Shri Mahendrabhai Chunibhai Patel, Borsad V. The ACIT., Circle-3, Baroda

ITA 2948/AHD/2006

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9293 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-09-2009
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 03-09-2009
• Assessment Year: misc
• Appeal Filed On: 29-12-2006
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: C K MISHRA
• Assessee Lawyers: S N SOPARKAR
• Section: 244A; 234B

Judgement Text

IN THE INCOME_TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI H.L.KARWA AND SHRI A.N.PAHUJA ITA NO. 2948/AHD/2006 (ASSESSMENT YEAR : 1989-90) MAHENDRABHAI CHUNIBHAI PATEL LAXMI KUI, STATION ROAD, AT & PO BHADRAN, BORSAD. VS. ACIT, CIRCLE-3, BARODA. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.N.SOPARKAR, A.R. RESPONDENT BY : SHRI C.K.MISHRA, D.R. ( (( ( )/ )/)/ )/ ORDER PER KARWA, JM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A)-I, BARODA DATED 30.10.2006 RELATING TO ASSESSMEN T YEAR 1989-90. 2. THE FIRST GROUND OF APPEAL RELATES TO CHARGING OF I NTEREST U/S 234B OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 3. THE RELEVANT FACTS NOTED BY THE CIT(A) ARE AS UNDER : 4. THE FACTS IN THIS CASE ARE THAT SHRI MAHENDRA C. PAT EL, THE APPELLANT, IS A PARTNER IN THE FIRM M/S. FULABHAI GOV INDBHAI. THE MATTER OF ASSESSMENT FOR A.Y. 89-90 IN THE CASE OF THE FIRM WENT IN APPEAL UPTO THE ITAT. IN THE ASSESSMENT OF THE APPELLANT THE SHARE OF PR OFIT IN THE SAID FIRM HAD INITIALLY BEEN TAKEN ON THE BASIS OF WHAT HA D BEEN RETURNED IN THE RETURN OF INCOME. AFTER THE ORDER OF THE ITAT IN THE CASE OF THE FIRM HAD BEEN RECEIVED THE ASSESSING OFFICER GAVE EFFECT TO TH E SAME IN THE HANDS OF THE APPELLANT VIDE ORDER DATED 8-9-2003. IN THIS ORDER, THE 2 ASSESSING OFFICER ALSO DIRECTED FOR CHARGING INTEREST U/S. 23 4B TILL THE DATE OF FILING OF RETURN I.E. 31-10-1989. SUBSEQUENTLY, T HE ASSESSING OFFICER OBSERVED THAT WHILE GIVING EFFECT TO THE ORDER OF THE ITAT, THE SHARE INCOME AS SHOWN IN THE RETUNED INCOME HAD BEEN TAKEN IN STEAD OF THE ASSESSED SHARE INCOME. UNDER THE CIRCUMSTANCES, THE ASSESSING OFF ICER ISSUED A LETTER DATED 24-6-2005 TO THE APPELLANT STAT ING 'THIS BEING A MISTAKE TO BE RECTIFIED U/S. 155 OF THE I.T. ACT, I PR OPOSE TO DO SO, FOR WHICH YOU ARE REQUESTED TO FURNISH THE DETAILS OF YOUR ASSESSED SHARE INCOME FROM THE FIRM .....'. IN RESPONSE TO THIS, THE APPELLANT VIDE LETTER DATED 11-7-2005 SUBMITTED THAT 'WE HAVE NO OBJECTION TO TAKE CORRECT INCOME AS PER ASSESSING OFFICER FOR ASSESSMENT YEAR 1989-90 O F M/S. FULABHAI GOVINDBHAI'. IN VIEW OF IS, THE ASSESSING OFFICE R RECTIFIED THE MISTAKE APPARENT FROM THE RECORD VIDE ORDER DATED 18- 7-2005. AT THE END OF THE ORDER, THE FOLLOWING WAS RECORDED: 'RECALCULATE THE TAX. CHARGE INTEREST AS PER LAW. GIVE CREDIT FOR PREPAID TAXES AFTER DUE VERIFICATION. ISSUE D.N. & CHA LLAN / R.O. ACCORDINGLY.' IN THE INCOME-TAX COMPUTATION FORM ACCOMPANIED WITH THE ORDER U/S. 155 DATED 18-7-2005, INTEREST U/S. 234B, 234C & 2 34D HAD BEEN WORKED OUT AT RS. 3,12,736/-, NIL AND RS. 75,815/-RESP ECTIVELY. THE APPELLANT IS AGGRIEVED WITH THE CHARGING OF THE INTER EST U/S. 234B & 234PXPRIMARILY ON THE GROUND THAT IN THE ORDER DATE D 18-7-2005 U/S. 155 OF THE ACT, THE ASSESSING OFFICER HAS NOT DIRECTED FOR CHARG ING OF INTEREST UNDER ANY PARTICULAR SECTION BUT HAS SIMPLY ORDERED 'CHAR GE INTEREST AS PER LAW'. RELYING ON THE JUDGMENT OF HON'BLE P ATNA HIGH COURT IN THE CASE OF UDAY MISTANNA BHANDAR AND COMPLEX V. CIT (1996), 222 ITR 44 WHICH WAS AFFIRMED BY THE SUPREME COURT IN THE CASE OF CIT V. RANCH! CLUB LTD. (2001), 247 ITR 209 (SC), THE APPEL LANT HAS EXTENSIVELY QUOTED FROM THE JUDGMENT OF THE PATNA HIGH COURT AN D THE RELEVANT PORTION IS EXTRACTED BELOW: 3 'FROM THE BARE READING OF SEC. 156 IT IS CLEAR THAT NOT ICE OF DEMAND CLAIMING INTEREST CAN BE ISSUED ONLY WHEN THERE IS ORDER IN THE ASSESSMENT ORDER LEVYING INTEREST...... THERE IS NO ORDER IN ANY OF THE ASSESSMENT ORDERS LEVYING INTEREST UNDER ANY OF THE SECTION 234A, 234B OR 234C. TO USE THE EXPRESSION 'CHARGE INTEREST, IF ANY' OR 'CHARGE INTEREST AS PER RULES' CANNOT BE READ TO MEAN THE ASSESSING OFFICER HAS PASSED ORDERS 'CHARGE INTEREST UNDER ALL THE AFORESAID SECTION'. THE ORDER TO CHARGE INTEREST HAS TO BE SPECIFIC AND CLEAR, AS FOR THAT M ATTER ANY ORDER TO CHARGE ANY TAX, PENALTY OR FINE........ THE ASSESSEE MUST BE MADE TO KNOW THAT THE ASSESSING OFFICER AFTER APPLYING HIS MIND A S ORDERED THE CHARGING OF INTEREST AND UNDER WHICH OF THE SECTIONS O F THE ACT..... THE NOTICE OF DEMAND IS SOMEWHAT LIKE A DECREE IN A CIVIL SUIT WHICH MUST FOLLOW THE ORDER. WHEN A JUDGMENT DOES NOT SPECIFY ANY AMOUNT TO BE CHARGED UNDER ANY PARTICULAR SECTION, THE DECREE CANNOT C ONTAIN ANY SUCH AMOUNT. SIMILARLY, WHEN THE ASSESSMENT ORDER IS SILENT, IF ANY INTEREST IS LEVIABLE, THE NOTICE OF DEMAND U/S. 156 OF THE ACT CANN OT GO BEYOND THE ASSESSMENT ORDER AND THE ASSESSEE CANNOT BE SERVED WITH ANY S UCH NOTICE DEMANDING INTEREST. WE, THEREFORE, DO NOT FEEL ANY DIFFICULTY IN COMING TO THE CONCLUSION THAT THE NOTICES OF DEMAND.....H AVE TO BE QUASHED SO FAR THESE RELATE TO CHARGING OF INTEREST U/S. 234A, 234B OR 234C OF THE ACT.' THE APPELLANT HAS SUBMITTED THAT THIS JUDGMENT HAS REL EVANCE TO THE FACTS OF THE PRESENT CASE WHERE THERE IS NO SPECIFIC DIR ECTION MENTIONED ON THE FACE OF / BODY OF ORDER U/S. 155 OF THE IT ACT DATED 18- 7-2005. THEREFORE, CHARGING OF INTEREST U/S. 234A, 23 4B AND 234C IS COMPLETELY WRONG AND BAD IN LAW. THE APPELLANT HAS F URTHER CLARIFIED THAT IT HAS NO OBJECTION TO THE CHARGING OF INTEREST U/S 234B UPTO THE DATE OF FILING OF THE RETURN AS HAS BEEN ORDERED VIDE THE ORI GINAL ORDER DATED 8-9- 2003 VIDE WHICH THE ASSESSING OFFICER HAD GIVEN EFFECT TO THE ITAT ORDER. 4 THE ASSESSING OFFICER HAD INTIMATED THE APPELLANT FOR AD OPTION OF THE CORRECT SHARE OF INCOME WHICH HAD REMAINED TO BE ADOPTED IN THE ORDER DATED 8-9-2003. THEREFORE, THE ASSESSING OFFICER CAN RECTI FY ONLY THAT MISTAKE ON RECORD AND ADOPT THE CORRECT SHARE INCOME BUT CANNOT ORDER FOR CHARGING OF INTEREST OTHER THAN U/S. 234B AND THE INTEREST CAN ALSO BE CHARGED UPTO THE DATE OF FILING OF THE RETURN I.E. 3 1-10-89 BECAUSE THAT IS WHAT HAD BEEN ORDERED BY THE ASSESSING OFFICER IN HIS ORD ER DATED 8-9- 2003. 4. AFTER HEARING THE LD. REPRESENTATIVES OF BOTH THE PARTIES, WE FIND THAT NOW THE ISSUE HAS BEEN SETTLED BY THE HON'BLE SUPR EME COURT. THE HON'BLE SUPREME COURT IN THE CASE OF CIT V.ANJUM M.H.GH ASWALA & ORS. (2001) 252 ITR 1 (SC) HELD THAT CHARGING OF INTEREST U/S 234B OF THE ACT IS MANDATORY. RESPECTFULLY FOLLOWING THE RATIO LAID DO WN BY HONBLE SUPREME COURT IN THE CASE OF ANJUM M.H.GHASWALA & ORS (SU PRA), WE REJECT THE GROUND RAISED BY THE ASSESSEE. 5. THE ASSESSEE HAS ALSO RAISED THE FOLLOWING ADDITIONAL G ROUNDS: 1. LEVY OF INTEREST U/S 234D OF THE ACT IS NOT JUSTIFIED WH EN THE SECTION ITSELF IS INSERTED WITH EFFECT FROM 01/06/2003. 2. BOTH THE LOWER AUTHORITIES HAVE ERRED IN LAW AND ON FACTS IN WITHDRAWING INTEREST U/S 244A OF THE ACT. 6. WE FIND THAT THE ABOVE GROUNDS ARE LEGAL GROUNDS A ND, THEREFORE, AS PER THE DECISION OF THE HONBLE SUPREME COURT IN THE CA SE OF NATIONAL THERMAL POWER (1998) 229 ITR 383, WE ADMIT THE SAME. 7. AS REGARDS CHARGING OF INTEREST U/S 234D, WE HOLD THA T THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE DECISION OF I.T.A.T DELHI BENCH E (SPECIAL BENCH) IN THE CASE OF ITO, WARD 11, NEW DELHI V. EKTA PROMOTERS PVT. LTD. (2008 ) 113 ITD 719 5 (DELHI)(SPECIAL BENCH) WHEREIN IT HAS BEEN HELD THAT PROVISIONS OF SECTION 243D, WHICH HAS BEEN BROUGHT ON STATUTE FROM 01.6.200 3, WILL HAVE APPLICATION ONLY WITH EFFECT FROM ASSESSMENT YEAR 2004-05 AND, THEREFORE, INTEREST U/S 234D CANNOT BE CHARGED FOR EARL IER YEARS EVEN THOUGH REGULAR ASSESSMENTS IN THOSE YEARS WERE FRAMED AFT ER 01.6.2003 OR REFUND WAS GRANTED FOR THOSE YEARS AFTER THE SAID DA TE. RESPECTFULLY FOLLOWING THE DECISION OF I.T.A.T DELHI SPECIAL BENCH I N THE CASE OF EKTA PROMOTERS PVT. LTD. (SUPRA), WE HOLD THAT INTEREST U/S 234D COULD NOT BE CHARGED IN RESPECT OF ASSESSMENT FALLING BEFORE 1.6.2003, AS THE PROVISIONS OF SEC. 234D WERE INSERTED WITH EFFECT FROM 1. 6.2003. ACCORDINGLY, WE DELETE THE INTEREST OF RS.75,815/- CHARG ED U/S 234D OF THE ACT. THIS GROUND OF APPEAL IS ALLOWED. 8. AS REGARDS ADDITIONAL GROUND NO.2, WE HOLD THAT TH E SAME DOES NOT ARISE FROM THE ORDERS OF AUTHORITIES BELOW. ACCORDINGLY, THE GROUND REGARDING WITHDRAWAL OF INTEREST U/S 244A OF THE ACT I S DISMISSED. 9. IN THE RESULT, THE APPEAL IS ALLOWED PARTLY, AS IND ICATED ABOVE. THE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 03.9 .2009. SD/- (A.N.PAHUJA) ACCOUNTANT MEMBER SD/- (H.L.KARWA JUDICIAL MEMBER AHMEDABAD, DATED:03.9.2009 PSP* 6 COPY TO : (1) THE ASSESSEE (2) THE ASSESSING OFFICER (3) THE CIT(A) CONCERNED, (4) THE CIT, CONCERNED, (5) THE DR, ITAT, AHMEDABAD, (6) GUARD FILE. BY ORDER ASSTT. REGISTRAR / D EPUTY REGISTRAR ITAT, AHMEDABAD BENCHES AHMEDABAD.