S.Kannaiyan, Erode V. DCIT, Salem

ITA 314/CHNY/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5037 (ITAT-CHENNAI)
• Duration Of Justice: 11 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 1992-1993
• Appeal Filed On: 03-02-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B SAGADEVAN IRS
• Assessee Lawyers: S SRIDHAR
• Keywords: Unexplained investment; Principle of natural justice; Retrospective amendment
• Section: 234B; 154

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, A (SMC) BENCH : CHENNAI . , [BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT M EMBER ] ./I.T.A. NO. 314/MDS/2017 / ASSESSMENT YEAR : 1992-93 SHRI. S. KANNAIYAN, NO.46, P.M. KOIL STREET, PONNAMAPET, SALEM 3 [PAN AKIPK 0021B] VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE II, SALEM. ./I.T.A. NO. 315/MDS/2017 / ASSESSMENT YEAR : 1992-93 SHRI. K.A. ARUNACHALAM, NO.4-A, RAJAJAI ROAD, SALEM 7. [PAN AFDPA 1356F] VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE II, SALEM. ./I.T.A. NO. 316/MDS/2017 / ASSESSMENT YEAR : 1992-93 SHRI. S. RAMACHANDRAN, 48, RAJA NAGAR, HASTHAMPATTI, SALEM 7. [PAN AFPPR 5972J] VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE II, SALEM. ./I.T.A. NO. 317/MDS/2017 / ASSESSMENT YEAR : 1992-93 SHRI. T. NAGARAJAN, NO.1, 6 TH CROSS, WEST VIDYA NAGAR, AMMAPET, SALEM 3. [PAN ACXPN 8373J] VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE II, SALEM. ITA NOS.314 TO 321 /MDS/2017 :- 2 -: ./I.T.A. NO. 318/MDS/2017 / ASSESSMENT YEAR : 1992-93 SHRI. R. PALANIAPPAN, 3/91E, BHARATHI STREET, NEW FAIRYLANDS, SALEM 16. [PAN AJKPP 3778K] VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE II, SALEM. ./I.T.A. NO. 319/MDS/2017 / ASSESSMENT YEAR : 1992-93 SHRI. H. NOORULLAH, 21A, CHINNAIAH ROAD, NORTH MARAVANERI EXTN, SALEM. [PAN ACXPN 8825D] VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE II, SALEM. ./I.T.A. NO. 320/MDS/2017 / ASSESSMENT YEAR : 1992-93 SHRI. SOUNDARAJAN NO.4, GREEN GARDENS, KONDAPPANACIKENPATTY, SALEM 636 008 [PAN ATMPS 5720N] VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE II, SALEM. ./I.T.A. NO. 321/MDS/2017 / ASSESSMENT YEAR : 1992-93 SHRI. S. RENGAN C/O. S. SRIDHAR, ADVOCATE, 112/1, PERIYAR STREET, ERODE. [PAN AFPPR 4764J] VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE II, SALEM. ( !' / APPELLANT) ( #$!' /RESPONDENT) ITA NOS.314 TO 321 /MDS/2017 :- 3 -: / APPELLANT BY : SHRI.S. SRIDHAR, ADVOCATE /RESPONDENT BY : SHRI. B. SAGADEVAN, IRS, JCIT. /DATE OF HEARING : 04-01-2018 !' /DATE OF PRONOUNCEMENT : 09-01-2018 % / O R D E R GROUNDS RAISED BY THESE ASSESSEES IN ALL THESE APP EALS ARE COMMON AND ARE REPRODUCED HEREUNDER:- 1) THE ORDER OF THE LEARNED CIT(A) IS ERRONEOUS IN L AW AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 2) THE LEARNED CIT (A) ERRED IN NOT CONSIDERING THE GR OUNDS OF APPEAL IN PROPER PERSPECTIVE. 3) THE LEARNED CIT(A) ERRED IN NOT CONSIDERING THE WRI TTEN SUBMISSIONS FILED IN PROPER PERSPECTIVE. 4) THE LEARNED CIT (A) ERRED IN SIMPLY RELYING ON CBDT CIRCULAR NO:14/2001, WHICH, IN ALL FORCE, IS NOT APPLICABLE TO THE CASE OF THE APPELLANT, WHEN THE HIGH COURT RESTORED THE ORI GINAL ASSESSMENT ORDER PASSED IN NOV,1995 AND WHEN THE AS SESSING OFFICER SIMPLY GAVE EFFECT TO THE SAME. AND FOR OTHER REASONS THAT MAY BE ADDUCED AT THE TI ME OF HEARING, YOUR APPELLANT PRAYS THAT THE APPEAL BE AD MITTED, CONSIDERED AND JUSTICE BE RENDERED. 2. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ALL THE ASSESSEES WERE EMPLOYEES OF BSNL. ACCORDING TO HIM , IN THE ORIGINAL ASSESSMENTS DONE IN THE YEAR 1995, U/S.143(3) R.W.S .147 OF THE ITA NOS.314 TO 321 /MDS/2017 :- 4 -: INCOME TAX ACT, 1961 ( IN SHORT THE ACT) ADDITI ONS WERE MADE IN THEIR HANDS FOR UNEXPLAINED CASH DEPOSITS IN THEIR SAVING BANK ACCOUNTS. SUCH ADDITIONS AS PER LD. AUTHORISED REP RESENTATIVE WERE MADE U/S.69 OF THE ACT. AS PER THE LD. AUTHORISED REPRESENTATIVE, ASSESSEES HAD FILED APPEALS AGAINST THESE ASSESSMEN TS BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) WHICH DID NOT MEET WITH ANY SUCCESS. ACCORDING TO HIM, ASSESSEES THEREAFTER MO VED THIS TRIBUNAL AND THIS TRIBUNAL HAD SET ASIDE THE ISSUE REGARDING ADDITION U/S.69 OF THE ACT BACK TO THE LD. ASSESSING OFFICER THROUGH AN ORDER DATED 29.08.2003. THEREAFTER, AS PER LD. AUTHORISED REPR ESENTATIVE, DEPARTMENT HAD FILED APPEALS BEFORE THE HONBLE JUR ISDICTIONAL HIGH COURT WHICH WERE DISMISSED, ON 24.01.2006 AS REPORT ED 292 ITR 678. ACCORDING TO THE LD. AUTHORISED REPRESENTATIVE, DEP ARTMENT, THEREUPON FILED CIVIL APPEALS BEFORE HONBLE APEX COURT AND H ONBLE APEX COURT THROUGH ITS COMMON JUDGMENT DATED 24.07.2007 IN CIV IL APPEAL NO.323O TO 3235 OF 2007 REPORTED AS 292 ITR 682 ALL OWED SUCH APPEALS FILED BY THE DEPARTMENT. AS PER THE LD. A UTHORISED REPRESENTATIVE BY VIRTUE OF THIS JUDGMENT OF HON BLE APEX COURT, ORIGINAL ASSESSMENTS DONE BY THE LD. ASSESSING OFFI CER U/S.143(3) R.W.S.147 OF THE ACT STOOD REVIVED FOR ALL THESE AS SESSEES. 3. IN THE MEANWHILE, AS PER THE LD. AUTHORISED REPRES ENTATIVE BASED ON THE JUDGMENT OF HONBLE JURISDICTIONAL HIG H COURT REPORTED ITA NOS.314 TO 321 /MDS/2017 :- 5 -: IN 292 ITR 678, I.E. PRIOR TO APEX COURT JUDGMENT I N 292 ITR 682, LD. ASSESSING OFFICER FRAMED FRESH ASSESSMENTS ON THE A SSESSEES, GOING BY THE EARLIER TRIBUNAL DECISION DATED 29.08.2003. HO WEVER, THESE FRESH ASSESSMENTS, AS PER THE LD. AUTHORISED REPRESENTATI VE, MADE NO EFFECTIVE DIFFERENCE, SINCE THE ASSESSED INCOME REMAINED THE SAME. THEREAFTER, ACCORDING TO THE LD. AUTHORISED REPRESE NTATIVE, APPEALS ON SUCH FRESH ASSESSMENTS, DONE PURSUANT TO THE TRIBUN AL DIRECTIONS, WERE PREFERRED BY THE ASSESSEES BEFORE THE LD. COM MISSIONER OF INCOME TAX (APPEALS), BUT THESE DID NOT MEET WITH ANY SUCCESS. HOWEVER, ACCORDING TO LD. AUTHORISED REPRESENTATIV E, THE TRIBUNAL IN FURTHER APPEALS FILED BY THE ASSESSEES, THROUGH IT S ORDER DATED 26.02.2010 HAD SET-ASIDE THE ORDERS OF THE LD. ASSE SSING OFFICER AND LD. COMMISSIONER OF INCOME TAX (APPEALS). AS PER THE L D. AUTHORISED REPRESENTATIVE THE DEPARTMENT HAD THEN MOVED THE HO NBLE JURISDICTIONAL HIGH COURT AGAINST THE TRIBUNAL ORD ER AND THE HONBLE JURISDICTIONAL HIGH COURT, THROUGH ITS JUDGMENT DAT ED 06.04.2011 IN T.C (A) NO.1317/2010 ALLOWED SUCH APPEALS OF THE DE PARTMENT, NOTING INTER-ALIA THAT ORIGINAL ASSESSMENTS HAVING BEEN RE VIVED, THROUGH APEX COURT JUDGMENT IN292 ITR 682, ALL INTERIM PROCEEDIN GS BASED ON THE EARLIER TRIBUNAL ORDER DATED 29.08.2003 WERE NULLI TY. 4. THEREAFTER AS PR THE LD. AUTHORISED REPRESENTATIVE ON 24.10.2011, THE LD. ASSESSING OFFICER, PURPORTEDLY FOR GIVING EFFECT TO ITA NOS.314 TO 321 /MDS/2017 :- 6 -: THE JURISDICTIONAL HIGH COURT JUDGMENT IN T.C(A) 1 317/2010, HAD PASSED AN ORDER, RE-COMPUTING INCOME OF EACH OF TH ESE ASSESSEES WHICH REMAINED SAME AS ORIGINALLY DETERMINED IN THE ASSESSMENTS COMPLETED U/S.143(3) R.W.S.147 OF THE ACT IN THE YE AR 1995. HOWEVER, AS PER THE LD. AUTHORISED REPRESENTATIVE IN SUCH FR ESH ORDERS, ASSESSEES WERE CHARGED INTEREST U/S.234A AND 234B O F THE ACT. CONTENTION OF THE LD. AUTHORISED REPRESENTATIVE WAS THAT LEVY OF INTEREST U/S.234A AND 234B OF THE ACT OUGHT HAVE BE EN MADE BASED ON THE LAW AS IT STOOD AT THE TIME OF COMPLETION OF TH E ORIGINAL ASSESSMENT. ACCORDING TO HIM, THE ORIGINAL ASSESSM ENTS WERE COMPLETED IN THE YEAR 1995, AND AS PER LAW AT THAT POINT OF TIME LEVY OF INTEREST U/SEC. 234A AND 234B OF THE ACT COULD B E BASED ON THE RETURNED INCOME AND NOT ON THE ASSESSED INCOME. R ELYING ON THE JUDGMENT OF HONBLE APEX COURT IN THE CASE OF CIT VS. RANCHI CLUB LTD, 247 ITR 209 , LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT INT EREST COULD BE CHARGED ONLY ON THE INCOME DECLARED IN TH E RETURN AND NOT ON THE INCOME DETERMINED BY THE ASSESSING AUTHORITY . ACCORDING TO HIM, AMENDMENT TO SECS. 234A AND 234B OF THE ACT R ESPECTIVELY, CARRIED OUT BY FINANCE ACT, 2001 W.E.F. 01.04.1989 COULD NOT BE RETROSPECTIVELY APPLIED. CONTENTION OF THE LD. AUT HORISED REPRESENTATIVE WAS THAT ASSESSEES AT THE TIME OF FI LING THE RETURNS FOR THE IMPUGNED ASSESSMENT YEAR COULD NOT HAVE KNOWN THAT INTEREST ITA NOS.314 TO 321 /MDS/2017 :- 7 -: UNDER SECTION 234A AND 234B WAS TO BE CHARGED ON ASSESSED INCOME AND NOT ON THE RETURNED INCOME. ACCORDING TO HIM, LEVY OF INTEREST UNDER SECTIONS 234A AND 234B OF THE ACT IN THE CAS E OF THE ASSESSEES, HAD TO BE MADE CONSIDERING THE SCENARIO PRIOR TO TH E AMENDMENTS TO SECTIONS 234A (1) AND SUBSTITUTION OF EXPLANATION 1 TO SEC. 234B(1) OF THE ACT MADE THROUGH FINANCE ACT, 2001. AS PER THE LD. AUTHORISED REPRESENTATIVE SUCH RETROSPECTIVE AMENDMENTS COUL D NOT HAVE BEEN VISUALIZED BY THE ASSESSEES AT THE TIME OF FILING T HE RETURNS AND BY VIRTUE OF JUDGMENT OF APEX COURT IN THE CASE OF RANCHI CLUB LTD (SUPRA ), ONLY THE INCOME DECLARED IN THE RETURN COULD BE CONSIDERED FOR COMPUTING INTEREST UNDER SECTIONS 234A AND 234B OF THE ACT. CONTENTION OF THE LD. AUTHORISED REPRESENTATIVE WAS THAT FOR ALL THESE ASSESSEES, THE INCOME DECLARED IN THE RETURNS FILED WERE BELOW THE TAX LIMITS AND THEREFORE THEY WERE NOT LIABLE FOR ANY I NTEREST UNDER SECTION 234A AND 234B OF THE ACT AT ALL. RELIANCE WAS PL ACED ON CIRCULAR NO.14 OF 2001, DATED 09.11.2001 OF CBDT BEING EXPL ANATORY NOTE ON FINANCE ACT, 2001. ACCORDING TO HIM, IT WAS CLEAR FROM THIS CIRCULAR THAT SECTIONS 234A AND 234B OF THE ACT WERE AMEND ED BY FINANCE ACT, 2001, FOR FASTENING THE LIABILITY OF INTEREST UNDER SECTIONS 234A AND 234B OF THE ACT, BASED ON THE ASSESSED INCOME AND N OT ON THE RETURNED INCOME. ACCORDING TO HIM, SUCH EXPLANATORY NOTE CLEARLY ITA NOS.314 TO 321 /MDS/2017 :- 8 -: INDICATED THAT PRIOR TO SUCH AMENDMENT, INTEREST W AS PAYABLE ONLY ON RETURNED INCOME. 5. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE STRONG LY SUPPORTING THE ORDERS OF THE AUTHORITIES BELOW SUBM ITTED THAT SIMILAR ISSUE HAD COME UP BEFORE THE HONBLE PUNJAB AND HAR YANA HIGH COURT IN THE CASE OF PARKASH AGRO INDUSTRIES VS. DCIT, 316 ITR 149. ACCORDING TO HIM, THEIR LORDSHIPS HAD HELD THAT JUD GMENT OF HONBLE APEX COURT IN THE CASE OF RANCHI CLUB LTD (SUPRA) R ELATED TO A PERIOD PRIOR TO AMENDMENT TO SEC. 234B OF THE ACT. ACCORDI NG TO HIM, HONBLE PUNJAB AND HARYANA HIGH COURT HAD CLEARLY HELD THA T EXPLANATION 1 TO SEC. 234B OF THE ACT HAD RETROSPECTIVE EFFECT AND I NTEREST U/S.234B OF THE ACT WAS TO BE CHARGED WITH REFERENCE TO ASSESS ED TAX AND NOT WITH REFERENCE TO INCOME DECLARED IN THE RETURNS. 6. AD LIBITUM REPLY OF THE LD. AUTHORISED REPRESENTATI VE WAS THAT HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. REVATHI EQUIPMENT LTD, 298 ITR 67 HAD HELD THAT ASSESSEE WAS LIABLE TO PAY INTEREST UNDER SECTIONS 234B AND 234C OF THE ACT ON LY BASED ON LAW THAT PREVAILED AT THE TIME WHEN ASSESSEES FILED THE IR RETURNS ORIGINALLY. ACCORDING TO HIM, THERE COULD BE NO RETROSPECTIVE LEVY OF INTEREST. RELIANCE WAS ALSO PLACED ON THE JUDGMENT OF HONBLE KARNATAKA HIGH ITA NOS.314 TO 321 /MDS/2017 :- 9 -: COURT IN THE CASE OF SHRIRAM CHITS (BANGALORE) LTD VS. JCIT, 325 ITR 219 . 7. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. IN ALL THESE CASES , ORIGINAL ASSESSMENT WERE COMPLETED U/S.143(3) R.W.S.147 OF THE ACT IN O R AROUND NOVEMBER, 1995. CASE OF ASSESSEE SHRI. S. KANNAIYAN (ITA NO.314/MDS/2017) IS TAKEN AS REPRESENTATIVE OF ALL OTHER ASSESSEES. COMPUTATION OF TAX IN THE ORIGINAL ASSESSMENT DONE ON 17.11.1995 U/S.143(3) R.W.S. 147 OF THE ACT READ AS UNDER:- INCOME TAX THEREON : 10,31,871/- REBATE U/S88 : 278/- --------------- BALANCE 10,31,593/- SURCHARGE OF 12% 1,23,791/- ---------------- TOTAL 11,55,384/- ADD 234A INTEREST I 184848 234B INTEREST I1016664 ------------ 12,01,512/- -------------------- TOTAL DEMAND 23,56,896/- --------------------- THIS SHOULD BE PAID AS PER THE DN & CHALLAN ENCLOSE D ITA NOS.314 TO 321 /MDS/2017 :- 10 -: THERE IS NO DISPUTE THAT TRIBUNAL ORDER DATED 29.0 8.2003 SETTING ASIDE THE ORIGINAL ASSESSMENTS, THOUGH AFFIRMED BY HON BLE JURISDICTIONAL HIGH COURT, WAS OVERRULED BY THE HONBLE APEX COURT IN 292 ITR 682. HONBLE APEX COURT HAD ALLOWED THE APPEALS FILED BY THE DEPARTMENT HOLDING AS UNDER AT PARAS 6 & 7 AT ITS JUDGMENT. 6. IN THE PRESENT CASE, THE TRIBUNAL HAS FURTHER HELD THAT THE PARTNERS WERE EMPLOYEES OF PUBLIC SECTOR UNDERTAKINGS ; THAT THEY HAD ACTED AS PARTNERS ; TH AT THE FIRM WAS FLOATED AND, THEREFORE, THOUGH THE FIR M WAS ILLEGALLY CONSTITUTED, HOWEVER, THE VERY EXISTE NCE OF THE FIRM WAS NEVER IN DOUBT. THE TRIBUNAL HELD THAT THE MEMBERS OF THE PUBLIC HAVE PLACED THEIR DEPOSITS WI TH THE SAID FIRM THROUGH THE RELATIVES AND FRIENDS. TH E TRIBUNAL HAS FURTHER HELD THAT THOUGH THE AFORESTAT ED AMOUNT OUGHT TO HAVE BEEN DEPOSITED IN THE NAME OF THE FIRM, IT WAS NOT SO DONE AND, THEREFORE, IT WAS NECESSARY TO LINK UP THE SAID AMOUNTS WITH THE BOOK S OF THE FIRM AND TO THE EXTENT POSSIBLE SHOULD BE SHOWN AS AMOUNTS RECEIVED BY THE SAID FIRM AS DEPOSITS FROM VARIOUS PERSONS. WE DO NOT SEE ANY BASIS FOR RECORD ING THE AFORESTATED FINDINGS. THERE IS NO EVIDENCE TO S HOW THAT MEMBERS OF THE PUBLIC HAVE BEEN PLACING THEIR DEPOSITS WITH THE SAID FIRM THROUGH THEIR RELATIVES AND FRIENDS, THEREFORE, THERE WAS NO QUESTION OF LINKIN G UP ALL THESE AMOUNTS WITH THE BOOKS OF THE FIRM AS ORD ERED BY THE TRIBUNAL. IN THE ABOVE FACTS, THE DEPARTMENT WAS RIGHT IN HOLDING THAT INCOME ON UNEXPLAINED INVESTMENTS CANNOT BE CONSIDERED IN THE HANDS OF TH E FIRM FOUND TO BE FICTITIOUS. THEREFORE, THE TRIBUNA L HAD ERRED IN DIRECTING LINKING UP OF THE DEPOSITS WITH THE ACCOUNTS OF THE ALLEGED FIRM. 7. WHERE A DEPOSIT STANDS IN THE NAME OF A THIRD PE RSON AND WHERE THAT PERSON IS RELATED TO THE ASSESSEE TH EN IN SUCH A CASE THE PROPER COURSE WOULD BE TO CALL U PON THE PERSON IN WHOSE BOOKS THE DEPOSIT APPEARS OR TH E PERSON IN WHOSE NAME THE DEPOSIT STANDS SHOULD BE CALLED UPON TO EXPLAIN SUCH DEPOSIT. IN THE PRESENT CASE, THERE IS NO EVIDENCE RECORDING REGISTRATION O F THE FIRM. IN THE PRESENT CASE, BOOKS OF ACCOUNTS ARE NO T ITA NOS.314 TO 321 /MDS/2017 :- 11 -: PROPERLY MAINTAINED. IN THE PRESENT CASE, THERE IS NO EXPLANATION REGARDING THE SOURCE OF INVESTMENT. IN THE PRESENT CASE, THE EVIDENCE OF K. PALANISAMY, INDICA TES THAT EVEN THE PARTNERS OF THE FIRM WERE FICTITIOUS. IN THE ABOVE CIRCUMSTANCES, THE TRIBUNAL HAD ERRED IN DIRECTING LINKING UP OF THE DEPOSITS WITH THE ACCOU NTS OF M/S. V. V. ENTERPRISES. IN FACT, THE DIRECTIONS GIV EN BY THE TRIBUNAL TO THE ASSESSING OFFICER FOR SUCH LINK ING UP WAS NOT EVEN CAPABLE OF COMPLIANCE. THE ONUS OF PROVING THE SOURCE OF DEPOSIT PRIMARILY RESTED ON T HE PERSONS IN WHOSE NAMES THE DEPOSIT APPEARED IN VARIOUS BANKS. IN THE CIRCUMSTANCES, THE DEPARTMENT WAS RIGHT IN MAKING INDIVIDUAL ASSESSMENT IN THE HA NDS OF THE RESPONDENT-ASSESSEE, K. CHINNATHAMBAN. SIMILARLY, THE DEPARTMENT WAS RIGHT IN MAKING THE INDIVIDUAL ASSESSMENT IN THE NAMES OF OTHER RESPONDENT-ASSESSEES, WHO ARE PARTIES TO CONNECTED CIVIL APPEALS HEREIN. THUS, BY VIRTUE OF THE ABOVE JUDGMENT OF HONBLE A PEX COURT THE ORIGINAL ASSESSMENTS DONE ALL THESE ASSESSES STOOD REVIVED WITH ALL FORCE. APPEALS NOW FILED BY ALL THESE ASSESSEES, C HALLENGING THE LEVY OF INTEREST UNDER SECTION 234A AND 234B OF THE ACT DO NOT THUS ARISE FROM THE ORDER DATED 24.10.2011 OF LD. ACIT, CIRCLE II , SALEM WHICH ORDER WAS PASSED PURPORTEDLY TO GIVE EFFECT TO THE JUDGME NT OF HONBLE JURISDICTIONAL HIGH COURT, ON AN APPEAL FILED BY TH E REVENUE, ON ORDERS EMANATING FROM PROCEEDINGS WHICH TOOK PLACE PRIOR TO THE ABOVE JUDGMENT OF HONBLE APEX COURT. AS ALREADY MENTIONE D BY ME, LEVY OF INTEREST UNDER SECTIONS 234A AND 234B OF THE ACT W ERE ALREADY THERE IN THE ORIGINAL ASSESSMENTS COMPLETED IN 1995 WHICH STOOD REVIVED BY THE JUDGMENT OF HONBLE APEX COURT. IN OTHER WORDS , ORDER DATED ITA NOS.314 TO 321 /MDS/2017 :- 12 -: 24.10.2011 OF LD. ACIT, CIRCLE II, SALEM IS OF NO L EGAL EFFECT WHATSOEVER. WHEN THE HONBLE APEX COURT GAVE ITS JU DGMENT 292 ITR 682 ON 24.07.2007, ORIGINAL ASSESSMENT ORDER PASSE D IN 1995 STOOD REVIVED AND SO REVIVED WITH ALL LEGAL FORCE. THUS , THE PRESENT APPEAL AGAINST LEVY OF INTEREST UNDER SECTIONS 234A AND 23 4B CAN ONLY BE CONSIDERED AS APPEAL ARISING FROM ORIGINAL ASSES SMENT ORDERS PASSED IN 1995 BY THE LD. ASSESSING OFFICER, U/S.143(3) R .W.S. 147 OF THE ACT. ASSESSEE IF AGGRIEVED BY SUCH LEVY OUGHT HAVE RAI SED GROUNDS CHALLENGING SUCH LEVY IN THE ORIGINAL APPEALS FI LED BY IT AGAINST SUCH ASSESSMENT ORDERS AND PURSUED SUCH MATTER. HAVING NOT DONE SO, ASSESSEES IN MY OPINION CANNOT NOW TURN BACK THE CLOCK BY MORE THAN A DECADE AND SAY THAT LEVY OF INTEREST UNDER S ECTIONS 234A AND 234B OF THE ACT, IN THE ORIGINAL ASSESSMENTS WERE NOT IN ACCORDANCE WITH LAW. 8. BE THAT AS IT MAY, THE QUESTION RAISED BY THE ASSES SEES WHETHER ASSESSED INCOME FOR THE PURPOSE OF COMPUTIN G INTEREST UNDER SECTION 234A & 234B OF THE ACT SHOULD BE CONSTRUED AS RETURNED INCOME OR INCOME FINALLY ASSESSED STANDS ADDRESSED BY THE AMENDMENTS DONE IN THE SAID SECTIONS THROUGH FINA NCE ACT, 2001. SEC. 234A(1) OF THE ACT, PRIOR TO ITS AMENDMENT B Y FINANCE ACT, 2001 WITH RETROSPECTIVE EFFECT 01.04.1989 STOOD AS UNDE R:- ITA NOS.314 TO 321 /MDS/2017 :- 13 -: (1) WHERE THE RETURN OF INCOME FOR ANY ASSESSMENT YEAR UNDER SUB-SECTION (1) OR SUB-SECTION (4) OF SE CTION 139, OR IN RESPONSE TO A NOTICE UNDER SUB-SECTION ( 1) OF SECTION 142, IS FURNISHED AFTER THE DUE DATE, OR IS NOT FURNISHED, THE ASSESSEE SHALL BE LIABLE TO PAY SIMP LE INTEREST AT THE RATE OF ONE PER CENT. FOR EVERY MON TH OR PART OF A MONTH COMPRISED IN THE PERIOD COMMENCING ON THE DATE IMMEDIATELY FOLLOWING THE DUE DATE, AND ,-- (A) WHERE THE RETURN IS FURNISHED AFTER THE DUE DATE, ENDING ON THE DATE OF FURNISHING OF THE RETURN; OR (B) WHERE NO RETURN HAS BEEN FURNISHED, ENDING ON THE DATE OF COMPLETION OF THE ASSESSMENT UNDER SECTION 144, ON THE AMOUNT OF THE TAX ON THE TOTAL INCOME AS DETERMINED ON REGULAR ASSESSMENT AS REDUCED BY THE ADVANCE TAX, IF ANY, PAID AND ANY TAX DEDUCTED AT SOURCE SUBSEQUENT TO THE AMENDMENT THE SAID SUB SECTION ST OOD AS UNDER:- (1) WHERE THE RETURN OF INCOME FOR ANY ASSESSMENT YEAR UNDER SUB- SECTION (1) OR SUB-SECTION (4) OF SECTION 139, OR I N RESPONSE TO A NOTICE UNDER SUB-SECTION (1) OF SECTION 142, IS FUR NISHED AFTER THE DUE DATE, OR IS NOT FURNISHED, THE ASSESSEE SHALL BE LI ABLE TO PAY SIMPLE INTEREST AT THE RATE OF ONE PER CENT. FOR EVERY MON TH OR PART OF A MONTH COMPRISED IN THE PERIOD COMMENCING ON THE DAT E IMMEDIATELY FOLLOWING THE DUE DATE, AND,-- (A) WHERE THE RETURN IS FURNISHED AFTER THE DUE DAT E, ENDING ON THE DATE OF FURNISHING OF THE RETURN; OR (B) WHERE NO RETURN HAS BEEN FURNISHED, ENDING ON THE DATE OF COMPLETION OF THE ASSESSMENT UNDER SECTION 144, ON THE AMOUNT OF THE TAX ON THE TOTAL INCOME AS DET ERMINED UNDER SUB-SECTION (1) OF SECTION 143 OR ON REGULAR ASSESS MENT AS REDUCED BY THE ADVANCE TAX, IF ANY, PAID AND ANY TA X DEDUCTED OR COLLECTED AT SOURCE. ITA NOS.314 TO 321 /MDS/2017 :- 14 -: A READING OF SECTION 234A OF THE ACT, WHETHER IT IS PRE OR POST THE AMENDMENT DOES NOT GIVE ANY ROOM FOR THE TYPE OF I NTERPRETATION CANVASSED BY THE LD. AUTHORISED REPRESENTATIVE. T HE STRESS WAS ALWAYS ON INCOME DETERMINED AS PER REGULAR ASSESSM ENT. 9. COMING TO SEC. 234B(1) OF THE ACT, EXPLANATION 1 T O SAID SECTION DEFINING THE TERM ASSESSED TAX AS IT ST OOD PRIOR TO ITS SUBSTITUTION OF FINANCE ACT, 2001, WITH RETROSPECTI VE EFFECT FROM 1989 STOOD AS UNDER:- EXPLANATION 1 IN THIS SECTION, ASSESSED TAX M EANS- (A) FOR THE PURPOSES OF COMPUTING THE INTEREST PAYABLE UNDER SECTION 140A, THE TAX ON THE TOTAL INCOME AS DECLARED IN THE RETURN REFERRED TO IN THAT SECTION; (B) IN ANY OTHER CASE, THE TAX ON THE TOTAL INCOME DETERMINED UNDER SUB-SECTION (1) OF SEC. 143 OR ON REGULAR ASSESSMENT. AFTER THE AMENDMENT SAID EXPLANATION STOOD AS UNDER :- EXPLANATION 1. IN THIS SECTION, 'ASSESSED TAX' ME ANS THE TAX ON THE TOTAL INCOME DETERMINED UNDER SUB-SECTION (1) O F SECTION 143 OR ON REGULAR ASSESSMENT AS REDUCED BY THE AMOUNT O F TAX DEDUCTED OR COLLECTED AT SOURCE IN ACCORDANCE WITH THE PROVISIONS OF CHAPTER XVII ON ANY INCOME WHICH IS SUBJECT TO S UCH DEDUCTION OR COLLECTION AND WHICH IS TAKEN INTO ACCOUNT IN CO MPUTING SUCH TOTAL INCOME . ITA NOS.314 TO 321 /MDS/2017 :- 15 -: NO DOUBT PRIOR TO AMENDMENT TO FINANCE ACT, 2001, A SSESSED TAX MEANT ONLY TAX AS PER INCOME RETURNED BY THE ASSESS EE AND THIS WAS SO HELD BY HONBLE APEX COURT IN THE CASE OF RANCHI CLUB LTD (SUPRA ). HOWEVER, SUBSEQUENT TO THE JUDGMENT OF HONBLE APEX COURT, AFTER THE AMENDMENTS MADE THROUGH FINANCE ACT 2001 HAD COME INTO THE STATUTE, THE ISSUE HAD COME UP BEFORE THE HONBLE P UNJAB AND HARYANA HIGH COURT IN THE CASE OF PARKASH AGRO INDUSTRIES (SUPRA ). THE FACTS OF THE CASE AND WHAT WAS HELD BY THEIR LORDSHIP AT PAR AS 5 TO 11 OF ITS JUDGMENT ARE REPRODUCED HEREUNDER:- 5.. THE FACTS AS NARRATED IN THE STATEMENT OF CAS E ARE THAT THE ASSESSEE FILED A RETURN OF INCOME FOR THE ASSESSMEN T YEAR 1991- 92 DECLARING A LOSS OF RS.31,130 AND ADVANCE TAX OF RS. 1,37,808 WAS PAID. THE CASE OF THE ASSESSEE WAS PROCESSED UN DER SECTION 143(1) OF THE ACT AND REFUND WAS MADE. LATER ON, TH E ASSESSING OFFICER, VIDE HIS ORDER DATED AUGUST 30, 1993, ASSE SSED THE INCOME OF THE ASSESSEE AT RS. 12,17,990 WHICH WAS R ECTIFIED TO RS. 11,86,330 UNDER SECTION 154 OF THE ACT. ACCORDI NGLY, A NOTICE OF DEMAND WAS ISSUED IN WHICH INTEREST HAD ALSO BEE N CHARGED UNDER SECTION 234B OF THE ACT. THE ASSESSEE MOVED A N APPLICATION UNDER SECTION 154 OF THE ACT ON FEBRUAR Y 9, 1994, AND THE SAME WAS DISMISSED BY THE ASSESSING OFFICER OBS ERVING THAT WHERE THE ADVANCE TAX PAID IS LESS THAN 90 PER CENT . OF THE ASSESSED TAX, THE INTEREST UNDER SECTION 234B OF TH E ACT IS CHARGEABLE. THE ASSESSEE FILED AN APPEAL BEFORE THE COMMISSIONER OF INCOME-TAX (APPEALS) WHO, VIDE HIS ORDER DATED NOVEMBER 9, 1999, ALLOWED THE APPEAL AND DELETED TH E INTEREST CHARGED UNDER SECTION 234B OF THE ACT. AGGRIEVED WI TH THE SAME, THE REVENUE FILED AN APPEAL BEFORE THE TRIBUNAL AND THE TRIBUNAL, VIDE ITS ORDER DATED FEBRUARY 24, 2006, ALLOWED THE APPEAL OF THE REVENUE HOLDING THE CHARGING OF INTEREST UNDER SECT ION 234B OF THE ACT TO BE PROPER. HENCE, THE PRESENT APPEAL BY THE ASSESSEE. 6. LEARNED COUNSEL FOR THE ASSESSEE HAS VEHEMENTLY CONTENDED THAT THE TRIBUNAL WAS IN ERROR IN REVERSING THE ORD ER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) THEREBY HOLDIN G THE ASSESSEE EXIGIBLE TO INTEREST UNDER SECTION 234B OF THE ACT ESPECIALLY WHEN THE ASSESSEE HAD FILED THE RETURN O F LOSS AND WAS ITA NOS.314 TO 321 /MDS/2017 :- 16 -: NOT LIABLE TO PAY ADVANCE TAX. ACCORDING TO LEARNED COUNSEL, THE ASSESSEE HAD BEEN INCURRING LOSSES IN THE PAST AND IT COULD NOT FORESEE THAT THE POSITIVE INCOME WOULD ACCRUE DURIN G THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 1991-92 AND, T HEREFORE, THERE WAS NO LIABILITY TO PAY ADVANCE TAX AND CONSE QUENTLY NO INTEREST UNDER SECTION 234B OF THE ACT COULD BE LEV IED. RELIANCE HAD BEEN PLACED ON THE APEX COURT JUDGMENT IN J. K. SYNTHETICS LTD. V. CTO 94 STC 422 ; AIR 1994 SC 2393, CIT V. R ANCHI CLUB LTD. [2001] 247 ITR 209 (SC) ; [2000] 164 CTR 200 A ND A JUDGMENT OF THE PATNA HIGH COURT IN RANCHI CLUB LTD . V. CIT [1996] 217 ITR 72. 7. MR. YOGESH PUTNEY, LEARNED COUNSEL FOR THE REVEN UE DREW OUR ATTENTION TO EXPLANATION 1 TO SECTION 234B OF THE A CT. ACCORDING TO LEARNED COUNSEL, THE AFORESAID EXPLANATION 1 TO SEC TION 234B OF THE ACT HAS BEEN AMENDED BY THE FINANCE ACT, 2001, WITH RETROSPECTIVE EFFECT FROM APRIL 1, 1989, AND THE VI RES OF THE SAME STANDS UPHELD BY THIS COURT IN RAJ KUMAR SINGAL V. UNION OF INDIA [2002] 255 ITR 561 . AS PER THE AMENDED PROVISIONS WHICH ARE APPLICABLE TO THE PRESENT ASSESSMENT YEAR 1991-92 A S WELL, INTEREST UNDER SECTION 234B OF THE ACT IS TO BE CHA RGED WITH REFERENCE TO ASSESSED TAX. HE SUPPORTED THE ORDER P ASSED BY THE TRIBUNAL AND FURTHER SUBMITTED THAT THE JUDGMENTS R ELIED UPON BY THE ASSESSEE DO NOT SUPPORT ITS CASE ANY LONGER AFT ER THE AFORESAID AMENDMENT WHICH HAS BEEN MADE APPLICABLE WITH RETRO SPECTIVE EFFECT FROM APRIL 1, 1989. 8. WE HAVE THOUGHTFULLY CONSIDERED THE RESPECTIVE S UBMISSIONS MADE BY LEARNED COUNSEL FOR THE PARTIES AND DO NOT FIND ANY FORCE IN THE APPEAL. 9. IT IS NO DOUBT TRUE THAT PRIOR TO THE AMENDMENT BROUGHT BY THE FINANCE ACT, 2001, WHICH HAS BEEN MADE EFFECTIVE RE TROSPECTIVELY FROM APRIL 1, 1989, THE INTEREST UNDER SECTION 234B OF THE ACT WAS CHARGEABLE WITH REFERENCE TO THE TOTAL INCOME AS HA D BEEN DECLARED BY THE ASSESSEE IN ITS RETURN AND NOT ON T HE ASSESSED INCOME. EXPLANATION 1 TO SECTION 234B OF THE ACT WA S AMENDED BY THE FINANCE ACT, 2001. IT READS THUS : 'EXPLANATION 1.IN THIS SECTION, 'ASSESSED TAX' MEA NS THE TAX ON THE TOTAL INCOME DETERMINED UNDER SUB-SE CTION (1) OF SECTION 143 OR ON REGULAR ASSESSMENT AS REDU CED BY THE AMOUNT OF TAX DEDUCTED OR COLLECTED AT SOURC E IN ACCORDANCE WITH THE PROVISIONS OF CHAPTER XVII ON A NY INCOME WHICH IS SUBJECT TO SUCH DEDUCTION OR COLLEC TION AND WHICH IS TAKEN INTO ACCOUNT IN COMPUTING SUCH T OTAL INCOME.' 10. THE SAID EXPLANATION WAS THE SUBJECT-MATTER OF CHALLENGE BEFORE THIS COURT IN RAJ KUMAR SINGAL'S CASE [2002] 255 ITR 561 ITA NOS.314 TO 321 /MDS/2017 :- 17 -: WHERE THE DIVISION BENCH WHILE UPHOLDING THE VALIDI TY OF THE SAID PROVISION, INTERPRETED IT AS UNDER (PAGE 562) : 'A COMPARISON OF THE TWO PROVISIONS SHOWS THAT UNDE R THE ORIGINAL PROVISION INTEREST WAS LEVIABLE ON THE INCOME AS DECLARED IN THE RETURN FILED BY THE ASSESSEE. BY THE AMENDED PROVISION, THE INTEREST IS LEV IABLE ON THE INCOME AS DETERMINED BY THE ASSESSING AUTHORITY MIN US THE INCOME ON WHICH THE TAX HAS BEEN PAID OR DEDUCT ED. THE AMEND MENT IS ONLY CALCULATED TO CLARIFY THE AMBIGUITY THAT WAS FELT IN THE ORIGINAL PROVISION. IT IS NOT ARBITRARY OR UNREASONABLE.' 11. NOW, REFERRING TO THE CASE LAW CITED BY THE LEA RNED COUNSEL FOR THE ASSESSEE, IT WOULD BE SUFFICIENT TO NOTICE THAT THE APEX COURT IN J. K. SYNTHETICS LTD.'S CASE 94 STC 422 ; AIR 1994 SC 2393, WAS INTERPRETING THE PROVISIONS OF THE SALES TAX LAW AN D, THEREFORE, THE SAME DOES NOT ADVANCE THE CASE OF THE ASSESSEE. EQU ALLY, THE JUDGMENTS OF THE APEX COURT IN RANCHI CLUB LTD.'S C ASE [2001] 247 ITR 209 AND THAT OF THE PATNA HIGH COURT IN RANCHI CLUB LTD.'S CASE [1996] 217 ITR 72 RELIED UPON BY THE ASSESSEE RELATE TO THE CASE PRIOR TO THE AFORESAID AMENDMENT AND, THUS, DO NOT HELP THE ASSESSEE'S CASE ANY LONGER. THEIR LORDSHIPS HAD TAKEN THIS VIEW AFTER CONSIDERI NG THE JUDGMENT OF HONBLE APEX COURT AS WELL AS HONBLE PATNA HIGH CO URT IN THE CASE OF RANCHI CLUB LTD (SUPRA). THUS IN MY OPINION THE LEVY OF INTEREST UNDER SECTION 234A AND 234B OF THE ACT WERE RIGHTLY DONE BASED ON THE INCOME ASSESSED BY THE ASSESSING OFFICER IN THE REG ULAR ASSESSMENT. 10 . BEFORE PARTING WITH THE ISSUE, I WILL BE FAILING IN MY DUTY, IF I DONT ADVERT TO TWO JUDGMENTS STRONGLY RELIED ON B Y THE LD. AUTHORISED REPRESENTATIVE. ONE IS THE JUDGMENT OF HONBLE JUR ISDICTIONAL HIGH COURT IN THE CASE OF REVATHI EQUIPMENT LTD (SUPRA ) AND OTHER IS THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT IN THE CA SE OF SHRIRAM ITA NOS.314 TO 321 /MDS/2017 :- 18 -: CHITS (BANGALORE) LTD. IN THE FIRST CASE, THE QUESTION WAS WHETHER EFFECT OF SEC.35DDA OF THE ACT COULD HAVE BEEN CONS IDERED BY AN ASSESSEE WHILE WORKING OUT INTEREST UNDER SECTIONS 234B AND 234C OF THE ACT. THE SAID SECTION HAD RETROSPECTIVELY REST RICTED THE DEDUCTION THAT COULD BE CLAIMED FOR PAYMENTS MADE UNDER VOLU NTARY RETIREMENT SCHEME WHICH WAS OTHERWISE FULLY ALLOWABLE. IT WAS IN THIS SCENARIO THAT THEIR LORDSHIPS HELD IN FAVOUR OF THE ASSESSEE RULING THAT ASSESSEE COULD NOT HAVE ENVISAGED THE IMPACT OF SEC. 35DDA OF THE ACT AND CALCULATED INTEREST UNDER SECTIONS 234B AND 234C OF THE ACT. AS FOR THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF SHRIRAM CHITS (BANGALORE) LTD (SUPRA ), THEIR LORDSHIPS WERE DEALING WITH A RECTIFICATION DONE BY INVOKING SECTION 154 OF THE ACT BASED ON A RETROSPECTIVE AMENDMENT TO LAW WHICH AMENDMENT WAS DONE TO ADDRESS THE ADVERSE EFFECT OF A HONBLE APEX COURT JUDGMENT. IN MY OPINION BOTH THESE CASES HAVE NO APPLICABILITY ON F ACTS HERE AND WERE GIVEN ON AN ENTIRELY DIFFERENT SET OF FACTS. IN TH E CASES BEFORE ME, LD. ASSESSING OFFICER HAD IN THE ORIGINAL ASSESSMENTS ITSELF LEVIED INTEREST UNDER SECTIONS 234A AND 234B OF THE ACT AND HAD NEV ER ATTEMPTED TO CHANGE OR VARY THE QUANTUM OF SUCH LEVY AT ANY POIN T THEREAFTER. ASSESSMENT ORDERS HAVING BEEN REVIVED THROUGH APEX COURT JUDGMENT SUCH LEVY OF INTEREST WILL ALSO STAND. IN THE CIR CUMSTANCES, I DO NOT ITA NOS.314 TO 321 /MDS/2017 :- 19 -: FIND ANY REASON TO INTERFERE WITH THE ORDERS OF THE LOWER AUTHORITIES. 11 IN THE RESULT, APPEALS OF ALL THE ASSESSEES ARE DI SMISSED. ORDER PRONOUNCED ON TUESDAY, THE 9TH DAY OF JANUARY, 2018, AT CHENNAI. SD/ - ( . ) (ABRAHAM P. GEORGE) / ACCOUNTANT MEMBER #$ / CHENNAI %& / DATED: 9 TH JANUARY, 2018 KV &' ()*) / COPY TO: 1 . / APPELLANT 3. +,- / CIT(A) 5. )./ 0 / DR 2. / RESPONDENT 4. + / CIT 6. /12 / GF