Shri Vishwanath H. Verma, Ahmedabad V. The ACIT, Central Circle-2(4), Ahmedabad

ITSSA 161/AHD/2015

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 2700 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 9 month(s) 6 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 21-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 15-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RANJAN KR SINGH
• Assessee Lawyers: P M MEHTA; IRA KAPOOR ARS
• Section: 143(3); 153A; 234B; 143(1); 250; 147; 263; 90; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH BEFORE: SHR I RAJPAL YADAV , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER SHRI VISHWANATH H. VARMA, AHMEDABAD PAN: ABUPV9902H (APPELLANT) VS THE ACIT, CIRCLE - 2(4) , AHMEDABAD (RESPONDENT) REVENUE BY : S H RI RANJAN KR. SINGH , SR. D . R. ASSESSEE BY: SHRI P.M. ME HTA & IRA KAPOOR, A.RS. DATE OF HEARING : 06 - 12 - 2 018 DATE OF PRONOUNCEMENT : 21 - 02 - 2 019 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THIS ASSESSEE S APPEAL FOR A.Y. 2008 - 09 , ARI SES FROM ORDER OF THE CIT(A) - 12, AHMEDABAD DATED 27 - 02 - 2 015 , IN PROCEEDINGS UNDER SECTION 154 OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . I T (SS) A NO . 161 / A HD/20 15 A SSESSMENT YEAR 200 8 - 09 I.T(SS). A NO. 161 /AHD/20 15 A.Y. 2008 - 09 PAGE NO SHRI VISHWANATH H. VARMA VS. ACIT 2 2. ALL THE GROUNDS OF APPEAL FROM 1 TO 3 ARE INTER CONNECTED TO THE COMMON ISSUE OF LEVYING OF INTEREST U /S. 234B OF THE ACT, THEREFORE , FOR THE SAKE OF CONVENIENCE OF ALL THESE GROUNDS OF APPEAL ARE ADJUDICATED BY THIS COMMON ORDER AS UNDER: - 3. THE BRIEF FACT OF T HE CASE IS THAT IN RESPONSE TO NOTICE U/S. 153C OF THE ACT, THE ASSESSEE HAD FILED RETURN OF I NCO M E ON 1 ST NOV, 2012 DECLARING INCOME OF RS. 1 , 10 , 160/ - . THE ASSESSMENT U /S. 153C R.W.S 143(3) OF THE AC T WAS FINALIZED ON 31 ST MARCH, SUBSEQUENTLY, THE ASSESSING OFFICER HAS INITIATED PROCEEDINGS U/S.154 OF THE ACT ON THE GROUND THAT INTEREST CHARGED U /S. 234B OF THE ACT WAS CHARGED FOR 40 MONTHS WHEREAS THE CORRECT LIABILITY IN THIS CASE WAS TO CHARGE THE INTEREST U/S. 234B OF THE ACT FOR 60 MONTHS. CONSEQUENTLY, THE ASSESSING OFFICER HAS CHARGED INTEREST U/S. 234B OF THE ACT FOR 60 MONTHS. 4. AGGRIEVED ASS ESSEE HAS FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS DISMISSED THE APPEAL . 5. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US, THE LD. COUNSEL CONTENDED THAT LD. CIT(A) HAS ERRED IN HOLDING THAT CHAR G ING OF INTE RE ST U/S. 234B OF THE ACT FOR 60 MONTHS FROM THE 1 S T DAY OF ASSESSMENT YEAR AS AGAINST INTE RE ST U/S. 234B REQUIRED TO BE CHARGED F R O M THE DATE OF INTIMATION PASSED U/S. 143(1) TO THE DATE OF PASSING ASSESSMENT YEAR U/S. 153C R. W .S 153A R.W.S. 143(3) OF THE A CT. THE LD. COUNSEL HAS ALSO PLACE D RELIANCE O N THE DECISIONS OF ITAT IN THE CASE OF BUSINESS PARK BUILDERS PVT. LTD. 55 1 0 /DEL/2013 DATED 14/11/2014 AND (2017) TAXMAN.COM 5353 (HYDERABAD - I.T(SS). A NO. 161 /AHD/20 15 A.Y. 2008 - 09 PAGE NO SHRI VISHWANATH H. VARMA VS. ACIT 3 TRIB) MBG COMMODITIES P. LTD. VS. DCIT DATED 15 TH JULY, 2016. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATIVE HAS SUPPORTED THE ORDER OF LD. CIT(A). 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD CAREFULLY . WITH THE ASSISTANCE OF LD. AUTHORIZED REPRESENTATIVES, WE HAVE GONE THROUGH THE MATERIAL ON RECORD AND IT IS NOTICED THA T T HE A SSESSING OFFICER HAS CHARGED INTEREST U/S. 234B FOR 40 MO N THS FROM THE DATE OF PROCESSING OF RETURN U/S. 143(1) OF THE ACT TO THE DATE OF ASSESSMENT ORDER PASSED U/S. 153A R.W.S. 143(3) OF THE ACT. SUBSEQUENTLY , THE ASSESSING OFFICER HAS RECTIFIED THE AFO RESAID ORDER U/S. 234B OF THE ACT AND CHARGED INTEREST FROM T H E1ST DAY OF THE DA Y OF THE RELEVANT ASSESSMENT YEAR TO THE DATE OF COMPLETION OF ASSESSMENT U/S. 153 OF THE ACT . WE HAVE GONE THROUGH THE PROVISION OF SECTION 234B OF THE ACT WHICH IS REPRODU CED AS UNDER: - 234B. ' (1) SUBJECT TO THE OTHER PROVISIONS OF THIS SECTION, WHERE, IN ANY FINANCIAL YEAR, AN ASSESSEE WHO IS LIABLE TO PAY ADVANCE TAX UNDER SECTION 208 HAS FAILED TO PAY SUCH TAX OR, WHERE THE ADVANCE TAX PAID BY SUCH ASSESSEE UNDER THE PROVISIONS OF SECTION 210 IS LESS THAN NINETY PER CENT OF THE ASSESSED TAX, THE ASSESSEE SHALL 4 BE LIABLE TO PAY SIMPLE INTEREST AT THE RATE OF 5 [ONE] PER CENT FOR EVERY MONTH OR PART OF A MONTH COMPRISED IN THE PERIOD FROM THE 1ST DAY OF APRIL NEXT FOLLOWING SUCH FINANCIAL YEAR 6 [TO THE DATE OF DETERMINATION OF TOTAL INCOME UNDER SUB - SECTION (1) OF SECTION 143 7 [AND WHERE A REGULAR ASSESSMENT IS MADE, TO THE DATE OF SUCH REGULAR ASSESSMENT, ON AN AMOUNT]] EQUAL TO THE ASSESSED TAX OR, AS THE CASE MAY BE, ON THE AMOUNT BY WHICH THE ADVANCE TAX PAID AS AFORESAID FALLS SHORT OF THE ASSESSED TAX. 8 [ EXPLANATION 1. IN THIS SECTION, ASSESSED TAX MEANS THE TAX ON THE TOTAL INCOME DETERMINED UNDER SUB - SECTION (1) OF SECTION 143 AND WHERE A REGULAR ASSESSMENT IS MADE, THE TAX O N THE TOTAL INCOME DETERMINED UNDER SUCH REGULAR ASSESSMENT AS REDUCED BY THE AMOUNT OF, ( I ) ANY TAX DEDUCTED OR COLLECTED AT SOURCE IN ACCORDANCE WITH THE PROVISIONS OF CHAPTER XVII ON ANY INCOME WHICH IS SUBJECT TO SUCH DEDUCTION OR COLLECTI ON AND WHICH IS TAKEN INTO ACCOUNT IN COMPUTING SUCH TOTAL INCOME; I.T(SS). A NO. 161 /AHD/20 15 A.Y. 2008 - 09 PAGE NO SHRI VISHWANATH H. VARMA VS. ACIT 4 ( II ) ANY RELIEF OF TAX ALLOWED UNDER SECTION 90 ON ACCOUNT OF TAX PAID IN A COUNTRY OUTSIDE INDIA; ( III ) ANY RELIEF OF TAX ALLOWED UNDER SECTION 90A ON ACCOUNT OF TAX PAID IN A SPECIFIED TERRITORY OUTSIDE INDIA REFERRED TO IN THAT SECTION; ( IV ) ANY DEDUCT ION, FROM THE INDIAN INCOME - TAX PAYABLE, ALLOWED UNDER SECTION 91 , ON ACCOUNT OF TAX PAID IN A COUNTRY OUTSIDE INDIA; AND ( V ) ANY TAX CREDIT ALLOWED TO BE SET OFF IN ACCORDANCE WITH THE PROVISIONS OF SECTION 115JAA .] EXPLANATION 2. WHERE, IN RELATION TO AN ASSESSMENT YEAR, AN ASSESSMENT IS MADE FOR THE FIRST TIME UNDER SECTION 147 9 [OR SECTION 153A ], THE ASSESSMENT SO MADE SHALL BE REGARDED AS A REGULAR ASSESSMENT FOR THE PURPOSES OF THIS SECTION. 10 [ EXPLANATION 3. IN EXPLANATION 1 AND IN SUB - SECTION (3) TAX ON THE TOTAL INCOME DETERMINED UNDER SUB - SECTION (1) OF SECTION 143 SHALL NOT INCLUDE THE ADDITIONAL INCOME - TAX, IF ANY, PAYABLE UNDER SECTION 143 .] (2) WHERE, BEFORE THE DATE OF 11 [DETERMINATION OF TOTAL INCOME UNDER SUB - SECTION (1) OF SECTION 143 OR] COMPLETION OF A REGULAR ASSESSMENT, TAX IS PAID BY THE ASSESSEE UNDER SECTION 140A OR OTHERWISE, ( I ) INTEREST SHALL BE CALCULATED IN ACCORDANCE WITH THE FOREGOING PROVISIONS OF THIS SECTION UP TO THE DATE ON WHICH THE TAX IS SO PAID, AND REDUCED B Y THE INTEREST, IF ANY, PAID UNDER SECTION 140A TOWARDS THE INTEREST CHARGEABLE UNDER THIS SECTION; ( II ) THEREAFTER , INTEREST SHALL BE CALCULATED AT THE RATE AFORESAID ON THE AMOUNT BY WHICH THE TAX SO PAID TOGETHER WITH THE ADVANCE TAX PAID FALLS SHORT OF THE ASSESSED TAX. (3) WHERE, AS A R ESULT OF AN ORDER OF REASSESSMENT OR RECOMPUTATION UNDER SECTION 147 12 [OR SECTION 153A ], THE AMOUNT ON WHICH INTEREST WAS PAYABLE UNDER SUB - SECTION (1) IS INCREASED, THE ASSESSEE SHALL BE LIABLE TO PAY SIMPLE INTEREST AT THE RATE OF 13 [ONE] PER CENT FOR EVERY MONTH OR PART OF A MONTH COMPRISED IN THE PERIOD COMMENCING ON THE DAY FOLLOWING 14 [THE DATE OF DETERMINATION OF TOTAL INCOME UNDER SUB - SECTION (1) OF SECTION 143 15 [AND WHERE A REGULAR ASSESSMENT IS MADE AS IS REFERRED TO IN SUB - SECTION (1) FOLLOWIN G THE DATE OF SUCH REGULAR ASSESSMENT]] AND ENDING ON THE DATE OF THE REASSESSMENT OR RECOMPUTATION UNDER SECTION 147 16 [OR SECTION 153A ], ON THE AMOUNT BY WHICH THE TAX ON THE TOTAL INCOME DETERMINED ON THE BASIS OF THE REASSESSMENT OR RECOMPUTATION EXCEEDS THE TAX ON THE TOTAL INCOME DETERMINED 17 [UNDER SUB - SECTION (1) OF SE CTION 143 OR] ON THE BASIS OF THE REGULAR ASSESSMENT AFORESAID. EXPLANATION. 18 [* * *] (4) WHERE, AS A RESULT OF AN ORDER UNDER SECTION 154 OR SECTION 155 OR SECTION 250 OR SECTION 254 OR SECTION 260 OR SECTION 262 OR SECTION 263 OR SECTION 264 OR AN ORDER OF THE SETTLEMENT COMMISSION UNDER SUB - SECTION (4) OF SECTION 245D , THE AMOUNT ON WHICH INTEREST WAS PAYABLE UNDER SUB - SECTION (1) OR SUB - SECTION (3) HAS BEEN INCREASED OR REDUCED, AS THE CASE MAY BE, THE INTEREST SHALL BE INCREASED OR REDUCED ACCORDINGLY, AND I.T(SS). A NO. 161 /AHD/20 15 A.Y. 2008 - 09 PAGE NO SHRI VISHWANATH H. VARMA VS. ACIT 5 ( I ) IN A CASE WHERE THE INTEREST IS INCREASED, THE ASSESSING OFFICER SHALL SERVE ON THE ASSESSEE A NOTICE OF DEMAND IN THE PRESCRIBED FORM SPECIFYING THE SUM PAYABLE AND SUCH NOTICE OF DEMAND SHALL BE DEEMED TO BE A NOTICE UNDER SECTION 156 AND THE PROVISIONS OF THIS ACT SHALL APPLY ACCORDINGLY; ( II ) IN A CASE WHERE THE INTEREST IS REDUCED, THE EXCESS INTEREST PAID, IF ANY, SHALL BE REFUNDED. (5) THE PROVISIO NS OF THIS SECTION SHALL APPLY IN RESPECT OF ASSESSMENTS FOR THE ASSESSMENT YEAR COMMENCING ON THE 1ST DAY OF APRIL, 1989 AND SUBSEQUENT ASSESSMENT YEARS. ' IN TH I S CONNECTION, WE HAVE ALSO GONE THROUGH THE DECISION OF ITAT HYDERABAD ON IDENTICAL ISSUE A ND FACT AS REFERRED BY THE LD. COUNSEL AND RELEVANT PART OF DECISION OF ITAT HYDERABAD IS REPRODUCED AS UNDER : - 16. IN THIS CASE, THE DISPUTE IS WITH REFERENCE TO WHETHER THE 143(1) ORDER PASSED EARLIER IS TO BE CONSIDERED AS AN ASSESSMENT? LD. CIT(A) W AS OF THE OPINION THAT 143(1) IS NOT AN ASSESSMENT AND IS ONLY AN INTIMATION. THIS VIEW CAN BE ACCEPTED IN THE CONTEXT OF RE - OPENING OF ASSESSMENT AS HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF RAJESH JHAVERI STOCK BROKERS PVT. LTD., [291 ITR 500] OR FOR ANY OTHER PROVISIONS ON ASSESSMENT. FOR THE PURPOSE OF LEVY OF INTEREST U/S. 23 4B WHERE IT IS VERY CLEARLY MENTIONED THAT EVEN PROCESSING U/S. 143(1) IS ALSO TO BE CONSIDERED AS AN ASSESSMENT BY SPECIFICALLY MENTIONING IN THE SECTION THE PERIODS THEREI N THEN, FOR THE PURPOSE OF LEVY OF INTEREST U/S. 234B(3), THE PERIOD IT WAS ALREADY CONSIDERED IN AN INTIMATION U/S. 143(1) IS TO BE EXCLUDED WHILE CALCULATING THE INTEREST U/S. 234B(3) : 'SECTION 234B : (3) WHERE, AS A RESULT OF AN ORDER OF REASSESSMENT OR RECOMPUTATION UNDER SECTION 147 (OR SECTION 153A), THE AMOUNT ON WHICH INTEREST WAS PAYABLE UNDER SUB - SECTION (1) IS INCREASED, THE ASSESSEE SHALL BE LIABLE TO PAY SIMPLE INTEREST AT THE RATE OF [ONE] PER CENT FOR EVERY MONTH OR PART OF A MONTH COMPRISED IN THE PERIOD COMMENCING ON THE DAY FOLLOWING [THE DATE OF DETERMINATION OF TOTAL INCOME UNDER SUB - SECTION (1) OF SECTION 143 [AND WHERE A REGULAR ASSESSMENT IS MADE AS IS REFERRED TO IN SUB - SECTION (1) FOLLOWING THE DATE OF SUCH REGULAR ASSESSMENT]] AND E NDING ON THE DATE OF THE REASSESSMENT OR RECOMPUTATION UNDER SECTION 147 [OR SECTION 153A ], ON THE AMOUNT BY WHICH THE TAX ON THE TOTAL INCOME DETERM INED ON THE BASIS OF THE REASSESSMENT OR RECOMPUTATION EXCEEDS THE TAX ON THE TOTAL INCOME DETERMINED [UNDER SUB - SECTION (1) OF SECTION 143 OR] ON THE BASIS OF THE REGULAR ASSESSMENT AFORESAID'. ( EMPHAS IS SUPPLIED) IN VIEW OF THE SPECIFIC EXCLUSION OF THE PERIOD CONSIDERED U/S. 234B(1), THE BALANCE OF THE PERIOD TILL THE COMPLETION OF ASSESSMENT U/S. 147/153A AS THE CASE MAY BE WAS ONLY BE CONSIDERED FOR LEVY OF INTEREST U/S. 234B(3) ON THE ENHANCED AMOU NT OF TAX. 17. THE AMENDMENT BROUGHT OUT BY THE FINANCE ACT , 2015 IN FACT MODIFIES THE THEN EXISTING PROVISIONS WHICH ARE APPLICABLE FOR THE IMPUGNED ASSESSMENT YEARS. IN FACT UNDER THE NEW SUB - SECTION (3), IT WAS PROVIDED THAT INTEREST WILL BE CALCULATED ON THE ENHANCED AMOUNT FROM THE PERIOD COMMENCING ON 1ST APRIL NEXT FOLLOWING THE RELEVANT FINANCIAL YEAR FOR WHICH ADVANCE TAX WAS PAYABLE AND ENDING ON THAT DATE OF THE RE - ASSESSMENT OR RE - COMPUTATION U/S. 147/153A. THUS, WHERE IN A CASE INTEREST U/S.234B(1) WAS LEVIED ON REGULAR ASSESSMENT U/S. 234B(1), ENHANCED INTEREST WAS PAYABLE FOR THE ENTIRE PERIOD AND NOT ON BROKEN PERIOD AS IT WAS PROVIDED EARLIER. THIS IS THE SUBSTANCE OF THE AMENDMENT BROUGH T TO SUB - SECTION(3) BY THE FINANCE ACT , 2015. IN VIEW OF THIS, WE ARE OF THE OPINION THAT THE INTEREST U/S. 234B(1) IS TO BE CALCULATED ON THE I.T(SS). A NO. 161 /AHD/20 15 A.Y. 2008 - 09 PAGE NO SHRI VISHWANATH H. VARMA VS. ACIT 6 ORIGINALLY ACCEPTED AMOUNT U/S. 143(1) AS WAS DONE BY THE AO IN THE INTIMATIONS AND THE ENHANCED AMOUNT IS TO BE LEVIED FROM THE DATE OF INTIMATION TILL THE DATE OF CONSEQUENTIAL ORDER PASSED U/S. 143(3) R.W.S. 153A R.W.S. 245D(4) IE ON 03 - 12 - 2013. 18. WE ARE NOT SURE WHETHER THE AO IS CORRECT ABOUT THE LEVY OF IN TEREST IN THE ORDERS U/S. 154, AS THE PERIOD AND CALCULATIONS WERE NOT PROVIDED FOR OUR EXAMINATION. IN FACT THERE IS REDUCTION OF DEMAND IN AYS 2005 - 06 AND 2009 - 10. IN VIEW OF THIS, WE, WHILE ALLOWING THE APPEALS OF ASSESSEE, DIRECT THE AO TO MODIFY THE I NTEREST LEVIED AS PER THE PROVISIONS OF THE ACT. THE APPEALS ARE CONSIDERED ALLOWED FOR STATISTICAL PURPOSES. AFTER CONSIDERING THE FACT OF THE CASE AND PROVISION OF SECTION 234B(3) OF THE ACT WE ARE OF THE VIEW THAT WHEN THE ASSESSMENT ORDER IS PASSE D UNDER SECTION 153A OF THE ACT PERTAINING TO THE ASSESSMENT YEARS 2008 - 2009 INTEREST UNDER SECTION 234B OF THE ACT SHOULD BE CHARGED FROM THE DATE OF INCOME DETERMINED UNDER SECTION 143(1) OF THE ACT TO THE DATE OF ASSESSMENT UNDER SECTION 153A OF THE ACT. AFTER PERUSAL OF THE PROVISION OF THE SECTION 234B, WE OBSERVE THAT INTEREST U/S. 234B IS REQUIRED TO BE CALCULATED FROM THE DATE OF DETERMINATION OF INCOME U/S. 143(1) OF THE ACT FROM 30 TH DECEMBER, 2009 TO THE DATE OF COMPLETION OF ASSESSMENT U/S., 153A R.W.S. 143(3) OF THE ACT I.E. 31 ST MARCH, 2013. CONSIDERING THE PROVISION OF SECTION 234B(3) OF THE ACT AND THE DECISION OF THE CO - ORDINATE BENCH AS SUPRA THE A SSESSING OFFICER IS DIRECTED TO CHARGE INTEREST U/S 234 B OF THE ACT AS DIRECTED ABOVE. ACCORDINGLY , THE APPEAL OF THE ASSESSEE IS ALLOWED SUBJECT TO THE ABOVE TERMS. 7 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE ORDER PR ONOUNCED IN THE OPEN C OURT ON 21 - 02 - 201 9 SD/ - SD/ - ( RAJPAL YADAV ) ( AM ARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER I.T(SS). A NO. 161 /AHD/20 15 A.Y. 2008 - 09 PAGE NO SHRI VISHWANATH H. VARMA VS. ACIT 7 AHMEDABAD : DATED 21 /02 /2019 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUA RD FILE. BY ORDER/ , / ,