BHARAT BARREL & DRUM MFG. CO.P. LTD, MUMBAI V. DCIT 6(1), MUMBAI

ITA 7135/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8505 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-10-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 21-10-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: H S RAHEJA
• Section: 142(1); 234B; 148; 90; 139

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B MUMBAI . . , . BEFORE SHRI B.R. MITTAL, JUDICIAL MEMBER / AND , SHRI RAJENDRA, ACCOUNTANT MEMBER I.TA. NO. 7135/MUM/2011 ASSESSMENT YEAR 2008-09 BHARAT BARREL & DRUM MFG. CO. P. LTD., 1 ST FLOOR, APSARA CINEMA, LAMINGTON ROAD, MUMBAI 400 007. PAN: AAACB 2227 M VS. DY. COMMISSIONER OF INCOME TAX-6(1), AAYAKAR BHAVAN, MUMBAI-400 020 ( / APPELLANT ) ( !' / RESPONDENT ) APPELLANT BY : SHRI H.S. RAHEJA RESPONDENT BY : SHRI MANOJ KUMAR # $ %& / DATE OF HEARING : 26-09-2012 '() $ %& / DATE OF PRONOUNCEMENT : 03-10-2012 * / O R D E R PER RAJENDRA, A.M. THE PRESENT APPEAL IS DIRECTED AGAINST THE ORDER DT . 29.08.2011 PASSED BY THE CIT(A)-14, MUMBAI. FOLLOWING GROUNDS OF APPEAL HAV E BEEN RAISED BY THE ASSESEE- COMPANY: 1.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN HOLDING THAT INTEREST U/S.234A IS CHARGEABLE ON THE AMOUNT OF TOTAL SELF ASSESSMENT TAX PAYABLE BY THE APPELLANT FOR THE PERIOD FROM DUE DATE OF FILING THE RETURN TO ACTUAL DATE OF FILING THE RETURN WITHOUT GIVING CREDIT OF FOLLOWING SELF ASSESSMENT TAX PAID BEFORE FILING TH E RETURN OF INCOME: I.TA. NO. 7135/MUM/2011 BHARAT BARREL & DRUM MFG. CO. P. LTD., 2 DATE AMOUNT 18.10.2008 1,76,18,416 29.04.2009 20,00,000 TOTAL 1,96,18,416 2. YOUR APPELLANT CRAVES LEAVE TO ADD TO, AMEND, AL TER, DELETE AND/OR MODIFY THE ABOVE GROUND OF APPEAL ON OR BEFORE THE FINAL DATE OF HEA RING OF THIS APPEAL PETITION. 2. ASSESSEE-COMPANY, ENGAGED IN THE BUSINESS OF DYEING , BLEACHING AND PRINTING, FILED ITS RETURN OF INCOME ON 30.10.2009 DECLARING TOTAL INCOME OF RS.15.79 CRORES. ASSESSMENT WAS FINALISED BY THE ASSESSING OFFICER(A O),U/S.143(3) OF THE INCOME-TAX ACT, 1961(ACT), ON 29.03.2010 DETERMINING THE TOTAL INCOME AT RS.22.12 CRORES. WHILE PASSING THE ASSESSMENT-ORDER AO CHARGED INTER EST U/S. 234A OF THE ACT. 3. ASSESSEE-COMPANY CHALLENGED CHARGING OF INTEREST UN DER SECTION 234A IN THE APPEAL FILED BEFORE FIRST APPEAL AUTHORITY (FAA). BEFORE HIM ASSESSEE SUBMITTED THAT APPELLANT HAD FILED ITS RETURN OF INCOME ON 30.10.2 009, THAT THE AO HAD WRONGLY CHARGED INTEREST FOR 13 MONTHS ON TOTAL ASSESSED TA X WITHOUT GIVING CREDIT FOR THE SELF ASSESSMENT TAX PAID BEFORE FILING THE INCOME TAX RE TURN. IN THIS REGARD, APPELLANT- COMPANY RELIED ON THE DECISION OF HONBLE SUPREME C OURT IN THE CASE OF CIT V/S. PRANOY ROY (309ITR231). AFTER CONSIDERING THE SUBM ISSIONS OF THE ASSESSEE AND THE CASE-LAW FAA HELD THAT THE DUE DATE FOR FILING THE RETURN WAS 30.9.2008, THAT THE RETURN WAS FILED AFTER A DELAY OF 13 MONTHS, THAT A O HAD RIGHTY INVOKED THE PROVISIONS OF SECTION 234A OF THE ACT, THAT FACTS OF THE CASE OF PRANON ROY WERE NOT APPLICABLE IN THE CASE UNDER CONSIDERATION. 4. BEFORE US, AUTHORISED REPRESENTATIVE (AR) SUBMITTED THAT ASSESSEE-COMPANY HAD PAID TAXES ON 18.10.2006 AND 29.04.2009, THAT F IRST PAYMENT OF TAX WAS MADE BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME, THAT SECOND INSTALLMENT WAS PAID BEFORE PASSING OF ASSESSMENT ORDER, WHILE CALCULATI NG THE INTEREST U/S. 234A CREDIT SHOULD BE GIVEN FOR BOTH THE INSTALLMENTS. HE RELIE D UPON THE CASES OF NITIN MURALI RAHEJA (105ITD414)AND ROSHANLAL KAPOOR (26SOT26). HE ALSO REFERRED TO THE CASE OF PRANON ROY (SUPRA). DEPARTMENTAL REPRESENTATIVE (DR) SUBMITTED THAT FAA HAD RIGHTLY UPHELD THE ORDER OF THE AO, THAT ASSESSEE H AD FILED ITS RETURN LATE, THAT STATE WAS DEPRIVED OF ITS SHARE OF DUE TAXES. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL PLACED BEFORE US. UNDISPUTED FACTS OF THE CASE ARE THAT- I) ASSESSEE-COMPANY HAD FILED ITS RETURN OF INCOME AFTER 13 MONTHS OF THE DUE DATE OF FILING OF RETURN. II) RS.1.76 CRORES WERE PAID BEFORE THE RETURN WAS FILED. III) RS.20 LACS WERE DEPOSITED IN GOVERNMENT ACCOUN T AFTER FILING OF RETURN. IV) WHILE CALCULATING 234A INTEREST CREDIT, FOR TAX AMOUNTING TO RS. 1.96 CRORES, WAS NOT GIVEN. I.TA. NO. 7135/MUM/2011 BHARAT BARREL & DRUM MFG. CO. P. LTD., 3 5.1. BEFORE DECIDING THE ISSUE OF CHARGING OF INTEREST W E WOULD LIKE TO DISCUSS THE PRINCIPLES OF TAX/INTEREST PAYMENT. -SECTION 4 OF THE ACT CREATES THE CHARGE AND PROVID ES, INTER ALIA, FOR PAYMENT OF TAX IN ADVANCE AND DEDUCTION OF TAX AT SOURCE. THE ACT PRO VIDES FOR THE MANNER IN WHICH ADVANCE TAX IS TO BE PAID AND PENALISES AN ASSESSEE WHO MAKES DEFAULT OR DELAYS PAYMENT THEREOF. SIMILARLY, DEDUCTION OF TAX AT SO URCE IS ALSO PROVIDED FOR IN THE ACT AND FAILURE TO COMPLY WITH THE PROVISIONS ATTRACTS THE PENAL PROVISIONS AGAINST THE PERSON RESPONSIBLE FOR MAKING THE PAYMENT. IT IS, T HEREFORE, QUITE APPARENT THAT THE ACT ITSELF PROVIDES FOR PAYMENT OF TAX IN THIS MANNER B Y THE ASSESSEE. THE ACT ALSO ENJOINS UPON THE ASSESSEE THE DUTY TO FILE A RETURN OF INCO ME DISCLOSING HIS TRUE INCOME. ON THE BASIS OF THE INCOME DISCLOSED, THE ASSESSEE IS REQUIRED TO MAKE A SELF-ASSESSMENT AND TO COMPUTE THE TAX PAYABLE ON SUCH INCOME AND T O PAY THE SAME IN THE MANNER PROVIDED BY THE ACT. THUS, THE FILING OF THE RETURN AND THE PAYMENT OF TAX THEREON COMPUTED AT THE PRESCRIBED RATES AMOUNT TO AN ADMIS SION OF TAX LIABILITY WHICH THE ASSESSEE ADMITS TO HAVE INCURRED. THE TAX PAYABLE ON THE BASIS OF THE RETURNS FILED BY THE ASSESSEE IS TREATED AS ASSESSED TAX. IT IS NOT AT ALL MADE DEPENDENT ON ANY REGULAR ASSESSMENT BEING MADE, THOUGH IN THE EVENT OF REGUL AR ASSESSMENT, THE AMOUNT PAID UNDER SUB-SECTION (1) OF SECTION 140A IS DEEMED TO HAVE BEEN PAID TOWARDS THE REGULAR ASSESSMENT. -OLD PROVISIONS DIRECTING PAYMENT OF INTEREST AND P ENALTY WERE FOR LATE FILING OF RETURN OF INCOME WERE REPLACED BY THE PROVISIONS OF SECTIO NS 234A, 234B AND 234C BY THE DIRECT TAX LAWS (AMENDMENT)ACT, 1987, W.E.F. APRIL 1, 1989-BUT, THE NEW SYSTEM DOES NOT GET ITS COLOUR FROM THE OLD. -SECTION 234A MAKES A PROVISION FOR THE PAYMENT OF SIMPLE INTEREST CALCULATED AT A FIX RATE BY AN ASSESSEE, WHO COMMITS DEFAULT IN FURNISH ING A RETURN OF INCOME UNDER SECTION 139(1) OR 139(4) OR IN RESPONSE TO A NOTICE SENT TO HIM UNDER SECTION 142(1) OF THE ACT. -SECTION 234A OF THE ACT IS A REGULATORY MEASURE TO SEE THAT ASSESSEES DO NOT COMMIT DEFAULT IN THE MATTER OF FILING OF THEIR RETURNS OF INCOME. -THE PERIOD FOR WHICH SUCH INTEREST IS MADE PAYABLE BY THIS PROVISION HAS ALSO BEEN SET OUT IN THE SECTION ITSELF. -COURTS ARE OF THE VIEW THAT THE LIABILITY TO PAY I NTEREST UNDER SECTIONS 234A, 234B AND 234C OF THE ACT, IS MANDATORY, AUTOMATIC AND COMPEN SATORY AND NON-PENAL IN NATURE. THE DICTIONARY MEANING OF THE WORD PENAL IS IMPOSIN G, CONSTITUTING A PUNISHMENT, A PENALTY; TO PUT UNDER A DISADVANTAGE. IN THE FISCA L STATUTE, THE WORD COMPENSATORY WOULD MEAN TO MAKE GOOD THE LOSS SUFFERED BY THE RE VENUE ON ACCOUNT OF ACTS OF COMMISSION AND OMISSION ATTRIBUTABLE TO THE ASSESSE E. CREATING CIRCUMSTANCES FOR COMPELLING THE ASSESSEE TO DISCHARGE HIS STATUTORY OBLIGATION CANNOT BE TERMED TO BE A PENALTY. IN OTHER WORDS COLLECTION OF TAX BEING AN ACT OF THE STATE, CANNOT BE TERMED TO BE EITHER A PENALTY OR A PUNISHMENT. THE FAILURE O N THE PART OF THE ASSESSEE TO ABIDE BY THE PROVISIONS OF THE ACT HAS BEEN MADE A BASIS FOR FORCING HIM TO COMPENSATE SOCIETY BY PAYING INTEREST IN TERMS OF SEC. 234A OF THE ACT . THE AMOUNT ON WHICH INTEREST IS LEVIED IS AN AMOUNT WHICH CAN LEGITIMATELY BE SAID TO BE PUBLIC REVENUE THOUGH PAYABLE BY THE ASSESSEE, BUT NOT PAID BY HIM, DESPI TE HIS KNOWLEDGE OF THE POSITION OF I.TA. NO. 7135/MUM/2011 BHARAT BARREL & DRUM MFG. CO. P. LTD., 4 LAW. LEVY OF INTEREST ON SUCH AMOUNT WHICH IS UTIL ISED BY THE ASSESSEE FOR HIS OWN PURPOSES HAS RIGHTLY BEEN DIRECTED TO BE COMPENSATE D BY MEANS OF DIRECTING HIM TO PAY THE INTEREST AT THE RATES SPECIFIED UNDER THE S AID SECTION. -TAX OR INTEREST OR BOTH SHOULD BE PAID BEFORE FURN ISHING THE RETURN AND PROOF OF PAYMENT SHOULD ACTUALLY ACCOMPANY THE RETURN. -SECTION 234A OF THE ACT SPEAKS ABOUT INTEREST FOR DEFAULTS IN FURNISHING RETURN OF INCOME AND FURTHER PROVIDES THAT FOLLOWING AMOUNTS SHOULD BE REDUCED WHILE CHARGING THE INTEREST- (I) ADVANCE TAX, IF ANY, PAID ;(II) ANY TAX DEDUCTE D OR COLLECTED AT SOURCE ;(III) ANY RELIEF OF TAX ALLOWED UNDER SECTION 90 ON ACCOUNT OF TAX P AID IN A COUNTRY OUTSIDE INDIA ;(IV) ANY RELIEF OF TAX ALLOWED UNDER SECTION 90A ON ACCO UNT OF TAX PAID IN A SPECIFIED TERRITORY OUTSIDE INDIA REFERRED TO IN THAT SECTION ;(V) ANY DEDUCTION, FROM THE INDIAN INCOME-TAX PAYABLE, ALLOWED UNDER SECTION 91, ON AC COUNT OF TAX PAID IN A COUNTRY OUTSIDE INDIA ;(VI) ANY TAX CREDIT ALLOWED TO BE SE T OFF IN ACCORDANCE WITH THE PROVISIONS OF SECTION 115JAA. -EVEN THOUGH THE SHORT TITLE TO SECTION 140A OF THE ACT READS SELF-ASSESSMENT,THE CHARGING PHRASE EMPLOYED IN SECTION 140A,NAMELY, WHERE ANY TAX IS PAYABLE ON THE BASIS OF ANY RETURN REQUIRED TO BE FURNISHED UNDER SECTION 115WD OR 115WH OR SECTION 139 OR SECTION 142 OR SECTION 148 OR SECTIO N 153A,AS THE CASE MAY BE, THE ASSESSEE SHALL BE LIABLE TO PAY SUCH TAX TOGETHER W ITH INTEREST PAYABLE UNDER ANY PROVISION OF THIS ACT FOR ANY DELAY IN FURNISHING T HE RETURN , MAKES IT CLEAR THAT THERE IS NO DIFFERENCE BETWEEN : (I) THE TAX PAID UNDER SECT ION 115WJ, WHICH DEALS WITH ADVANCE TAX IN RESPECT OF FRINGE BENEFITS ; OR (II) THE TAX COLLECTED AT SOURCE UNDER SECTION 206C ; OR (III) ANY TAX PAID BY WAY OF ADVA NCE TAX OR ANY TAX TREATED AS PAID UNDER SECTION 199, WHICH DEALS WITH CREDIT FOR TAX DEDUCTED, 5.2. FROM FACTS OF THE CASE UNDER CONSIDERATION IT IS CL EAR THAT RETURN OF INCOME WAS NOT FILED BY THE ASSESSEE, AS PER THE PROVISION S OF THE ACT. THE INTEREST WAS LEVIED BY THE AO BECAUSE THE DEFAULT IN FURNISHING THE RET URN IN TIME RESULTED IN POSTPONEMENT OF PAYMENT OF TAX BY THE AND THUS DEPR IVING THE STATE OF A CORRESPONDING AMOUNT OF REVENUE FOR THE PERIOD OF T HE DELAY. IN OTHER WORDS, IT WAS A CASE OF UNDUE ENRICHMENT ON THE PART OF THE ASSESSE E. AS FAR AS PAYMENT OF 1.76 CRORES IS CONCERNED IT IS CLEAR THAT PAYMENT WAS MA DE BEFORE FILING OF RETURN. IN OUR OPINION, ASSESSEE IS ENTITLED TO GET CREDIT FOR THE SAID AMOUNT FOR DETERMINING THE LIABILITY OF 234A INTEREST. AO IS DIRECTED TO CHARG E INTEREST UP TO THE DATE OF FILING OF RETURN WHILE CALCULATING THE INTEREST PAYABLE BY TH E ASSESSE-COMPANY. BUT, THE BALANCE PAYMENT, AMOUNTIN G OF RS.20 LACS, MADE BY THE ASSESSEE CANNOT BE TREATED AT PAR WITH RS.1.76 CRORES. WORD S USED IN THE SECTION ENDING ON THE DATE OF FURNISHING OF THE RETURN LEAVES NO DOU BT THAT TAX HAS TO BE PAID BEFORE FILING OF RETURN. IN OUR OPINION, LANGUAGE OF THE ACT IS VERY CLEAR-THERE IS NO AMBIGUITY IN IT. IN THESE CIRCUMSTANCES, TO INTERPR ET THE PROVISIONS OF THE STATUTE IN A DIFFERENT WAY, AS ARGUED BY THE AR, WILL RESULT IN COMMITTING VIOLENCE TO THE PURPOSE AND INTENT OF THE SECTION ITSELF. SECTION 234A,WAS BROUGHT ON STATUTE WITH A DEFINITE PURPOSE. THERE IS NO DOUBT THAT BY INTRODUCING INT EREST CHARGING SECTIONS, INCLUDING SECTION 234A,STATE WANTED MORE AND MORE SELF-COMPLI ANCE FROM THE TAX-PAYERS. IT I.TA. NO. 7135/MUM/2011 BHARAT BARREL & DRUM MFG. CO. P. LTD., 5 WAS EXPECTED THAT, WITH REGARD TO THEIR TAX MATTERS , ASSESSEES WOULD OBSERVE DISCIPLINE IN FILINGS THEIR RETURNS AND BEHAVE AS MATURE CIT IZENS OF THE NATION. IT WILL BE APPROPRIATE THAT REPEALING THE PENAL PROVISIONS, WI TH REGARD TO LATE FILING OF RETURN I.E.271 (A)(I)OF THE ACT, ARE ALSO TO BE TAKEN INTO CONSIDERATION AT THIS JUNCTURE. SO, WE ARE OF THE OPINION THAT IF AN ASSESSEE DOES NOT DIS CHARGE HIS DUTY OF FILING RETURN OF INCOME IN TIME, HE SHOULD COMPENSATE THE EXCHEQUER BY PAYING INTEREST AT STIPULATED RATE. IT IS SAID THAT TAXES ARE PRICE OF CIVILIZAT ION. SIMILARLY, IT CAN BE HELD THAT INTEREST PAYMENT FOR LATE FILING OF RETURN IS PRICE AN ASEES EE HAS TO PAY FOR LEARNING THE LESSON OF DISCIPLINE FROM THE SOVEREIGN. AS THE ASSESSEE HAD NOT MADE PAYMENT OF RS.20 LACS BEFORE FILING OF RETURN, IT IS NOT ENTITLED TO GET CREDIT FOR THE SAID PAYMENT WHILE IT IS BEING CHARGED COMPENSATORY INTEREST. EFFECTIVE GROUND OF APPEAL FILED BY THE ASSESSEE-CO MPANY IS ALLOWED IN PART. AS A RESULT, APPEAL FILED BY THE ASSESSEE STANDS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD OCTOBER, 2012. SD/- SD/- ( . . / B.R. MITTAL ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI, +# DATE: 3 RD OCTOBER, 2012 TNMM * * * * $ $$ $ !%, !%, !%, !%, -,)% -,)% -,)% -,)% / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. THE CONCERNED CIT (A) 4. THE CONCERNED CIT 5. DR B BENCH, ITAT, MUMBAI 6. GUARD FILE ',% !% //TRUE COPY// *# *# *# *# / BY ORDER, . .. . / / / / / DY./ASSTT. REGISTRAR , / ITAT, MUMBAI