINCE SELF ASSESSMENT TAX IS NOT MENTIONED AS A COMPONENT OF TAX TO BE REDUCED FROM THE AMOUNT ON WHICH INTEREST UNDER SECTION 234A OF THE ACT IS CHA RGEABLE, INTEREST IS BEING CHARGED ON THE AMOUNT OF SELF-ASSESSMENT TAX PAID BY THE ASSESSEE EVEN BEFORE THE DUE DATE OF FILING OF RETU RN. 2. IT HAS BEEN HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS PRANNOY ROY, 309 ITR 231 (2009) THAT THE INTERES T UNDER SECTION 234A OF THE ACT ON DEFAULT IN FURNISHING RETURN OF INCOME SHALL BE PAYABLE ONLY ON THE AMOUNT OF TAX THAT HAS NOT BEEN DEPOSITED BEFORE THE DUE DATE OF FILING OF THE INCOME-TAX RETURN FOR THE RELEVANT ASSESSMENT YEAR. ACCORDINGLY, THE PRESENT PRACTICE OF CHARGING INTEREST UNDER SECTION 234A OF THE ACT ON SELF-ASSE SSMENT TAX PAID BEFORE THE DUE DATE OF FILING RETURN WAS REVIEWED B Y CBDT. 3. THE BOARD HAS DECIDED THAT NO INTEREST UNDER SEC TION 234A OF THE ACT IS CHARGEABLE ON THE AMOUNT OF SELF-ASSESSMENT TAX PAID BY THE ASSESSEE BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME. 4. THIS CIRCULAR MAY BE BROUGHT TO THE NOTICE OF AL L OFFICERS FOR COMPLIANCE. 5. HINDI VERSION SHALL FOLLOW. SD/- (SANDEEP SINGH) UNDER SECRETARY TO GOVERNMENT OF INDIA ITA NO 1854 OF 2019 BHARAT BHUSHAN AGARWAL HYDERA BAD PAGE 6 OF 6 8. RESPECTFULLY FOLLOWING THE DECISION OF THE HON'B LE SUPREME COURT ON SIMILAR SET OF FACTS, WE DIRECT TH E ASSESSING OFFICER TO RECOMPUTE INTEREST U/S 234A OF THE ACT O NLY FOR TWO MONTHS AND THAT TOO ON THE SUM OF RS.45,52,980/- WH ICH WAS NOT PAID BEFORE THE DUE DATE OF FILING THE RETURN O F INCOME. ASSESSEES APPEAL IS ACCORDINGLY ALLOWED. 9. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOW ED. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH JUNE, 2021. SD/- SD/- (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 9 TH JUNE, 2021. VINODAN/SPS COPY TO: S.NO ADDRESSES 1 SRI BHARATH BHUSHAN AGARWAL, HYDERABAD 2 DY.CIT, CIRCLE 14(1) HYDERABAD 3 CIT (A)-6, HYDERABAD 4 PR. CIT - 6, HYDERABAD 5 DR, ITAT HYDERABAD BEN CHES 6 GUARD FILE BY ORDER