Milind Madhav Padhye,Pune, Pune V. Dy. Commissioner Of Income Tax, CPC Bengaluru, Bengaluru

ITA 502/PUN/2022

AI Insights

The case revolves around the computation of interest under section 234A of the Income-tax Act, 1961, for the assessment year 2020-21. The appellant, Milind Madhav Padhye, contested the interest charged from the due date of filing his income tax return until the date of filing, instead of until the date of tax payment. The NFAC had upheld the interest computation as per the initial assessment, which the appellant challenged. The Tribunal's decision favored the appellant, emphasizing that interest under section 234A should only accrue on unpaid taxes up to the date of payment, not the date of filing the return.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 136320 (ITAT-PUNE)
• Duration Of Justice: 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-01-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 26-12-2022
• Assessment Year: 2020-2021
• Appeal Filed On: 29-06-2022
• Other Referred Cases: CIT Vs Prannoy Roy
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ROHIT PAWAR SHARAD VAZE; DILATING
• Section: 143(1); 250

Judgement Text

॥ आयकर अपीलीय न्यायाधिकरण, पुणे “सी” न्यायपीठ, पुणे में ॥ ITAT-Pune Page 1 of 6 IN THE INCOME TAX APPELLATE TRIBUNAL, PUNE“C” BENCH, PUNE BEFORE HON’BLE SHRI S.S. GODARA, JUDICIAL MEMBER AND SHRI G. D. PADMAHSHALI, ACCOUNTANT MEMBER आयकर अपऩल सं. / ITA No.502/PUN/2022 ननधधारण वषा / Assessment Year : 2020-21 Milind Madhav Padhye, 4, Prasannagad,107/3 Erandawane, Pune – 411 004 PAN : AAEPP1757H . . . . . . . अपऩलधथी / Appellant बनधम / V/s. Dy. Commissioner of Income Tax, CPC, Bengaluru . . . . . . . . प्रत्यथी / Respondent द्वारा / Appearances Assessee by : Shri Rohit Pawar for Sharad Vaze Revenue by : Shri Suhas Kulkarni सपनवधई की तधरऩख / Date of conclusive Hearing : 27/12/2022 घोषणध की तधरऩख / Date of Pronouncement : 18/01/2023 आदेश / ORDER PER G.D. PADMAHSHALI, AM; The present appeal of the assessee for the assessment year [for short “AY”] 2020-21 is assailed against the first appellate order of National Faceless Appeal Centre, Delhi [for short “CIT(A) /NFAC”] dt. 24/05/2022 passed u/s 250 of the Income-tax Act,1961 [for short “the Act”] which emanated out of an order of intimation issued Dy. CIT, Bengaluru u/s 143(1) of the Act. Shri Milind Madhav Padhye, ITA No.502/PUN/2022 AY: 2020-21 ITAT-Pune Page 2 of 6 1. Briefly stated the facts of the case are; 1.1. The appellant is a resident individual e-filed his return of income [for short “ITR”] for AY 2020-21 on 17/10/2020 declaring total income of ₹86,77,950/- which was e-processed u/s 143(1) of the Act computing interest u/s 234A of the Act to ₹55,794/- for the period commencing from 01/08/2020 upto the date of filing of return as against appellant’s quantification of ₹19,183/- computed from 01/08/2020 upto the date of discharge of taxes by way of self-assessment u/s 140A of the Act. 1.2. Aggrieved by aforesaid charge of interest, the appellant assailed before Ld. FAA, wherein the Ld. NFAC vide para 5.2 rejected the claim vis-à-vis submission of the assessee by holding that; “5.2 Appellant’s submissions were carefully considered. Return of income filed by the appellant on 17/10/2020 whereas original date of filing of return of income was 31/07/2020 which was further extended to 10/01/2021 (for Non Audit cases) for the purpose of filing for return of income only not for the calculation of interest (if the interest is amount is less than Rs.1,00,000/- only). It appears that there is three (3) months delay in filing of Shri Milind Madhav Padhye, ITA No.502/PUN/2022 AY: 2020-21 ITAT-Pune Page 3 of 6 return of income for the purpose of calculating of interest u/s 234A. However for the Assessment Year 2020-21, as per the Notification No. 35/22020/F.No. 370142/23/2020- TP, if assessee had tax payable exceeding Rs. 1,00,000/- for the purpose of section 234A due date extension was not applicable on him and interest would be charged from 1 st August 2020 (Non Audit cases) to the date of filing of return of income. Tax paid after due date was not considered for the purpose of calculating interest u/s 234A. In view of the above, appeal on this ground is dismissed.” 1.3. Aggrieved by the orders of both the tax authorities below [for short “TAB”], the appellant brought up the matter on the following grounds; “1. On the basis of facts and circumstances of the case and as per law, the Commissioner of Income Tax, (NFAC) Delhi has erred in confirming interest computation u/s 234A up to the date of filing return of income as against up to the date of payment of tax. 2. The appellant craves leave to add, alter, omit or substitute any of the above grounds at the time of hearing of the appeal”. 2. Undisputedly, the appellant has discharged the entire tax liability in five instalments in two months i.e. Shri Milind Madhav Padhye, ITA No.502/PUN/2022 AY: 2020-21 ITAT-Pune Page 4 of 6 August and September, 2020 and while doing so, interest u/s 234A was computed and paid on the amount of outstanding tax liability as on the date of respective payments for the period commencing from 01/08/2020. Per contra the revenue has set up the case for recovery of interest commencing from first day after the expiry of due date of filing i.e. 01/08/2020 upto the date of return filed i.e. 17/10/2020. 3. After hearing to rival contentions, we find that, the substantive ground falls in a narrow compass, as to ‘what is the period upto which interest u/s 234A can be levied’ and we see there is hardly any issue between the parties to dispute to dwell upon in the light of decision of Hon’ble Supreme Court in “CIT Vs Prannoy Roy” reported in 309 ITR 231, whereby their lordships have settled down the issue in favour of assessee by dilating the scope of term ‘advance tax’ to subsume all the taxes paid before filing of return and further have categorically held that, interest u/s 234A would be payable in a case only where tax has not been deposited prior to date of filing of the tax return. Shri Milind Madhav Padhye, ITA No.502/PUN/2022 AY: 2020-21 ITAT-Pune Page 5 of 6 4. We also note that, the claim of the assessee in substance finds solidified by the CBDT Circular No 2/2015 dt. 10/02/2015, whereby the department has accepted the aforestated settled position to the effect that the interest u/s 234A shall be payable on the un- paid amount of taxes upto the date of its discharge. 5. As the interest u/s 234A is a monetary compensation against the legitimate taxes due to the Government of India, we in the light of “CIT Vs Prannoy Roy” (supra) are of the considered view that, irrespective of date of filing of ITR, interest u/s 234A of the Act, shall on the balance of taxes outstanding accrue commencing from the first date immediately following the due date and shall cease to accrue on the date of payment by instalment (when paid in parts) or on the date of full discharge of entire tax liability computed on the total income. It shall be needless to mentioned that, by virtue of provisions of sub-section (2) to section 243A, the interest payable under sub- section (1) shall be reduced by the interest, if any, paid u/s 140A towards the interest chargeable thereunder. Shri Milind Madhav Padhye, ITA No.502/PUN/2022 AY: 2020-21 ITAT-Pune Page 6 of 6 6. In the extant appeal, since the appellant in terms of section 234A(1) computed the interest accrued on each occasion of payment by instalment on the outstanding balance of taxes due to ex-chequer and discharged the entire tax liability alongwith interest accrued thereon before filing of his return, we finding no fault with the computation of interest liable u/s 234A, hold the orders of both the Ld. TAB as erroneous, consequently we set- aside the order of Ld. NFAC and direct the Ld. CPC to compute interest in aforestated terms. 7. Resultantly, the appeal of the appellant assessee is ALLOWED in terms of aforestated observation. In terms of rule 34 of ITAT Rules, 1963 the order is pronounced in the open court on this Wednesday 18 th day of January, 2023. -S/d- -S/d- -S/d- -S/d- S. S. GODARA G. D. PADMAHSHALI JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / PUNE ; दिन ांक / Dated : 18 th day of January, 2023. आदेश की प्रधिधलधप अग्रेधिि / Copy of the Order forwarded to : 1. अपऩलधथी / The Appellant. 2.प्रत्यथी / The Respondent. 3. The NFAC, Delhi (India) 4. The Pr.CIT(CPC) Bengaluru 5. DR, ITAT, Pune “C” Bench, Pune. 6. गधर्ाफ़धइल / Guard File. आदेशधनपसधर / BY ORDER, वररष्ठ ननजऩ सनिव / Sr. Private Secretary आयकर अपऩलऩय न्यधयधनधकरण, पपणे / ITAT, Pune.