ACIT, Jaipur V. SHRUTI GEMS, Jaipur

ITA 236/JPR/2011

• Counselvise Citation: 23623114 RSA 2011
• Duration Of Justice: 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2003-2004
• Appeal Filed On: 15-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VINOD JOHARI
• Section: 234B; 154

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, B JAIPUR (BEFORE SHRI R.K.GUPTA AND SHRI N.L. KALRA) ITA NO.236/JP/2011 ASSESSMENT YEAR : 2003-2004 THE ASSTT. COMMISSIONER OF INCOME-TAX VS. M/S. SH RUTI GEMS, CIRCLE-I, 1632, SONTHLIWALON JAIPUR. KA RASTA, JAIPUR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VINOD JOHARI RESPONDENT BY : NONE DATE OF HEARING: 13.09.2011 DATE OF PRONOUNCEMENT : 16.09.2011 ORDER PER SHRI N.L. KALRA, A.M. 1. THE REVENUE HAS FILED AN APPEAL AGAINST ORDER OF LD. CIT (A)-I JAIPUR DATED 07.01.2011. THE GROUND OF APPEAL RAISED IS AS UNDER : WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LD. CIT (A) IS JUSTIFIED IN: WHETHER ON THE FACTS AND IN THE CIRCUMSTANCE OF TH E CASE AND IN LAW THE LD. CIT (A) IS JUSTIFIED IN ALLOWING THE PAYMENT OF ADDITIONAL INCOME-TAX U/S 245D(2A) TO BE ADJUSTED TOWARDS TAX LIABILITY F IRST AND THEN TOWARDS THE INTEREST LIABILITY. 2. THE ASSESSEE FILED AN APPLICATION U/S 154 OF THE I.T. ACT AGAINST ORDER OF A.O. PASSED U/S 245 D(4) AND SUBMITTED THAT INTEREST U/S 234 B HAS BEEN WRONGLY CHARGED AT 2 RS.12,83,769/- AS AGAINST RS.8,12,736/-. IT WAS THE REFORE REQUESTED BY THE ASSESSEE THAT MISTAKE IN CHANGING INTEREST BE RECTIFIED. 3. THE A.O. REJECTED THE APPLICATION OF THE ASSESSE E AFTER OBSERVING AS UNDER: UNDER THE PROVISIONS OF SUB-SECTION (1) OF SECTION 234B OF THE I.T. ACT, 1961, WHERE IN ANY FINANCIAL YEAR, AN ASSESSEE WHO IS LIABLE TO PAY ADVANCE TAX HAS FAILED TO PAY SUCH TAX OR WHERE THE ADVANCE TAX PAID BY SUCH ASSESSEE IS LESS THAN NINETY PERCENT OF THE AS SESSED TAX, THE ASSESSEE SHALL BE LIABLE TO PAY SIMPLE INTEREST AT THE PRESC RIBED RATES FOR EVERY MONTH OR PART OF A MONTH COMPRISED IN THE PERIOD FR OM IST DAY OF APRIL, NEXT FOLLOWING SUCH FINANCIAL YEAR TO THE DATE OF R EGULAR ASSESSMENT, ON AN AMOUNT EQUAL TO THE ASSESSED TAX OR AS THE CASE MAY BE, ON THE AMOUNT BY WHICH THE ADVANCE-TAX PAID AS AFORESAID FALLS SHORT OF THE ASSESSED TAX. FURTHER, UNDER THE PROVISIONS OF THE SECTION 140A T HE ASSESSEE IS LIABLE TO PAY THE TAX DUE ON RETURN INCOME TOGETHER WITH INTE REST PAYABLE UNDER ANY PROVISIONS OF THE ACT BEFORE FURNISHING THE RETURN. IN SUCH A CASE, WHERE THE AMOUNT PAID BY THE ASSESSEE FALLS SHORT OF THE AGGREGATE OF THE TAX AND INTEREST, THE AMOUNT SO PAID SHALL FIRST BE ADJUSTE D TOWARDS THE INTEREST PAYABLE AS AFORESAID AND THE BALANCE IF ANY SHALL B E ADJUSTED TOWARDS THE TAX PAYABLE. FURTHER, IN CASE OF A REGULAR ASSESSME NT, ANY AMOUNT PAID AS SELF ASSESSED TAX SHALL BE DEEMED TO HAVE BEEN PAID TOWARDS SUCH REGULAR ASSESSMENT. IN VIEW OF THE ABOVE THE INTEREST U/S 234B HAS BEEN CALCULATED IN THE CASE OF THE ASSESSEE AS UNDER: ASSESSED TAX RS.28,08,578/- INTEREST U/S234A= 4,49360/- INTEREST U/S.234C= 78,417/- INTEREST U/S.234B: INTEREST FROM APRIL, 2003 TO AUGUST, 2003 (28085 X 5 X 1.25= 175531/- (A) INTEREST FROM SEPT.,2003 TO MARCH, 2005 28085 X 19 X 1= 533615/- (B) 1236923/- PAID IN MARCH, 05= RS.21,18,681/- LESS: THE AMOUNT OF INTEREST RS.12,36,923/- THE BALANCE AMOUNT ADJUSTED AGAINST TAX RS.8,81,758/- RS.8,81,758/- RS.19,26,820/- INTEREST FROM APRIL, 2005 TO MARCH, 2006 (19268 X 12 X 1)= RS.2,31,216 (C) AMOUNT PAID IN MARCH, 06 RS.5,87,815/- 3 LESS: INTEREST AMOUNT ADJUSTED 2,31,216/- 3,56,599/- RS.3,56,599/- RS.15,70,221/- INTEREST FROM APRIL, 2006 TO APRIL, 2008 (15702 X 25 X 1) RS.3,92,550 (D) THE TOTAL OF (A) (B) (C) & (D) = RS.13,32,912/- I.E . INTEREST CHARGEABLE U/S. 234B. 4. THE LD. CIT (A) HAS DIRECTED THE A.O. TO ACCEPT THE CLAIM OF THE ASSESSEE AFTER OBSERVING AS UNDER: DURING THE COURSE OF APPEAL HEARING THE A/R FOR THE APPELLANT SUBMITTED THAT THE APPELLANT HAD MOVED AN APPLICATION U/S 245 C(1) FOR SETTLEMENT WHICH HAD BEEN ALLOWED VIDE ORDER U/S 245D(1) VIDE THE SETTLEMENT COMMISSIONS ORDER DATED 24.10.2005 AND PAID THE AD DITIONAL AMOUNT OF TAX U/S 245D(2A). THE ADDITIONAL TAX WAS NOT PAID U /S 140A WHEREBY THE AMOUNT HAD TO BE ADJUSTED FIRST AGAINST THE TAX LIA BILITY AND NOT AGAINST THE INTEREST PAYMENT. IT WAS FURTHER SUBMITTED THAT IN A.Y. 2004-2005 IN SIMILAR SITUATION THE SAME AO HAD ACCEPTED THE CONT ENTION OF THE APPELLANT U/S 154 VIDE ORDER DATED 23.06.2008. IT WAS PLEADED THAT THE APPELLANTS CLAIM BE ALLOWED. I HAVE CONSIDERED THE FACTS OF THE CASE AND THE SUB MISSIONS MADE. THE POSITION IN THE CURRENT YEAR AND A.Y.2004-05 IS IDE NTICAL. THERE BEING NO CHANGE IN THE FACTS THE AO IS DIRECTED TO ACCEPT TH E APPELLANTS CLAIM AND MODIFY THE INTEREST CHARGEABLEU/S234B. 5. BEFORE US THE LD. D/R HAS SUBMITTED AS UNDER: THERE IS NO DIRECTION OF HONBLE SETTLEMENT COMMISS ION REGARDING THE MANNER IN WHICH TAX PAID IS LIABLE TO BE TREATED. I T IS SO BECAUSE THERE IS NO PROVISIONS IN CHAPTER XIX-A FOR SUCH DETERMINATI ON OF TAX AND INTEREST ON THE INCOME UNDER SETTLEMENT. THE TAX AND INTERES T ARE LIABLE TO BE COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF THE A CT I.E. TAX AS LEVIED BY FINANCE ACT OF THE RELEVANT YEAR AND INTEREST AS PR OVIDED UNDER SECTION 234-A, B, C ETC. THERE ARE NO OVER-RIDING PROVISION S FOR SUCH PURPOSE IN CHAPTER XIX-A OF INCOME TAX ACT 1961. ANY ADDITIONAL TAX ON INCOME UNDER SETTLEMENT IS PA ID UNDER SECTION 245D(2A) OF INCOME TAX ACT 1961 BUT THE SAME IS IN ACCORDANCE WITH THE PROVISIONS OF FINANCE ACT OF THE RELEVANT YEAR AND INTEREST AS PROVIDED UNDER SECTION 234-A, B,C ONLY. SIMILARLY, TAX AND INTEREST (OR PENALTY) ARE PAYABL E ON INCOME UNDER THE TERMS OF SETTLEMENT UNDER SECTION 245D(4) OF INCOME TAX ACT 1961 IN 4 ACCORDANCE WITH THE PROVISIONS OF SECTION 245 D(6) OF INCOME TAX ACT 1961 WHICH IS ALSO IN ACCORDANCE WITH THE PROVISION S OF FINANCE ACT OF THE RELEVANT YEAR AND INTEREST AS PROVIDED UNDER SECTIO N 234-A, B, C ONLY AS IN THIS SECTION ALSO, NO POWERS HAVE BEEN GIVEN TO HONBLE SETTLEMENT COMMISSION TO OVER-RIDE THE PROVISIONS OF FINANCE A CT OF THE RELEVANT YEAR AND INTEREST AS PROVIDED UNDER SECTION 234-A, B, C OF INCOME TAX ACT 1961. LEARNED COMMISSIONER OF INCOME TAX (APPEALS) WAS DU TY BOUND TO DECIDE THE APPEAL AND ASCERTAIN ABILITY OF INTEREST IN ACC ORDANCE WITH THE PROVISIONS OF FINANCE ACT OF THE RELEVANT YEAR AND INTEREST AS PROVIDED UNDER SECTION 234-A, B, C AND NOT BY PRECEDENTS, TH E FACTS OF WHICH ARE NEITHER DISCUSSED IN THE APPELLATE ORDER NOR IN THE GROUNDS OF APPEAL BEFORE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) . IF THE ORDER OF THE ASSESSING OFFICER WAS NOT CORRECT FOR ASSESSMENT YE AR 2004-05 OR NOT IN ACCORDANCE WITH LAW, LEARNED COMMISSIONER OF INCOME TAX (APPEALS) WAS DUTY-BOUND TO REFER IT IN HIS APPELLATE ORDER I NSTEAD OF FOLLOWING IT. IT IS PRAYED THAT THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) MAY BE SET ASIDE OR ALTERNATIVELY HE MAY BE DIRECTED TO DECIDE THE APPEAL IN ACCORDANCE WITH THE PROVISIONS OF INC OME TAX ACT 1961. 6. WE HAVE HEARD THE LD. D/R AND HAVE GONE THROUGH THE RECORD. THE A.O. VIDE ORDER U/S 154 DETERMINED INTEREST U/S 234 B AT RS.13,32,9 12 WHILE THE ASSESSEE MADE AN APPLICATION FOR REDUCING THE INTEREST TO RS.8,12,73 6/- FROM RS.12,83,769/- CHARGED VIDE ORDER U/S 245D(4). THE ASSESSEE HAS MOVED AN APPLIC ATION AND THERE IS NO NOTICE FROM THE A.O. TO ENHANCE THE INTEREST. AN AMENDMENT WHICH HA S THE EFFECT OF ENHANCEMENT CAN NOT BE MADE UNLESS THE A.O. GIVES NOTICE TO THE ASSESSE E OF ITS INTENTION TO DO SO AS PER THE PROVISIONS OF SECTION 154(3) OF I.T. ACT. HENCE THE ORDER TO THE EXTENT OF ENHANCEMENT IS NOT VALID IN THE EYE OF LAW. 7. AS PER ORDER OF SETTLEMENT COMMISSION IT IS CLEA R THAT APPLICATION WAS FILED ON 2.9.2005 AND 18.3.2005. SECTION 245HA WAS INSERTED BY FINANCE ACT 2007 VIDE WHICH THE APPLICATION, IF NOT DISPOSED BY SETTLEMENT COMM ISSION BY 31.3.2008, THEN SUCH APPLICATIONS SHALL ABATE. A NUMBER OF ASSESSES APPR OACHED THE HONBLE HIGH COURT AND 5 THE HONBLE HIGH COURT DIRECTED THE SETTLEMENT COMM ISSION TO PASS ORDER U/S 245D(4) BEFORE 31.3.2005. 8. ACCORDINGLY THE SETTLEMENT COMMISSION, AFTER OBS ERVING TO LARGE NUMBER OF APPLICATIONS PENDING BEFORE IT, PASSED THE ORDER IN VIEW OF THE DECISION OF THE HONBLE HIGH COURT IN A SUMMARY MANNER. AS PER SECTION 245D (1) AS IT EXISTED BEFORE 1.6.2007. THE SETTLEMENT COMMISSION WHERE IT IS POSSIBLE, WAS TO PASS AN ORDER WITHIN ONE YEAR. IF THE APPLICATION IS TO BE PROCEEDED THEN THE ASSESSE E HAS TO PAY THE ADDITIONAL AMOUNT OF INCOME TAX. IF THE ORDER U/S 245D(1) IS NOT MADE BE FORE 31.7.2007 THEN ASSESSEE IS REQUIRED TO PAY ADDITIONAL INCOME TAX AND INTEREST. AMENDED PROVISION OF 245 D(2A) ARE NOT APPLICABLE. BEFORE AMENDMENT THE ASSESSEE WAS R EQUIRED TO PAY ADDITIONAL INCOME TAX. HENCE THERE IS NO CASE OF ADJUSTMENT OF INTERE ST OUT OF ADDITIONAL INCOME TAX PAID. WE THEREFORE FEEL THAT THE LD. CIT (A) WAS JUSTIFIE D IN DIRECTING THE A.O. TO CHARGE INTEREST U/S 234B BY NOT CONSIDERING PART OF PAYMENT OF ADDI TIONAL INCOME TAX TOWARDS INTEREST. EXPLANATION TO SECTION 140A REFERS TO THE AMOUNT PA ID UNDER SUBSECTION 1 OF SECTION 140A AND STATES THAT AMOUNT PAID IS FIRST TO BE ADJ USTED AGAINST INTEREST AND BALANCE TOWARDS INCOME TAX. THIS EXPLANATION IS NOT APPLICA BLE TO PAYMENT U/S 245D(2). HENCE WE UPHOLD THE ORDER OF LD. CIT (A). IN THE RESULT THE APPEAL OF THE REVENUE IS DISMISS ED. THE ORDER IS PRONOUNCED IN OPEN COURT ON 16.09.201 1 SD/- SD/- (R.K.GUPTA) (N.L.KALRA) JUDICIAL MEMBER ACCOUNTANT MEMBER 6 DATED: 16.09.2011 *S.KUMAR* COPY FORWARDED TO:- 1. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE -1, JAIPUR. 2. M/S. SHRUTI GEMS, 1632, SONTHLIWALON KA RASTA, C HAURA RASTA, JAIPUR. 3. THE CIT 4. THE CIT(A), 5. THE D/R, ITAT, JAIPUR 6. THE GUARD FILE IN ITA NO.236/JP/2011 BY ORDER A.R., I.T.A.T., JAIPUR