Dr A. Naresh Babu, Hyderabad V. ITO, Siddipet

ITA 419/HYD/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3045 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 28-07-2010
• Assessment Year: 2001-2002
• Appeal Filed On: 19-03-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUNIL BABU KE
• Assessee Lawyers: S RAMA RAO
• Section: 143(3); 234B; 147; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B , HYDERABAD BEFORE SHRI N.R.S. GANSAN, JUDICIAL MEMBER AND SHRI CHANDRA POOJARI ACCOUNTANT MEMBER ITA.415 TO 421/HYD/2010 ASSESSMENT YEAR 1997-98 TO 2003-04 DR. A. NARESH BABU, GAJWEL. (PAN ABLPA 2559 E) VS ITO, SIDDIPET (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S. RAMA RAO RESPONDENT BY : SHRI SUNIL BABU, KE O R D E R PER: CHANDRA POOJARI, ACCOUNTANT MEMBER: THESE SEVEN APPEALS PREFERRED BY THE ASSESSEE ARE DIRE CTED AGAINST THE ORDER PASSED BY THE CIT(A)III, HYDERABAD DATED 15.1.2010 AND PERTAINS TO ASSESSMENT YEARS 1997-98 TO 2003-04 . 2. THE ONLY GRIEVANCE RAISED BY THE ASSESSEE IN ALL ITS APPEALS IS THAT: THE CIT(A) ERRED IN HOLDING THAT INTEREST U/S 234B IS CORRECTLY CHARGED BY THE ASSESSING OFFICER. THE CIT(A) OUGHT TO HAVE SEEN THAT THE ASSESSMENTS HAVE BEEN MADE U/S 147 OF THE IT ACT AN D THAT THE INTEREST IS CHARGEABLE ON THE DIFFERENCE OF TAX PAY ABLE BECAUSE AS PER ORDER U/S 147 AND THE TAX AS PER INTIMATION U/S 143 (1) OR ASSESSMENT U/S 143(3) AS THE CASE MAY BE, FROM THE DATE OF ORD ER INTIMATION U/S 143 TILL THE DATE OF REASSESSMENT MADE U/S 147 OF T HE IT ACT. 3. BRIEF FACTS OF THE CASE ARE THAT CONSEQUENT UPO N THE COMBINED APPELLATE ORDER DATED 19.1.2009 OF THE CIT( A) III, HYDERABAD IN ITA NO.0078 TO 0085/CIT(A)-III/08-09 PASSED BY THE CIT(A) ON APPEALS FILED BY THE ASSESSEE AGAINST THE ASSESSMENT ORDERS FO R THOSE ITA NOS.415 TO 421/H/2010 DR. A. NARESH BABU, GAJWEL 2 ASSESSMENT YEARS PASSED U/S 143(3) R.W.S. 264 ON 29.12.2006, THE ASSESSING OFFICER HAS PASSED THE ABOVE ORDERS DATED 4.3.2009 , GIVING EFFECT TO THE SAID ORDER OF THE CIT(A) III, HYDERABAD . VIDE THE SAID ORDER DATED 4.3.2009, WHILE COMPUTING THE REVISED INCO ME FOR EACH YEAR, AFTER ALLOWING THE RELIEF ALLOWED BY THE CIT( A), THE ASSESSING OFFICER HAS COMPUTED THE TAX LIABILITY INCLUSIVE OF INTE REST U/S 234A, 234B ETC. ON SUCH REVISED INCOME FOR ALL THE ASSESSMENT YEARS. IN THE CONTEXT OF CHARGING OF INTEREST U/S 234B, IN ALL THE ABOVE ORD ERS, THE ASSESSING OFFICER HAS STATED AS FOLLOWS: AS PER PROVISIONS OF SEC.234B(1) AND EXPLANATION 2 O F 234B(1), INTEREST U/S 234B WAS CHARGED FROM 1.4.1997 T O 19.3.2004 I.E. TO THE DATE OF REGULAR ASSESSMENT ORDER U/S R.W.S. 147 OF THE ACT, ON 19.3.2004. 4. FOR THE OTHER ASSESSMENT YEARS, THE ASSESSING OFFICER HAS MADE THE ALMOST SAME OBSERVATION REGARDING CHARGING OF INTER EST UPTO 19.3.2004, I.E. THE DATE OF REGULAR ASSESSMENT ORDERS U /S 143(3) R.W.S. 147 FOR THE SAID ASSESSMENT YEAR, EXCEPT SHOWING THE FIRST DATE I.E. 1.4.1998, 1.4.1999, 1.4.2000, 1.4.2001, 1.4.2002 AN D 1.4.2003, FOR THE ASSESSMENT YEARS 1998-99, 1999-2000, 2000-01, 2001-02, 2 002-03 AND 2003-04 RESPECTIVELY, FOR THE PURPOSE OF INDICATING RESPECTIVE DURATION/PERIOD FOR WHICH SUCH INTEREST IS CHARGED. 5. THE LEARNED AUTHORISED SUBMITTED THAT THE ASSESSING OFFICER HAS CHARGED INTEREST FROM 1 ST APRIL OF THE ASSESSMENT YEAR TILL THE DATE OF ASSESSMENT MADE U/S 147. IT WAS SUBMITTED THAT THE PROVISI ONS OF SEC.234B(3) OF THE ACT, ARE APPLICABLE IN THIS CASE. IT WAS STATED, ACCORDING TO THE SAID SECTION 234B(3), INTEREST IS CHARGEAB LE IN A CASE WHERE THE INCOME WAS DETERMINED U/S 143(1) FROM THE DA TE OF INTIMATION U/S 143(1) TILL THE DATE OF ORDER U/S 147 ON THE DIFFERENCE OF ITA NOS.415 TO 421/H/2010 DR. A. NARESH BABU, GAJWEL 3 TAX PAYABLE. STATING THAT FOR ALL THE ABOVE ASSESSMENT YEARS, INTEREST IS CHARGEABLE U/S 234B(3) OF THE ACT AND NOT FROM 1 ST APRIL OF THE ASSESSMENT YEAR, AND HE REQUESTED THAT THE ASSESSING OFFICER MAY BE DIRECTED TO CHARGE SUCH INTEREST IN ACCORDANCE WITH THE PRO VISIONS OF THE ACT. FURTHER HE RELIED ON THE ORDER OF TRIBUNAL MUM BAI BENCH IN THE CASE OF ACIT VS. RONALD NARDI (14 SOT 24) (MUM) WHEREIN HELD THAT WHERE INTEREST U/S 234B(1) IS CHARGED IN INTIMATIO N U/S 143(1) AND TAX PAYABLE IS ENHANCED ON REASSESSMENT, THE ASSESSING OFFICER SHOULD INCORPORATE THE INTEREST U /S 234B(1) IN THE COMPUTATION SHEET OF REASSESSMENT AN D SHOULD CHARGE INCREMENTAL INTEREST U/S 234B(3) FOR EVERY MONTH OR PART OF A MONTH COMPRISED IN THE PERIOD COMMENCING ON THE DAY FOLLOWING THE DATE OF DETERMI NATION OF TOTAL INCOME UNDER SUB SECTION (1) OF SECTION 14 3 AND ENDING ON THE DATE OF REASSESSMENT U/S 143(3)/147 O N THE AMOUNT BY WHICH THE TAX ON THE TOTAL INCOME DETERMI NED ON THE BASIS OF THE REASSESSMENT EXCEEDED THE TAX ON T HE TOTAL INCOME DETERMINED U/S 143(1). 6. THE DEPARTMENTAL REPRESENTATIVE RELIED ON THE O RDER OF THE CIT(A) AND ALSO ORDER OF THE TRIBUNAL, AHMEDABAD BEN CH IN THE CASE OF ACIT VS. GUJARAT BITUMEN LTD. (82 ITD 614) (AHEMADAB AD). 7. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY GON E THROUGH THE PROVISION OF THIS SECTION 234B OF THE ACT. AS PER TH E PROVISIONS OF SUB SECTION (1) TO SEC. 234B, INTEREST UNDER THAT SECTION AT THE APPROPRIATE RATE, SHALL BE LEVIED FOR THE PERIOD FRO M 1 ST DAY OF APRIL NEXT FOLLOWING SUCH FINANCIAL YEAR TO THE DATE OF DETERMINA TION OF TOTAL INCOME UNDER SUB SECTION (1) OF SEC.143 AND WHERE A REGULAR ASSE SSMENT IS MADE, TO THE DATE OF SUCH REGULAR ASSESSMENT, ON AN AMOUN T EQUAL TO THE ASSESSED TAX OR, AS THE CASE MAY BE ON THE AMOUNT BY W HICH THE ADVANCE TAX PAID FALLS SHORT OF THE ASSESSED. THUS, AS PER THIS PROVISION, WHENEVER A REGULAR ASSESSMENT IS MADE, SUCH INTEREST U/S 23 4B HAS TO ITA NOS.415 TO 421/H/2010 DR. A. NARESH BABU, GAJWEL 4 BE LEVIED FROM THE 1 ST DAY OF THE RELEVANT ASSESSMENT YEAR UP TO THE DATE OF SUCH REGULAR ASSESSMENT. EXPLANATION 1 GIVEN BELOW SUB SECTION (1) TO SECTION 2 34B, DEFINES ASSESSED TAX. UNDER EXPLANATION 2 IT SAYS AS UNDER: EXPLANATION 2: WHERE IN RELATION TO AN AY, AN ASSESSM ENT IS MADE FOR THE FIRST TIME (U/S 147 OR SECTION 153A) THE ASSESSMENT SO MADE SHALL BE REGARDED AS A REGULAR ASSESSMENT OF THE PURPOSES OF THI S SECTION. 8. AS PER THE ABOVE EXPLANATION 2, THUS WHEN IN CASE OF AN ASSESSEE AN ASSESSMENT IS MADE FOR THE FIRST TIME U/S 147 OF THE ACT, THE SAME SHALL BE CONSIDERED AS A REGULAR ASSESSMENT FOR TH E PURPOSE OF LEVYING INTEREST U/S 234B. THUS, WHENEVER A SCRUTINY OF ASSESSMENT IS MADE FOR THE FIRST TIME U/S 147 OF THE ACT, THE SAID ASSE SSMENT HAS TO BE CONSIDERED AS A REGULAR ASSESSMENT FOR THE PURPOSE OF COMPUT ING INTEREST U/S 234B OF THE ACT. 9. IT IS TO BE NOTED THAT UNDER SUB SECTION (3) TO SEC.234B OF THE ACT, IT PROVIDES THE MECHANISM TO BE FOLLOWED FOR CO MPUTING INTEREST U/S 234B, WHEN THE AMOUNT OF TAX LIABILITY ON WHICH T HE INTEREST WAS PAYABLE UNDER SUB SECTION (1) INCREASED, FOLLOWING ASSESSIN G OFFICER ORDER OF REASSESSMENT OR RE-COMPUTATION. THUS, ON A CAREF UL READING OF THE SAID SUB SECTION, IT MAY BE SEEN SEEN THAT THE SAID SECT ION COMES INTO PICTURE, WHEN THE LIABILITY OF INTEREST U/S 234B EXCEEDS THE AMOUNT ALREADY CHARGED U/S 234B(1) OF THE ACT. BUT SINCE IN TH E INSTANT CASE THE TAX LIABILITY OF THE ASSESSEE FOR ALL THE ASSESSMENT YE ARS HAVE DECREASED, THE SAID SUB SECTION (3) IS NOT AT ALL APPLICABL E AND THEREFORE, THE ASSESSING OFFICER WAS RIGHT IN COMPUTING INTEREST UNDER SUB SECTION (1) TO SEC.234B AFTER CONSIDERING THE PERIOD UP TO TH E DATE OF SUCH ITA NOS.415 TO 421/H/2010 DR. A. NARESH BABU, GAJWEL 5 REGULAR ASSESSMENT U/S 143(3) R.W.S. 147 FOR EACH ASSESSMENT YEAR. FURTHER IN THE PRESENT CASE THERE IS NO DISPUTE THAT ORI GINALLY RETURNS WERE PROCESSED 143(1) AND CONSEQUENT TO SURVEY, THE ASSESSME NTS WERE REOPENED BY ISSUING NOTICE U/S 148. IT IS TO BE N OTED THAT THE PROCESSING OF THE RETURN OR INTIMATION U/S 143(1) IS NOT AT ALL AN ASSESSMENT. THE PERIOD FOR WHICH INTEREST IS TO BE CHARGED ARE SPECIFIED IN THE SECTION AS (1) DATE OF DETERMINATION OF TOTAL I NCOME U/S 143(1) AND (2) WHERE REGULAR ASSESSMENT IS MADE DATE OF SUCH REGU LAR ASSESSMENT. THUS, THE LEGISLATIVE INTENTION IS THAT PRO CESSING OF RETURN U/S 143(1) DOES NOT HAVE THE MEANING OF AN ASSESSMENT. THEREFORE, THE ASSESSMENT MADE IN THE INSTANT CASE U/S 143(3) R.W.S. 1 47 IS THE FIRST ASSESSMENT AND BY VIRTUE OF EXPLANATION 2 SECTION 23 4B, THIS ASSESSMENT IS A REGULAR ASSESSMENT AS SUCH INTEREST IS CHARGEABLE AS PER SUB SECTION (1) TO SEC.234B AND ASSESSING OFFICER IS JU STIFIED CHARGING THE INTEREST ACCORDINGLY. OUR VIEW IS FORTIFIED BY THE ORDER OF THE TRIBUNAL IN THE CASE OF ACIT VS. GUJARAT BITUMEN LTD. (2002) 82 ITD 614 WHEREIN HELD THAT SENDING OF INTIMATION DOES NOT AMOUNT TO AN ASSESSMENT. THEREFORE, THE ASSESSMENT MADE IN THE INSTANT CASE U/S 147 IS THE FIRST ASSESSMENT AND BY VIRTUE OF EXPLANATION (2) TO SECTI ON 234B THIS ASSESSMENT IS A REGULAR ASSESSMENT. THEREFORE INTEREST U/S 234B IS CLEARLY CHARGEABLE WHILE MAKING THE IMPUGNED ASSESSMENT U/S 147. 10. THE ASSESSEE RELIED ON THE ORDER OF THE TRIBUNAL IN THE CASE OF RONALD NARDI CITED SUPRA WHEREIN THE ISSUE BEFORE THE TRIBUNAL IS RELATING TO THE LEVY OF INTEREST U/S 234B (3) FOR TH E PERIOD 27 TH DECEMBER, 2000 (DATE OF DETERMINATION OF TOTAL INCOME U/S 143(1) TO 27 TH MARCH, 2002 (DATE OF COMPLETION OF REASSESSMENT U/S 143(3 ) R.W.S. ITA NOS.415 TO 421/H/2010 DR. A. NARESH BABU, GAJWEL 6 147) AND THEREAFTER, BY INTERPRETING THE PROVISIONS O F SECTIONS 234B(1) LEVIED INTEREST FOR THE PERIOD 1 ST APRIL, 1998 TO 27 TH MARCH, 2002 WHICH, ACCORDING TO THE CIT(A), WAS OUTSIDE THE PURVIEW OF THE PROVISIONS CONTAINED IN SECTION 154 AS THERE ARE TWO VIEWS POSSIBLE A S REGARDS THE CHARGEABILITY OF INTEREST U/S 234B(1) AND 234B(3) AND, ACCORDINGLY, HOLDING THAT THE ORDER U/S 154 WAS LIABLE TO BE CANCEL LED AS BAD IN LAW. WHILE DECIDING THIS ISSUE THE TRIBUNAL DIRECTED THE ASSESSI NG OFFICER TO MODIFY THE ORDER U/S 154 AS UNDER: (A) THE FIGURE OF INTEREST ORIGINALLY CHARGED U/S 23 4B(1) AS PER THE INTIMATION ISSUED U/S 143(1) SHOULD BE INCORPORATED AND INCLUDED IN THE COMPUTATION SHEET ACCOMPANYING THE REASSESSMENT ORDER PASSED U/S 143(3)/148: AND (B) IN ADDITION TO THE ABOVE, THE INCREMENTAL INTEREST REQUIRED TO BE CHARGED U/S 234B(3) SHOULD ALSO BE CHARGE D FOR EVERY MONTH OR PART OF A MONTH COMPRISED IN THE PERIOD COMME NCING ON THE DAY FOLLOWING THE DATE OF DETERMINATION OF TOTAL IN COME UNDER SUB SECTION (1) OF SECTION 143 AND ENDING ON THE DATE OF RE ASSESSMENT UNDER SECTION 143(3)/147 ON THE AMOUNT BY WHICH THE TAX ON T HE TOTAL INCOME DETERMINED ON THE BASIS OF THE REASSESSMENT EXCEEDS THE TA X ON THE TOTAL INCOME DETERMINED U/S 143(1). 11. IN OUR OPINION, PLACING RELIANCE BY THE AUTHOR ISED REPRESENTATIVE OF THE ASSESSEE ON THE ABOVE ORDER IS TOT ALLY MISPLACED. IN VIEW OF THE ABOVE DISCUSSION, WE ARE INCLINED TO AGR EE WITH THE FINDINGS GIVEN BY CIT(A) AND THE SAME IS CONFIRMED. ITA NOS.415 TO 421/H/2010 DR. A. NARESH BABU, GAJWEL 7 11. IN THE RESULT ALL THE ASSESSEE APPEALS IN ITA NOS.41 5 TO 421/HYD/2010 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT 30 .7.2010 SD/- SD/- N.R.S. GANESAN CHANDRA POOJARI JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 30 TH JULY, 2010 COPY FORWARDED TO: 1. SHRI S. RAMA RAO, ADVOCATE, FLAT NO.102, SHRIYAS ELEGANCE, ST.NO.9, HIMAYATNAGQAR, HYDERABAD 2. ITO, SIDDIPET 3. CIT(A)-III, HYDERABAD. 4. CIT, HYDERABAD 5. THE D.R., ITAT, HYDERABAD. NP