Epari Sadasiva Rao(HUF), Cuttack V. ACIT, Cuttack

ITA 323/CTK/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4456 (ITAT-CUTTACK)
• Duration Of Justice: 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 1994-1995
• Appeal Filed On: 03-09-2010
• Court: TRIBUNAL
• Department Lawyers: J KHANRADR
• Assessee Lawyers: KANHYALAL SHARMA
• Keywords: Search and seizure; Audit objection
• Section: 54

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , S HRI K.S.S.PRASAD RAO , JUDICIAL MEMBER / I.T.A.NO. 323/CTK/2010 / ASSESSMENT YEAR 1994 - 95 EPARI SADASIVA RAO (HUF) OLD COLLEGE LANE, NIMCHOURI, CUTTACK 753 002 PAN - AAAHE 0572 R - - - VERSUS - ASST.COMMISSIONER OF INCOME - TA X, CIRCLE 2(2), CUTTACK. ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI KANHYALAL SHARMA, AR / FOR THE RESPONDENT: / SHRI J.KHANRA,DR / ORDER . . , , SH RI K.K.GUPTA, ACCOUNTANT MEMBER. THIS APPEAL BY THE ASSESSEE AGITATES THE ACTION OF THE LEARNED CIT(A) IN CONFIRMING THE DISMISSAL OF THE ASSESSEES PETITION U/S.154 BEFORE THE ASSESSING OFFICER REQUIRING RECTIFICATION OF A MISTAKE APPARENT ON RECORD BEI NG THE INTEREST LEVIED U/S.234A REQUIRED TO BE COMPUTED AGAIN EVEN AFTER THE ASSESSEE HAD FULFILLED THE REQUIREMENT OF HAVING PAID TAX MUCH PRIOR TO THE DATE FROM WHEN THE REQUIREMENT OF THE LAW W AS TO CHARGE INTEREST ON THE BASIS OF FILING OF THE RETURN. 2. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THE FACTS THAT THE ASSESSEE IS A HINDU UNDIVIDED FAMILY GETTING INCOME FROM SHARE IN A PARTNERSHIP FIRM AND OTHER SOURCES. AFTER ASSESSMENT AND APPEALS WERE FINALIZED , THE PROCEEDINGS HAD CONCLUDED FINALL Y BY AN ORDER U/S .2 54 OF THE INCOME TAX ACT, 1961 DATED 31.03.2006. HO WEVER DUE TO AN AUDIT OBJECTION, THE LD. A.O. INITIATED RECTIFICATION PROCEEDINGS U/S 154, ON THE GROUNDS THAT INTEREST U/S 234A WAS CHARGED LESS. THE I NTER ES T U/S 234A WAS RIGHTLY CHARG ED I.T.A.NO. 323/CTK/2010 2 TILL THE PAYMENT OF SELF ASSESSMENT TAX U /S 140A SINCE THERE WAS DELAY IN FILING OF THE RETURN AS A RESULT OF THE SEARCH AND SEIZURE OPERATIONS AND SEIZURE OF THE ACCOUNTS OF THE FIRM, ETC., THE ASSESSEE HA D SINCERELY AND DILIGENTLY PAID AN ESTIMATED AM OUNT OF TAX EARLY THOUGH THE FILING OF RETURN WAS DELAYED. SINCE THE INTEREST U/S 234A WAS COMPENSATORY IN NATURE, THE INTEREST U/S 234A WAS RIGHTLY CHARGED TILL THE DATE OF PAYMENT OF THE SELF ASSESSMENT TAX, FOR WHICH PERIOD THE DEPARTMENT SUFFERED , AND NOT TILL THE DATE OF FILING OF RETURN, WHICH WAS THE PRINCIPLE LAID DOWN IN A PLETHORA OF CASES AND AFFIRMED EVEN BY THE HONBLE SUPREME COURT. THE COURTS HAVE HELD THAT SINCE INTEREST U/S 234A WAS COMPENSATORY IN NATURE, AND NOT A PENALTY FOR NON - FILING O F RETURNS, FOR WHICH THERE ARE SEPARATE PROVISIONS, IT IS MEANT TO COMPENSATE THE DEPARTMENT FOR DEPRIVING IT OF THE PAYMENT OF TAX. THEREFORE I NTEREST U/S 234A IS ONLY TO BE CHARGED TILL THE DATE OF PAYMENT OF THE SELF - ASSESSMENT TAX, EVEN THOUGH THE RETU RN HAS BEEN FILED LAT ER. HOWEVER THE LD. AO WITHOUT APPLYING HIS MIND OR APPRECIATING THE UNDERLYING PRINCIPLE OF THE VARIOUS COURT DECISIONS, DECIDED TO LEVY THE INTE REST U/S 234A TILL THE DATE OF F ILING OF THE RETURN . THE LEARNED COUNSEL FOR THE ASSESSEE POINTED OUT THAT THE LEARNED CIT(A) INSPITE OF HAVING BEEN APPRISED OF THE DECISION OF DELHI HIGH COURT IN THE CASE OF DR. PRANNOY ROY V.CIT (254 ITR 755) AND LATER AFFIRMED BY THE HONBLE SUPREME COURT IN CIT V. PRANOY ROY (309 ITR 231), THE LEARNED CIT (A) REDUCED ITS CREDENCE TO THE FACT THAT EVEN IF RETURN WAS FILED PRIOR TO HAVING PAID TAX WAS NOT THE CRITERIA AS HELD BY THE JUDICIAL PRONOUNCEMENT. HE PERUSED THE ORDER U/S.154 OF THE ASSESSING OFFICER WHEREIN IT HAS BEEN CLEARLY MENTIONED THAT THE CH ARGING OF INTEREST U/S.234A COMMENCE D FROM NOVEMBER, 1994 TO MARCH,1996 WHEN RETURN WAS FILED HAD ALREADY BEEN CLAIMED WAS AGAIN RECOMPUTED WHEN THE REFUND VOUCHER HAD BEEN ISSUED NO 15.6.2006 AMOUNTING TO 47,569.THIS RESULTED IN I.T.A.NO. 323/CTK/2010 3 APPROXIMATELY 30,000 INTEREST WHICH EITHER THE DEPARTMENT WOULD HAVE LEVIED OR THE ASSESSEE WOULD HAVE PAID BUT WAS NOT TO BE CHARGED AT ALL IN VIEW OF THE SIMPLE PROPOSITION THAT THE INTEREST LEVIED U/S.234A IS COMPENSATORY AND N OT PENAL. THE DECISION OF THE HONBLE APEX COURT CLEARLY INDICATE S LEVY OF INTEREST U/S.234A AS COMPENSATORY AND IS TO BE CHARGED TILL THE DATE OF PAYMENT OF TAX AND NOT TO TILL THE DATE OF FILING OF RETURN I.E., WHEN THE CREDIT FOR THE TAXES HAVE BEEN PA ID BY THE ASSESSEE HAD BEEN ACKNOWLEDGED BY THE DEPARTMENT. 3. THE LEARNED DR SUBMITTED THAT THE ASSESSEE HAD NOT FILED THE RETURN IN ACCORDANCE WITH THE TAX PAID AND THEREFORE ON APPEAL BEFORE THE LEARNED CIT(A), THE LEARNED CIT(A) NOTED THAT THE SELF AS SESSMENT TAX HAS TO BE PAID BEFORE THE FILING OF THE RETURN OR THE DUE DATE OF FILING OF THE RETURN. THE CITATIONS RELIED UPON BY THE ASSESSEE APPELLANT BEFORE HIM WAS THEREFORE DISTINGUISHED TO THE EXTENT THAT THE ASSESSEE IS TO P AY THE INTEREST TILL THE TIME SUCH INTEREST WAS TO BE CALCULATED FOR BELATEDLY FILING OF THE RETURN WHICH WAS IN ACCORDANCE WITH THE PROVISIONS AS ON STATUTE PRIOR TO 1.4.1989 WHEN INTEREST WAS TO BE CHARGED ON BELAT ED FILING OF RETURN U/S.271(1)(A ). HE ALSO NOTED THAT LEVY OF INT EREST HAS GOT NOTHING TO DO WITH THE PENAL PROVISIONS OF BELATED FILING OF THE RETURN WHICH WAS DONE AWAY WITH AFTE R 1.4.1989. THE LEARNED COUNSEL FOR THE ASSESSEE SEEKS TO INDICATE THAT THE INTEREST IS COMPENSATORY AND NOT PENAL IN NATURE , IS NOWHERE CONS IDERED . 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ON OUR CAREFUL CONSIDERATION OF THE FACTS, WE ARE INCLINED TO HOLD THAT RATIO OF ANALYSIS ON THE DECISION IN THE CASE OF DR. PRANNOY ROY V.CIT (254 ITR 755),THE I NTEREST TO BE LEVIED U/S.234A WAS NOT TO PENALIZE OR I.T.A.NO. 323/CTK/2010 4 PUNISHING FOR DELAYED SUBMISSION OF RETURN. IT WAS COMPENSATORY IN NATURE TO COMPENSATE THE REVENUE IN ORDER TO AVOID IT FROM BEING DEPRIVED OF THE PAYMENT OF SELF ASSESSMENT TAX WHICH IS PAID PRIOR TO F ILING OF THE RETURN. IF A RETURN HAS BEEN BELATEDLY FILED THE ASSESSEE HAS TO UNDER GO LEVY OF INTEREST U/S.271(1)(A ) TILL SUCH TIME THE RETURN IS FILED. THESE FACTS ARE UNDISPUTED INSOFAR AS THE LEARNED CIT(A) INSISTED THAT THE INTEREST HAS TO BE LEVIED ON CE THE RETURN HAS BEEN DELAYED AND THE SELF ASSESSMENT TAX THEREAFTER CANNOT TAKE THE NATURE OF TAX TO REDUCE THE LEVY OF INTEREST U/S.234A. THUS, THE LEARNED CIT(A) ERRED INSOFAR AS THE ASSESSING OFFICER CLEARLY NOTED THE COMPUTATION OF INTEREST AFTER HA VING LEVIED INTEREST U/S.234A IN COMPLIANCE TO THE PROVISIONS OF THE ACT EARLIER BUT INDICATED THAT A RETURN ENSUED WAS A DIFFERENCE BETWEEN THE DEMAND CREATED AND NOW CALLED FOR TO BE PAID BY THE ASSESSEE IN THE GARB OF LEVY OF INTEREST U/S.234A. THE FACT S, THEREFORE, CLINCHES THE ISSUE IN FAVOUR OF THE ASSESSEE THAT THE INTEREST PORTION BEING THE PERIOD THE TAX REMA INED UNADJUSTED TO THE EXTENT IT WAS NOT FOR THE ASSESSEES NON - FILING OF RETURN ON TIME , BUT ON THE BASIS OF REVENUES PROCESSING THE RETURN , THE INTEREST HAS BEEN CHARGED OVER AND ABOVE WHAT THE LAW PERMITS. THE REVENUE HAD SUFFERED NO MONETARY LOSS FOR NON FILING OF THE RETURN WHICH HAS BEEN CONSIDERED BY THE LEARNED CIT(A) AS APPROPRIATE FOR NOT ALLOWING THE CLAIM OF THE ASSESSEE U/S.154 BU T CLEARLY INDICATES THAT THE LEARNED CIT(A) DID NOT ADHERE TO THE PROPOSITION CITED BY THE ASSESSEE APPELLANT BEFORE HIM O N THE RATIO OF THE DECISION IN THE CASE OF DR. PRANNOY ROY V.CIT (254 ITR 755) WHICH INDICATES THAT THE LEVY OF INTEREST U/S.234A IS C OMPENSATORY AND NOT PENAL. FINDING NO INFIRMITY IN THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE, WE HAVE NO HESITATION IN ALLOWING THE APPEAL AND DIRECTING THE ASSESSING OFFICER TO RECTIFY THE CLAIM IN ACCORDANCE WITH LAW WHEN THE BALANCE PAYABLE DEMAND AMOUNTING TO 31,590 CANNOT BE I.T.A.NO. 323/CTK/2010 5 COMPUTED AGAINST THE ASSESSEE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT. 21 ST APRIL, 2011 S D/ - S D/ - ( . . . ) , ( K.S.S.PRASAD RAO), JUDICIAL MEMBER ( . . ) , , (K.K.GUPTA), ACCOUNTANT MEMBER. ( ) DATE: 21 ST APRIL, 2011 - COPY OF THE ORDER FORWARDED TO: 1 . / THE APPELLANT : EPARI SADASIVA RAO (HUF) OLD COLLEGE LANE, NIMCHOURI, CUTTACK 753 002 2 / THE RESPONDENT: ASST.COMMISSIONER OF INCOME - TAX, CIRCLE 2(2), CUTTACK. 3 . / T HE CIT, 4 . ( )/ THE CIT(A), 5 . / DR, CUTTACK BENCH 6 . GUARD FILE . / TRUE COPY, / BY ORDER, [ ] SENIOR PRIV ATE SECRETARY ( ), ( H.K.PADHEE ), SENIOR.PRIVATE SECRETARY.