Shri Suresh Parakh, Pune V. ACIT, Range-2, Pune

ITA 494/PUN/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 56538 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 6 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 30-08-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 07-04-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SANJAY SINGH
• Section: 243B; 234B; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO. 494/PN/2010 (ASSTT. YEAR: 2005-06) SHRI SURESH PARAKH , ... APPELLANT 584/1, SALISBURY PARK, PUNE 411 037 PAN : AAXPP 9220 A V. ADDL. CIT, RANGE 2, PUNE RESPONDENT APPELLANT BY : SHRI NIKHIL PATHAK RESPONDENT BY : SHRI SANJAY SINGH DATE OF HEARING :30.8.11 DATE OF PRONOUNCEMENT: .10.11 ORDER PER I.C. SUDHIR, JM THE ASSESSEE HAS QUESTIONED FIRST APPELLATE ORDER ON THE FOLLOWING GROUNDS : 1] THE LEARNED CIT(A) ERRED IN CONFIRMING THE LEV Y OF INTEREST U/S 234B OF RS. 15,30,792/-. 2] THE LEARNED CIT(A) FAILED TO APPRECIATE THAT AS PER SECTION 234B, NO INTEREST WAS LEVIABLE SINCE THE ASSESSEE HAD PAID M ORE THAN 90% OF THE ASSESSED TAX AND THEREFORE, THEY LEVY OF INTEREST W AS NOT JUSTIFIED. 3] THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THA T THE AMOUNT OF TAX FOR THE PURPOSE OF SECTION 234B DID NOT INCLUDE SUR CHARGE AND EDUCATIONAL CESS AND HENCE, THE INTEREST LEVIED U/S. 234B MAY K INDLY BE DELETED. 2. WE HAVE HEARD AND CONSIDERED THE ARGUMENTS ADVA NCED BY THE PARTIES AND HAVE GONE THROUGH THE MATERIAL AVAILABLE OR RECORD AS WELL AS THE DECISIONS RELIED UPON. 3. THE GRIEVANCE OF THE ASSESSEE IS AGAINST LEVY OF INTEREST U/S. 234B AT RS.15,30,792/-. THE RELEVANT FACTS ARE THAT THE A. O HAD COMPUTED THE TOTAL INCOME ITA . NO 494/PN/2010 SHRI SURESH PARAKH PAGE OF 5 2 AT RS. 45, 01,40,360/- AND HAD COMPUTED THE TOTAL TAX AT RS. 9,06,68,277/-. HE HAD INCREASED THE INCOME-TAX CALCULATED BY SURCHARG E OF RS. 90,66,826/- AND EDUCATION CESS OF RS. 19,94,702/-. ACCORDINGLY, TH E A.O HAD COMPUTED THE TOTAL AMOUNT PAYABLE AT RS. 10,17,29,807/-. THE A.O HAD COMPUTED THE INTEREST U/S. 234B AT RS.15,30,792/-. THE SAME HAS BEEN UPHELD B Y THE LD CIT(A). 4. THE CONTENTION OF THE LD. A.R. IS THAT LEVY OF I NTEREST U/S. 234B AT RS.15,30,792/- IS NOT JUSTIFIED AS AS PER THE PROVI SION OF SEC. 234B, THE ASSESSEE IS LIABLE TO PAY INTEREST IF THE ADVANCE TAX PAID BY T HE ASSESSEE IS LESS THAN 90% OF THE ASSESSED TAX. THE LD. A.R. DREW OUR ATTENTION TO THE PROVISIONS OF 234B OF THE ACT. HE SUBMITTED THAT ONLY THE TAX ON THE TOTAL INCOME IS TO BE CONSIDERED AND NOT SURCHARGE AND THE EDUCATION CESS WHICH IS LEVIED SU BSEQUENTLY. AS PER HIM, THE WORD TAX MEANS ONLY THE INCOME TAX AND NOT SURCHA RGE AND EDUCATION CESS. IN THIS CONTEXT, THE LD. A.R. ALSO REFERRED THE DEFINI TION OF TAX PROVIDED U/S. 2(43) OF THE I.T. ACT. HE ALSO REFERRED PART III OF SCHEDUL E I TO THE FINANCE ACT 2008 WHICH STATES THAT THE AMOUNT OF INCOME TAX COMPUTED SHAL L BE INCREASED BY SURCHARGE. HE SUBMITTED FURTHER THAT IN THE CONTEXT OF SECTIO N 115JB, IT HAS BEEN SPECIFICALLY CLARIFIED THAT FOR THE PURPOSE OF THAT SECTION, THE TERM INCOME TAX WOULD INCLUDE SURCHARGE AND THE EDUCATION CESS. THIS POINT CLARI FIES THE ISSUE AND WHEREVER REGISTRY WANTED TO INCLUDE SURCHARGE AND EDUCATION CESS AS PART OF THE INCOME TAX, THE SAME WAS SPECIFICALLY CLARIFIED. THE LD. A.R. POINTED OUT FURTHER THAT THE A.O HAS COMPUTED THE TAX PAYABLE INCLUDING SURCHARG E AND EDUCATION CESS AT RS.9,06,68,277/-. IT IS THE ASSESSED TAX FOR THE P URPOSE OF SECTION 234B AND 90% OF THE SAID AMOUNT WORKS TO RS. 8,16,01,449/-. AS AGA INST THIS, THE ASSESSEE HAD PAID ADVANCE TAX TO THE TUNE OF RS. 8,94,90,000/-. THUS , THE ASSESSEE HAD ALREADY PAID THE ADVANCE TAX MORE THAN 90% OF THE ASSESSED TAX I N VIEW OF SUB-SECTION (1) OF SECTION 234B, HENCE NO INTEREST U/S. 234B IS LEVIAB LE. 5. THE LD. D.R., ON THE OTHER HAND, TRIED TO JUSTIF Y THE ACTION OF THE AUTHORITIES BELOW. HE SUBMITTED THAT THE TAX DEFINED IN ABOVE PROVISIONS IS IN THE DIFFERENT ITA . NO 494/PN/2010 SHRI SURESH PARAKH PAGE OF 5 3 CONTEXT. HE SUBMITTED THAT SURCHARGE IS PART OF IN COME TAX AND CITED FOLLOWING DECISIONS : 1) CIT VS. K. SRINIVASAN, 83 ITR 346 (SC) 2) MERIT ENTERPRISES VS. DCIT, CENTRAL CIRCLE-1, 10 1 ITD 1 (SB) (HYD.) 3) CIT VS. DHARMENDRA SHARMA, 297 ITR 320 (DELHI) 4) JOINT OFFICIAL LIQUIDATORS OF THE PEERDAN JUHARM AL BANK LTD., 25 ITR 140 VS. CIT (MAD.) 5) SWASTIK ENGINEERING WORKS VS. CIT, 87 ITR 116 (G UJ.) 6) UNION OF INDIA VS. SIKRI AND SONS, 112 ITR 529 ( CAL.) 6. IN REJOINDER, THE LD. A.R. SUBMITTED THAT SURCHA RGE IS OPTIONAL TAX AND NOT INCOME TAX AND THE DECISIONS CITED ABOVE BY THE LD . D.R ARE NOT HELPFUL TO THE REVENUE AS HAVING DISTINGUISHABLE FACTS. HE SUBMIT TED FURTHER THAT THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF 83 ITR 34 6 (SUPRA) IS IN RELATION TO FINANCE ACT AND NOT IN RELATION TO INCOME TAX. 7. HAVING GONE THROUGH THE ABOVE CITED DECISIONS, B Y THE LD. D.R., ESPECIALLY THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. K. SRINIVASAN (SUPRA), 83 ITR 346, WE DO NOT FIND SUBSTANCE IN THE CONTENT ION OF THE LD. A.R. THAT ONLY TAX ON THE TOTAL INCOME IS TO BE CONSIDERED AND NOT SUR CHARGE WHILE EXAMINING THE DEFAULT IF ANY ON THE PART OF THE ASSESSEE FOR CHAR GING INTEREST U/S. 234B OF THE ACT. THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. K. SRINIVASAN (SUPRA) HAS BEEN PLEASED TO HOLD THAT THE TERM INCOME TAX AS EMPLO YED IN SECTION 2 OF THE FINANCE ACT, 1964 INCLUDES SURCHARGE AND ADDITIONAL SURCHAR GE WHEREVER PROVIDED. THE SURCHARGE, THE SPECIAL SURCHARGE AND THE ADDITIONAL SURCHARGE FORM A PART OF INCOME TAX AND SUPER TAX, HELD THE HONBLE SUPREME COURT. WE FIND THAT AS PER SECTION 2(45) OF THE I.T. ACT, THE TOTAL INCOME MEANS THE TOTAL AMOUNT OF INCOME REFERRED TO SECTION 5, COMPUTED IN THE MANNER LAID DOWN IN T HIS ACT. IN SECTION 5 OF THE ACT, THE SCOPE OF TOTAL INCOME HAS BEEN STATED AS SUBJE CT TO THE PROVISIONS OF THIS ACT, THE TOTAL INCOME OF ANY PREVIOUS YEAR OF A PERSON W HO IS A RESIDENT, INCLUDES OF ALL ITA . NO 494/PN/2010 SHRI SURESH PARAKH PAGE OF 5 4 INCOME FROM WHATEVER SOURCE DERIVED. THUS, THE TOT AL INCOME U/S. 2(45) IS THE TOTAL INCOME OF A PREVIOUS YEAR DEFINED IN SECTION 2(34), AS BASIS MANDATED BY SECTION 5. UNDER SECTION 4(1) CHARGE OF INCOME TAX HAS BEEN DEFINED AS UNDER : (1) WHERE ANY CENTRAL ACT INDICATES THAT INCOME TA X SHALL BE CHARGED FOR ANY A.Y AT ANY RATE, OR RATES, INCOME TAX AT THAT R ATES OR THOSE RATES SHALL BE CHARGED FOR THAT YEAR IN ACCORDANCE WITH, AND SUBJE CT TO THE PROVISIONS INCLUDING PROVISIONS FOR THE LEVY OF ADDITIONAL IN COME TAX OF THIS ACT IN RESPECT OF THE TOTAL INCOME OF THE PREVIOUS YEAR OF EVERY PERSON : PROVIDED THAT WHERE BY VIRTUE OF ANY PROVISIONS OF THIS ACT INCOME TAX IS TO BE CHARGED IN RESPECT OF THE INCOME OF A PERI OD OTHER THAN THE PREVIOUS YEAR, INCOME TAX SHALL BE CHARGED ACCORDIN GLY. EVEN AS PER THE COMMON KNOWLEDGE, IT IS AN UNDISPU TED FACT THAT THE ASSESSEE WAS KNOWING DURING THE PREVIOUS YEAR RELEVANT TO THE A. Y. IN QUESTION THAT HE IS SUPPOSED TO PAY THE SURCHARGE AND THE EDUCATIONAL C ESS ON ITS INCOME. THUS, IT CANNOT BE SAID THAT THE ASSESSEE COULD NOT ESTIMATE THE PAYMENT OF ADVANCE TAX. THE EXCUSE TAKEN BY THE ASSESSEE FOR NON-PAYMENT OF TAX INCLUSIVE OF SURCHARGE AND THE EDUCATIONAL CESS IN ADVANCE, SINCE TOTAL I NCOME FOR THE PURPOSE OF MEETING COMPLIANCE OF THE PROVISIONS OF SECTION 243B IS ONL Y ON THE TOTAL INCOME EXCLUDING SURCHARGE AND EDUCATIONAL CESS, THUS CAN NOT BE ENT ERTAINED. UNDER THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE LD CIT(A ) HAS RIGHTLY DENIED THE EXPLANATION OF THE ASSESSEE THAT AS PER THE PROVISI ONS OF SECTION 234B OF THE ACT, ONLY THE TAX ON THE TOTAL INCOME IS TO BE CONSIDERE D AND NOT SURCHARGE AND THE EDUCATIONAL CESS. ON THE CONTRARY, AS PER THE CITED DECISION BY THE LD. D.R., ESPECIALLY, THE DECISION OF THE HONBLE SUPREME COU RT IN THE CASE OF CIT VS. K. SRINIVASAN (SUPRA), THE TERM INCOME TAX AS EMPLOY ED IN SECTION 2 OF THE FINANCE ACT, 1964, INCLUDES SURCHARGE AND ADDITIONAL SURCHA RGE WHEREVER PROVIDED. THE SURCHARGE, THE SPECIAL SURCHARGE AND THE ADDITIONAL SURCHARGE FORM A PART OF INCOME TAX AND SUPER TAX, HELD THE HONBLE SUPREME COURT. RESPECTFULLY FOLLOWING THIS ITA . NO 494/PN/2010 SHRI SURESH PARAKH PAGE OF 5 5 DECISION OF HONBLE SUPREME COURT, WE DO NOT FIND I NFIRMITY IN THE FIRST APPELLATE ORDER TREATING SURCHARGE AND EDUCATIONAL CESS AS PA RT OF THE INCOME TAX FOR THE PURPOSE OF COMPLIANCE OF THE PROVISIONS OF SECTION 234B OF THE ACT. WE THUS DO NOT FIND SUBSTANCE IN THE CONTENTION OF THE LD. A.R. TH AT THE ASSESSEE HAD PAID 90% OF THE INCOME TAX EXCLUDING THE SURCHARGE AND EDUCATIO NAL CESS, HENCE PROVISIONS OF SECTION 234B ARE NOT APPLICABLE FOR CHARGING INTERE ST THEREIN. THE FIRST APPELLATE ORDER IN THIS REGARD IS UPHELD. THE GROUNDS ARE ACC ORDINGLY REJECTED. 8. IN RESULT, APPEAL IS DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 21ST OCTOBER 2011. SD/- SD/- ( G.S. PANNU ) ACCOUNTANT MEMBER (I.C. SUDHIR ) JUDICIAL MEMBER PUNE, DATED THE 21ST OCTOBER, 2011 US COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT -II, PUNE 4. THE CIT(A)-II, PUNE 4. THE D.R. A BENCH, PUNE 5. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PUNE