The DCIT, Circle-1(3), Surat V. M/s. S.V. Enterprise, Surat

ITA 22/AHD/2015

• Counselvise Citation: [2018] 111 COUNSELVISE.COM (IT) 1900 (ITAT-SURAT)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 05-01-2015
• Court: TRIBUNAL

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL,SURAT BENCH,SURAT , , BEFORE SHRI C.M.GARG, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER . / ITA NO.22/AHD/2015/SRT [ [ / ASSESSMENT YEAR: 2008-09 DY. COMMISSIONER OF INCOME TAX, CIRCLE-1(3), SURAT. VS. M/S. S.V.ENTERPRISE, 202, CINDRELLA APARTMENT, BEHIND MODI BUNGALOW, PARLE POINT, ATHWALINES, SUTAT 395 007. [PAN: AAPFS 7663E] ( / APPELLANT) ( /RESPONDENT) / APPELLANT BY : MRS.R.KAVITHA, SR. DR /RESPONDENT BY : SHRIHIRENM.DIWAN, C.A /DATE OF HEARING : 15-03-2018 /DATE OF PRONOUNCEMENT : 20-03-2018 / ORDER PERC.M.GARG, JUDICIAL MEMBER : THIS APPEAL HAS BEEN FILED BY THE REVENUE CHALLENGING THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-IV, SURAT (CIT(A) FOR SHORT) DATED 15.10.2014 FOR THE ASSESSMENT YEAR (AY) 2008-09 PASSED IN THE FIRST APPEALNO.CAS-IV/109/13-14. 2 ITA NO.22/AHD/2015/SRT (A.Y: 2008-09) M/S.S.V.ENTERPRISE 2. GROUNDS.3 & 4 OF REVENUE ARE OF GENERAL IN NATURE. THE REMAINING EFFECTIVE GROUNDS RAISED BY REVENUE READS AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, WHETHER THE LD. CIT(A) WAS JUSTIFIED IN ALLOWING CHARGING OF INTEREST U/S. 220(2) AFTER 30 DAYS FROM THE DATE OF ISSUE OF NOTICE OF DEMAND U/S. 156 OF THE ACT EVEN THOUGH INTEREST U/S. 220(2) WAS CHARGEABLE AFTER 30 DAYS FROM THE DATE OF INTIMATION U/S. 143(1) OF THE ACT. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) ERRED IN OF THE ACT APPRECIATING THE PROVISIONS OF S. 140A(3) AND NOT TREATING THE INTIMATION U/S. 143(1) AS NOTICE OF DEMAND. 3. WE HAVE HEARD THE ARGUMENTS OF BOTH SIDES AND CAREFULLY PERUSED THE RELEVANT MATERIAL PLACED ON THE RECORD OF THE TRIBUNAL. THE LD. DEPARTMENTAL REPRESENTATIVE (DR) SUBMITTED THAT THE FIRST APPELLATE ORDER WAS NOT JUSTIFIED IN ALLOWING THE CHARGING OF INTEREST U/S. 220(2) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT) AFTER 30 DAYS FROM THE DATE OF ISSUE OF NOTICE OF DEMAND U/S. 156 OF THE ACT EVEN THOUGH INTEREST U/S. 220(2) OF THE ACT WAS CHARGEABLE AFTER 30 DAYS FROM THE DATE OF INTIMATION U/S. 143(1) OF THE ACT. THE LD. DR FURTHER POINTED OUT THAT THE LD. FIRST APPELLATE AUTHORITY HAS ALSO ERRED IN NOT APPRECIATING THE PROVISIONS OF S. 140A(3) OF THE ACT AND NOT TREATING THE INTIMATION U/S. 143(1) OF THE ACT AS NOTICE OF DEMAND. LASTLY, THE LD. DR SUBMITTED THAT THE FIRST APPELLATE AUTHORITY IS GRANTED RELIEF WITHOUT ANY BASIS AND JUSTIFIED REASON THEREFORE, IMPUGNED ORDER MAY KINDLY BE SET ASIDE BY THAT OF THE A.O. 4. REPLYING TO THE ABOVE, THE LD. ASSESSEES REPRESENTATIVE (AR) SUBMITTED THAT THE DEPARTMENT IS AGITATING THE ISSUE OF INTEREST PRAY TO ALLOW TO CHARGE THE INTEREST U/S. 220(2) OF THE ACT AFTER 30 DAYS FROM THE DATE OF 3 ITA NO.22/AHD/2015/SRT (A.Y: 2008-09) M/S.S.V.ENTERPRISE INTIMATION WITHOUT ANY BASIS. THE LD. AR FURTHER SUBMITTED THAT THE LD. CIT(A) WAS RIGHT IN GRANTING RELIEF TO THE ASSESSEE AS THE INTEREST U/S. 234B WOULD HAVE BEEN CHARGED UP TO THE DATE OF THE DEMAND NOTICE AND THE ASSESSEE HAS THEREFORE BEEN VISITED BY THE CONSEQUENCES INTENDED U/S. 140A OF THE ACT FOR NON-PAYMENT OF TAXES AS PER SAID PROVISION THE ASSESSEE WAS ALSO TO BE TREATED AS ASSESSEE IN DEFAULT WHICH ENABLES THE A.O. TO COLLECT THE OUTSTANDING TAX EVEN WITHOUT RAISING NOTICE OF DEMAND BY METHODS PRESCRIBED IN THE ACT FOR COLLECTION OF TAXES BUT IT DOES NOT EMPOWER THE A.O TO CHARGE INTEREST U/S. 220(2) OF THE ACT FROM THEMONTH FOLLOWING THE MONTH IN WHICH THE RETURN WAS FILED. THE LD. AR SUPPORTING THE FIRST APPELLATE ORDER SUBMITTED THAT THE BASELESS CHARGING OF INTEREST WAS RIGHTLY DELETED BY THE FIRST APPELLATE AUTHORITY HENCE, THE CONCLUSION DRAWN BY HIM MAY KINDLY BE CONFIRMED BY DISMISSING THE APPEAL OF THE REVENUE. 5. ON CAREFUL SUBMISSION OF ABOVE RIVAL SUBMISSIONS, FIRST OF ALL WE OBSERVE THAT THE LD. CIT(A) HAS GRANTED RELIEF TO THE ASSESSEE WITH THE FOLLOWING CONCLUSION: 2.5 I HAVE GONE THROUGH THE FACTS OF THE CASE, THE PROVISIONS OF SEC.220(2) AS ALSO SEC. 140A ON WHICH THE A.O. HAS RELIED TO CHARGE INTEREST U/S.220(2) ON UNPAID TAXES FROM THE MONTH FOLLOWING THE MONTH IN WHICH THE RETURN OF INCOME WAS FILED. SEC. 220(2) IS APPLICABLE ONLY IF THE DEMAND RAISED VIDE ANY NOTICE U/S. 156 REMAINS TO BE PAID WITHIN THE TIME ALLOWED AS PER THAT NOTICE. FURTHER, THE INTEREST IS TO BE CHARGED FROM THE END OF THE SAID PERIOD TILL THE DEMAND IS PAID. THE CASE RECORDS OF THE APPELLANT WERE REQUISITIONED FROM WHICH IT IS SEEN THAT NOTICE OF DEMAND U/S.156 WAS RAISED ONLY ON 24.12.2010 ON COMPLETION OF ORDER U/S. 143(3). THE SAID NOTICE OF DEMAND SPECIFIES THAT THE TAX BE PAID WITHIN 30 DAYS OF THE NOTICE. THEREFORE, INTEREST U/S. 220(2) WAS 4 ITA NO.22/AHD/2015/SRT (A.Y: 2008-09) M/S.S.V.ENTERPRISE CHARGEABLE ONLY FROM 24.01.2011 AND NOT FROM THE MONTH FOLLOWING THE MONTH IN WHICH THE RETURN WAS FILED. 2.6 THE RELIANCE OF THE A.O. ON PROVISIONS OF SEC.L40A FOR CHARGING INTEREST U/S. 220(2) FROM THE MONTH FOLLOWING THE MONTH IN WHICH THE RETURN WAS FILED ONLY FOR THE REASON THAT THE ASSESSEE WAS TO BE TREATED AS AN ASSESSEE IN DEFAULT FOR NON-PAYMENT OF SELF ASSESSMENT TAX U/S. 140A IS NOT INTENDED BY THE SAID SECTION. AS PER SEC. 140A IF THE TAXES DUE ON THE RETURNED INCOME ARE NOT PAID BEFORE FILING OF THE RETURN, THE APPELLANT IS LIABLE TO INTEREST FOR DELAY IN FURNISHING THE RETURN OR DEFAULT OR DELAY IN PAYMENT OF ADVANCE-TAX, I.E. INTEREST U/S. 234A, 234B & 234C, AS THE CASE MAY BE. FROM THE INCOME-TAX COMPUTATION FORM ACCOMPANYING THE NOTICE OF DEMAND IT IS SEEN THAT THE ASSESSEE HAS BEEN CHARGED INTEREST U/S. 234B AND 234C OF RS. 1,02,03,842/- AND RS. 13,20,444/-, RESPECTIVELY. THE INTEREST U/S.234B WOULD HAVE BEEN CHARGED UP TO THE DATE OF THE DEMAND NOTICE AND THE ASSESSEE HAS THEREFORE BEEN VISITED BY THE CONSEQUENCES INTENDED U/S.140A FOR NON- PAYMENT OF TAXES U/S.140A. AS PER SEC.140A THE ASSESSEE WAS ALSO TO BE TREATED AS AN ASSESSEE IN DEFAULT WHICH ENABLES THE A.O. TO COLLECT THE OUTSTANDING TAX EVEN WITHOUT RAISING NOTICE OF DEMAND BY METHODS PRESCRIBED IN THE ACT FOR COLLECTION OF TAXES BUT IT DOES NOT EMPOWER THE A.O. TO CHARGE INTEREST U/S. 220(2) FROM THE MONTH FOLLOWING THE MONTH IN WHICH THE RETURN WAS FILED. THIS ASPECT IS TAKEN CARE OF BY CHARGING OF INTEREST U/S. 234B UP TO THE DATE OF DEMAND NOTICE. THE RECTIFICATION APPLICATION OF THE APPELLANT ASKING FOR CHARGING OF INTEREST U/S. 220(2) ONLY FROM 24.01.2011 WAS THEREFORE REQUIRED TO BE ALLOWED. THE A.O. IS DIRECTED TO COMPUTE THE INTEREST U/S. 220(2) FROM 24.01.2011 AND ALLOW RELIEF TO THE ASSESSEE ACCORDINGLY. AS THE ASSESSEE HAS IN ITS GROUND OF APPEAL ASKED FOR THE DELETION OF THE ENTIRE INTEREST OF RS. 59,17,804/- RAISED U/S. 220(2), THE APPEAL IS REQUIRED TO THE TREATED AS PARTLY ALLOWED. 6. WHEN WE LOGICALLY ANALYZE OUR CONCLUSION THEN WE FIND THAT IN THE PRESENT CASE THE AO WANTS TO TAKE SUPPORT ON THE PROVISION OF S. 140A OF THE ACT FOR CHARGING INTEREST U/S. 220(2) OF THE ACT FROM THE FOLLOWING THE MONTHS IN WHICH RETURN WAS FILED. MERELY FOR THE REASON THAT THE ASSESSEE WAS TO BE TREATED AS ASSESSEE IN DEFAULT FOR NON PAYMENT OF TAX U/S. 140A OF THE ACT WHICH IS NOT INTENTION OF THIS PROVISION. IN OUR HUMBLE UNDERSTANDING S. 140A OF THE ACT PROVIDES THAT THE TAXES DUE ON THE RETURNED INCOME ARE NOT PAID 5 ITA NO.22/AHD/2015/SRT (A.Y: 2008-09) M/S.S.V.ENTERPRISE BEFORE FILING RETURN, THE ASSESSEE IS LIABLE TO INTEREST FOR DELAY IN FURNISHING THE RETURN OR DEFAULT OR DELAY IN PAYMENT OF ADVANCE TAX WHICH ARE COVERED UNDER THE PROVISIONS OF S. 234A, 234B AND 234C AS THE CASE MAY BE. THE INTEREST U/S. 234B OF THE ACT WOULD HAVE BEEN CHARGED UP TO THE DATE OF DEMAND OF NOTICE AND THEREAFTER THE ASSESSEE IS LIABLE TO PAY INTEREST U/S. 140A OF THE ACT FOR NON PAYMENT OF TAX AS CONSEQUENTIAL LIABILITY. IN THE PRESENT CASE, THE LD. CIT(A) HAS DIRECTED THE AO TO COMPUTE THE INTEREST U/S. 220(2) OF THE ACT FROM 24.01.2011,I.E., THE DATE ON WHICH NOTICE U/.S 156 OF THE ACT WAS ISSUED TO THE ASSESSE AND TO ALLOW THE RELIEF TO THE ASSESSE, WHICH IS AS PER INTENTION OF THE LEGISLATURE ON THE ABOVE NOTED PROVISIONS CREATED FOR CHARGING INTEREST FOR DELAY IN PAYMENT OF TAX. THE INTENTION IS VERY CLEAR THAT THE INTEREST U/S. 140A OF THE ACT HAS TO BE CHARGED FROM THE DATE OF DEMAND NOTICE TILL ACTUAL COLLECTION OF TAX AND THE FIRST APPELLATE AUTHORITY HAS PROPERLY CONSIDERED THE RELEVANT PROVISION OF CHARGING INTEREST FOR DELAY IN PAYMENT OF TAX. WE ARE UNABLE TO SEE ANY VALID REASON TO INTERFERE WITH THE CONCLUSION DRAWN BY THE LD. CIT(A), HENCE WE UPHOLD THE SAME. ACCORDINGLY, GROUNDS 1 & 2 OF REVENUE ARE DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 20 TH MARCH, 2018. / SURAT ; DATED :20 TH MARCH, 2018 SD/- SD/- ( ) ( O.P.MEENA ) / ACCOUNTANT MEMBER ( ) (C.M.GARG) / JUDICIAL MEMBER 6 ITA NO.22/AHD/2015/SRT (A.Y: 2008-09) M/S.S.V.ENTERPRISE EDN / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) / THE CIT; 4. , , / DR, ITAT,SURAT; 5. / GUARD FILE. / BY ORDER, // TRUE COPY // / ASSISTANT REGISTRAR , / ITAT, SURAT