Sachin Jain, New Delhi V. DCIT CC-15, New Delhi

ITA 2523/DEL/2008

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 5690 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 25-02-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 17-07-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: BANITA DEVI NAOREM
• Assessee Lawyers: RAMIT KOCHER
• Section: 143(3); 142(1); 234B; 132; 144; 90

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH : G NEW DELHI) BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI K.D. RANJAN, ACCOUNTANT MEMBER I.T.A. NO.2523/DEL./2008 (ASSESSMENT YEAR : 2006-07) SHRI SACHIN JAIN, VS. DCIT, CENTRAL CIRCLE 15, E-2/195-A, SHASTRI NAGAR, NEW DELHI. NEW DELHI-110 052. (PAN/GIR NO.ADPPJ7417A) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RAMIT KOCHER, CA. REVENUE BY : SHRI BANITA DEVI NAOREM, SR.DR ORDER PER K.D. RANJAN, AM THIS APPEAL BY THE ASSESSEE FOR AY 2006-07 ARISES OUT OF ORDER OF CIT(A)-III, NEW DELHI. 2. THE ONLY ISSUE FOR CONSIDERATION RELATES TO CHAR GING OF INTEREST U/S 234A & 234B OF THE I.T. ACT, 1961. THE RELEVANT GROUND IS REPR ODUCED AS BELOW: 1. THE LD. DCIT HAS ERRED IN COMPUTING INTEREST U/S 234-A AND 234B IN THE IMPUGNED ASSESSMENT ORDER DATED 26.12.2007 IN VIOLA TION OF SCHEME OF INCOME TAX ACT, 1961 AND PRINCIPLES OF NATURAL JUST ICE TO THE EXTENT OF NOT GIVING PROPER CREDIT FOR TAXES PAID BY THE APPELLAN T BEFORE CALCULATING ITA NO.2523/DEL./2008 (AY : 2006-07) 2 AFORESAID INTERESTS. THE LD. CIT(APPEALS) ERRED IN CONFIRMING THE SAID IMPUGNED ASSESSMENT ORDER AND DISMISSING THE APPEAL FILED BY THE APPELLANT. 3. THE FACTS OF THE CASE STATED IN BRIEF ARE THAT S EARCH AND SEIZURE OPERATION U/S 132 OF THE I.T. ACT, 1961 WAS CARRIED OUT ON THE BUSINE SS PREMISES OF THE ASSESSEE M/S VARDHMAN ASSOCIATES PVT. LTD. AND ITS DIRECTORS ON 17.3.2006. IN THE CASE OF ASSESSEE, THE AO ISSUED NOTICE U/S 143(2) ON 18.10.2007. NOT ICES U/S 143(2) AND 142(1) ALONG WITH A DETAILED QUESTIONNAIRE DATED 27.11.2007 WERE ISSU ED AND SERVED ON THE ASSESSEE FIXING THE CASE FOR HEARING ON 3.12.2007. THE ASSESSEE FI LED RETURN OF INCOME DECLARING INCOME OF RS.56,18,111/- ON 26.11.2007. THE AO COMPLETED THE ASSESSMENT U/S 143(3) AT AN INCOME OF RS.56,26,384/-. THE ADDITION OF RS.6,661 /- WAS MADE ON ACCOUNT OF COMMUNICATION EXPENSES AND ANOTHER ADDITION OF RS.1 ,612 WAS MADE ON ACCOUNT OF CONVEYANCE. THESE ADDITIONS WERE MADE ON AD-HOC BA SIS. THE AO CHARGED INTEREST U/S 234A, 234B & 234C OF THE ACT. 4. THE ASSESSEE BEING AGGRIEVED BY CHARGING OF INTE REST U/S 234A & 234B FILED APPEAL BEFORE CIT(A) ON THE GROUND THAT INTEREST U/ S 234A & 234B OF THE ACT WAS NOT CHARGEABLE AS THE TAX ASSESSING OFFICER DID NOT GIV E CREDIT TO TAX DEPOSITED UNDER SELF- ASSESSMENT U/S 140 OF THE ACT. IT WAS ALSO SUBMITT ED THAT RETURN OF INCOME WAS DUE ON 31.7.2006 WHICH WAS FILED ON 26.11.2007. THE ASSES SEE PAID TAXES OF RS.19,72,604/- IN NOVEMBER, 2006. THE AO WHILE CHARGING INTEREST U/S 234A IGNORED THE TAX PAID BY THE ASSESSEE IN NOVEMBER, 2006 AND CHARGED INTEREST U/S 234A OF RS.19,70,621/- FROM AUGUST, 2006 TILL NOVEMBER, 2007 WHEN THE RETURN OF INCOME WAS FILED BY THE ASSESSEE. IT WAS ALSO SUBMITTED THAT INTEREST PAYABLE U/S 234 A WAS COMPENSATORY IN NATURE AND SINCE ASSESSEE HAD PAID TAX OF RS.13,70,000/- ON 2. 11.2006, NO INTEREST COULD BE CHARGED FOR THE PERIOD BEYOND NOVEMBER, 2006, IF THE CREDI T FOR THE TAX PAID IS GIVEN. THE AO HAD MERELY PROCEEDED ON THE BASIS OF DELAY IN FILIN G THE RETURN AND ON THE BASIS OF PAYMENT OF TAXES BY THE ASSESSEE. IT WAS ALSO SU BMITTED THAT REVENUE WAS NOT DEPRIVED OF DUE TAXES AFTER NOVEMBER, 2006 AND, THEREFORE, I NTEREST U/S 234A WAS NOT CHARGEABLE. THE ASSESSEE PLACED RELIANCE ON THE DECISION IN THE CASE OF DR. PRANNOY ROY, REPORTED IN 254 ITR 755. ITA NO.2523/DEL./2008 (AY : 2006-07) 3 5. THE CIT(A) CONFIRMED THE LEVY OF INTEREST U/S 23 4A BY OBSERVING AS UNDER: I HAVE CONSIDERED THE SUBMISSIONS RAISED ON THE IS SUE OF LEVY OF INTEREST U/S 234A OF THE I.T. ACT. IN THIS CASE AS ADMITTED THE RETURN WAS FILED IN NOV.,2007 AS AGAINST DUE DATE OF 31 ST JULY,2006. THE TAXES WERE PAID IN NOV.,2006 MUCH AFTER THE DUE DATE OF FILING RETURNED ALLOWED U/S 1 39(1) OF I.T. ACT. I HAVE GONE THROUGH THE JUDGMENT OF HONBLE DELHI HIGH COURT W HICH WAS RELIED BY THE APPELLANT TO SUPPORT HIS CASE. IN THAT CASE THE DUE DATE OF FILING RETURN IS 31 ST OCT.,1995. WHEREAS THE ASSESSEE HAS FILED THE RETUR N ON 26.9.1996. HOWEVER, THE ASSESSEE HAS PAID THE TAXES ON 25 TH SEP.,1995 I.E. BEFORE THE DUE DATE OF FILING THE RETURN OF INCOME. THE A.O. HAS LEVIED INTEREST FROM OCT.,1995 TILL SEPT.,1996 FOR THE DELAY OF FILING RETURN. IN THAT CONTEXT THEIR L ORDSHIP HAS OPINED THAT INTEREST U/S 234A WOULD BE PAYABLE IN A CASE WHERE TAX HAS NOT B EEN DEPOSITED PRIOR TO THE DATE OF FILING OF THE INCOME-TAX RETURN. IN THE CUR RENT CASE, THE ASSESSEE HAS DEPOSITED THE TAXES ONLY IN NOV.,2006 WHICH IS BEYO ND THE DUE DATE OF FILING OF THE RETURN OF INCOME. AS FAR AS THE DECISION OF THE DEL HI HIGH COURT THE ASSESSEES CASE WOULD SQUARELY FALL UNDER THE SCOPE OF CHARGIN G INTEREST U/S 234A FOR BELATED RETURN OF INCOME. THE PROVISIONS OF SECTION 234A IS UNAMBIGUOUS AND THE ASSESSING OFFICER IS BOUND TO FOLLOW SUCH PROVISION S MANDATORILY WITHOUT USING ANY DISCRETION. IT IS A NORMAL RULE OF CONSTRUCTIO N THAT WHEN A STATUTE VESTS CERTAIN POWER IN AN AUTHORITY TO BE EXERCISED IN A PARTICULAR MANNER THEN THE SAID AUTHORITY HAS TO BE EXERCISES IT ONLY IN THE MANNER PROVIDED IN THE STATUTE ITSELF. IN VIEW OF THE ABOVE DISCUSSION, THE A.O. HAS RIGHT LY EXERCISED HIS JURISDICTION TO IMPOSE INTEREST FOR THE DELAY IN FI LING OF THE RETURN. SO THERE IS NO JUSTIFICATION ON MY PART TO INTEREST WITH SUCH ACTI ON OF THE A.O. ACCORDINGLY THE LEVY OF INTEREST U/S 234A IS SUSTAINED. AS REGARDS CHARGING OF INTEREST U/S 234B, LD. CIT( A) OBSERVED THAT NO SPECIFIC REASONS WERE RAISED DURING THE COURSE OF APPELLATE PROCEEDI NGS AND ACCORDINGLY THE INTEREST PAYABLE U/S 234B BEING MANDATORY AND CONSEQUENTIAL IN NATURE HAS BEEN RIGHTLY CHARGED BY THE ASSESSING OFFICER. 6. BEFORE US, LD.AR OF THE ASSESSEE SUBMITTED THAT ASSESSMENT HAS BEEN MADE ALMOST ON THE SAME INCOME EXCEPT MAKING SOME AD HOC DISALL OWANCES. THE ASSESSEE HAD PAID TAXES ON RETURNED INCOME ON 2.11.2006 AND RETURN OF INCOME WAS FILED ON 26.11.2007. THEREFORE, INTEREST U/S 234A COULD BE CHARGED ONLY UP TO 2.11.2006 AND NOT BEYOND THAT DATE. HE FURTHER SUBMITTED THAT TAX PAID UNDER SEL F-ASSESSMENT HAS TO BE REDUCED FOR CALCULATION OF INTEREST U/S 234A OF THE ACT. HE FU RTHER SUBMITTED THAT TAX PAID BY WAY OF SELF-ASSESSMENT ON 2.11.2006 IS IN NATURE OF ADVANC E TAX. HE PLACED RELIANCE ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CI T VS. DR. PRANNOY ROY & ANOTHER, ITA NO.2523/DEL./2008 (AY : 2006-07) 4 309 ITR 231. HE ALSO PLACED RELIANCE ON THE DECISI ON OF ITAT IN THE CASE OF ROSHAN LAL KAPOOR VS. ACIT, 108 TTJ 740(CHENNAI). ON THE OTHE R HAND, LD. SR. DR SUPPORTED THE ORDER OF CIT(A). SHE SUBMITTED THAT INTEREST U/S 2 34A IS TO BE CHARGED FOR THE PERIOD FOR WHICH RETURN WAS DELAYED. THEREFORE, INTEREST HAS BEEN CHARGED CORRECTLY. 7. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, THE AO HAD MADE MEAGER ADDITIO N OF RS.8,273/-. IN A CASE WHERE THE RETURN OF INCOME FOR ANY ASSESSMENT YEAR U/S 139(1) OR 139(4) OR IN RESPONSE TO NOTICE U/S 142(1) IS FURNISHED AFTER THE DUE DATE OR IS NOT FU RNISHED, THE ASSESSEE SHALL BE LIABLE TO PAY SIMPLE INTEREST U/S 234A AT THE RATE SPECIFIED IN THE STATUTE FOR EVERY MONTH OR PART OF MONTH COMPRISES IN THE PERIOD COMMENCING ON THE DAT E IMMEDIATELY FOLLOWING THE DUE DATE: (A) WHERE THE RETURN IS FURNISHED AFTER THE DUE DAT E AND ENDING ON THE DATE OF FURNISHING OF RETURN; OR (B) WHERE NO RETURN HAS BEEN FURNISHED ENDING ON TH E DATE OF COMPLETION OF ASSESSMENT U/S 144 OF THE ACT. ON THE AMOUNT OF TAX ON THE TOTAL INCOME AS DETERMI NED U/S 143(1); AND WHERE REGULAR ASSESSMENT IS MADE, ON THE AMOUNT OF TAX ON THE TOTAL INCOME DETERMINED UNDER REGULAR ASSESSMENT AS REDUCED BY THE AMOUNT O F TAX PAID SPECIFIED IN THE SECTION. IN THE INSTANT CASE, THE ASSESSMENT HAS BEEN MADE U /S 143(3) OF THE ACT. THEREFORE, THE INTEREST WILL BE CHARGEABLE TILL THE DATE OF FILING OF RETURN ON ASSESSED TAX AS REDUCED BY TAX PAID BY WAY OF ADVANCE TAX; TAX COLL ECTED BY TDS OR TCS; RELIEF ALLOWED U/S 90 AND 90A OF THE ACT IN RESPECT OF TAX PAID OU TSIDE INDIA OR ALLOWED U/S 91 AND ALSO ANY TAX CREDIT ALLOWED U/S 115JAA OF THE ACT. IN T HIS CASE, ASSESSEE HAS PAID TAX AFTER CLOSE OF THE FINANCIAL YEAR AND AS SUCH THE TAX PAI D BY THE ASSESSEE IS TO BE TREATED AS SELF- ASSESSMENT. AS PER ITNS 150, THE ASSESSEE HAD PAID ADVANCE TAX OF RS.4,50,000/- AND SELF-ASSESSMENT TAX AMOUNTING TO RS.13,84,774/- (RS .13,70,000 ON 2.11.2007 AND RS.14,774/- ON 23.11.2006). THE AO HAS DETERMINED THE TAX PAYABLE ON ASSESSED INCOME AT RS.18,37,740/-. HOWEVER, WHILE CALCULATING INTE REST U/S 234A, HE HAS CHARGED INTEREST ITA NO.2523/DEL./2008 (AY : 2006-07) 5 FOR THE PERIOD FROM THE DUE DATE OF FILING OF RETUR N TO THE DATE ON WHICH THE RETURN WAS FILED WITHOUT GIVING CREDIT TO THE TAX PAID. IN TH E CASE OF ROHSAL LAL KAPOOR VS. ACIT (SUPRA) ITAT, CHENNAI, SMC BENCH, RELYING ON THE DE CISION OF HONBLE DELHI HIGH COURT OF DR. PRANNOY ROY & ANOTHER, 254 ITR 755 HEL D THAT INTEREST U/S 234A IS PAYABLE IN A CASE WHERE TAX HAS NOT BEEN DEPOSITED PRIOR TO THE DUE DATE OF FILING OF RETURN, AND NOT WHERE TAX HAS BEEN PAID, BUT RETURN HAS TO BE FILED BELATEDLY. THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF DR. PRANNOY ROY & A NOTHER HAS BEEN UPHELD BY HONBLE SUPREME COURT IN THE CASE OF CIT & ANOTHER VS. DR. PRANNOY ROY & ANOTHER, 309 ITR 231. IN THE CASE OF DR. PRANNOY ROY, THE DUE DATE FOR FILING THE RETURN WAS 31.10.1995. THE RETURN WAS FILED ON 29.9.1996. HOWEVER, ASSESS EE PAID TAXES DUE ON 25.9.95 BEFORE THE DUE DATE OF FILING OF THE RETURN. IN A CASE WHE RE THE ASSESSEE HAS ALREADY PAID THE SELF- ASSESSMENT TAX DUE ON OR BEFORE DUE DATE OF FILING THE RETURN AND FILES THE RETURN LATE, A PLAIN READING OF THE SECTION 234A WOULD JUSTIFY LEV Y OF INTEREST ON THE DIFFERENCE BETWEEN THE TAX ON THE RETURNED INCOME AS REDUCED BY THE AG GREGATE OF ADVANCE TAX AND TAX DEDUCTED AT SOURCE IGNORING ANY INTERMEDIATE PAYMEN T. THIS TANTAMOUNTS TO CHARGING INTEREST ON THE AMOUNT SO PAID AND ALREADY WITH THE DEPARTMENT. THIS WAS THE ISSUE WHICH WAS DECIDED BY THE HONBLE DELHI HIGH COURT IN DR. PRANNOY ROY & ANOTHER (SUPRA). THE HONBLE HIGH COURT POINTED OUT THAT THE REVENUE HAD NOT SUFFERED ANY MONETARY LOSS BY LATE FILING OF THE RETURN, SINCE INTEREST UNDER THE INCOME-TAX LAW IS FOR THE MONEY WRONGLY WITHHELD FROM THE DEPARTMENT. ACCORDINGLY , THE ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE. THIS DECISION IN THE CASE OF DR. PRA NNOY ROY & ANOTHER HAS BEEN UPHELD BY HONBLE SUPREME COURT AS REFERRED TO ABOVE. APPL YING THE RATIO OF DECISION IN THE CASE OF DR. PRANNOY ROY & ANOTHER (SUPRA), IT IS HELD TH AT INTEREST U/S 234A WILL BE PAYABLE ON AMOUNT OF TAX RETAINED BY THE ASSESSEE DURING THE P ERIOD WHEN RETURN OF INCOME WAS NOT FILED. IN THE INSTANCE CASE, THE RETURNED INCOME AN D ASSESSED INCOME ARE NOT SAME. THERE IS A DIFFERENCE OF RS.8,273/-. SINCE THE ASSESSEE HAS PAID TAX ON RETURNED INCOME ON 2.11.2006, IN OUR CONSIDERED OPINION, THE INTEREST U/S 234A WILL BE CHARGEABLE FORM THE DUE DATE OF FILING THE RETURN TO NOVEMBER, 2006 ON ASSESSED INCOME. SINCE THE ASSESSEE HAD PAID TAX OF RS.13,84,774/- IN NOVEMBER, 2006, I NTEREST U/S 234A FROM DECEMBER, 2006 TO NOVEMBER, 2007 WHEN THE RETURN OF INCOME WA S FILED, WILL BE PAYABLE ON THE ITA NO.2523/DEL./2008 (AY : 2006-07) 6 ASSESSED TAX AFTER REDUCING THE AMOUNT OF TAX PAID AT RS 13,84,774/- . THE AO IS DIRECTED TO COMPUTE THE TAX PAYABLE U/S 234A ACCORDINGLY. 8. AS REGARDS CHARGING OF INTEREST U/S 234B, LD.COU NSEL FOR THE ASSESSEE HAD NOT ADVANCED ANY ARGUMENTS AND SINCE CHARGING OF INTERE ST U/S 234B IS MANDATORY AND CONSEQUENTIAL TO ADDITIONS MADE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE CIT(A) CONFIRMING THE CHARGING OF INTEREST U/S 234B OF THE ACT. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. 10. ORDER PRONOUNCED IN OPEN COURT ON 12.03.2010. SD/- SD/- (I.P. BANSALI) (K.D. RANJAN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: MARCH. 12, 2010. *SKB* COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A)-III, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DELHI. AR/ITAT ITA NO.2523/DEL./2008 (AY : 2006-07) 7