M/S NILGIRI SLEEPERS PVT.LTD V. THE COMMISSIONER OF INCOME TAX

MA/169/2002

AI Insights

The case involves M/S Nilgiri Sleepers (Pvt.) Ltd., which appealed against the order of the Income Tax Appellate Tribunal, Patna, concerning the assessment year 1994-95. The primary issue was the legality of charging interest under section 234B of the Income Tax Act, 1961, on the grounds that no specific order for such interest was included in the assessment order. The Tribunal had dismissed the appellant's earlier appeals, leading to this appeal in the High Court. The High Court's decision affirmed the Tribunal's ruling, emphasizing that the charging of interest under section 234B is automatic and mandatory, applicable from April 1, 1989, onwards, without the need for specific mention in the assessment order.

• Counselvise Citation: [2009] 140 COUNSELVISE.COM (IT) 751775 (HC-PATNA)
• Appeal Type: Others
• Pronouncement Date: 08-05-2009
• Assessment Year: misc
• Other Referred Cases: Kalyan Kumar Ray Vrs. Commissioner of Income Tax, Vimla Stores V. Commissioner of Income-Tax and another, Parkash Agro Industries Vs. Deputy Commissioner of Income Tax, Seapearl Enterprises V. Deputy Commissioner of Income-Tax
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: HARSHWARDHAN PRASAD; ARCHANA SINHA
• Assessee Lawyers: AJAY RASTOGI
• Keywords: Assessment year 1994-95; Demand notice; Income Tax; Interest Charge; Reopening of assessment
• Section: 147; 143(3); 234B; 244A; 260A; 143(1)(a); 156

Judgement Text

" 1 Appeal From Appellate Order No.169 of 2002 --------- Against the order dated 30.10.2001 passed by Income Tax Appellate Tribunal, Patna Bench, Patna in ITA No.59/(Pat)/2001 for assessment year 1994-95 confirming the order passed by CIT(A)-II. ------- M/S Nilgiri Sleepers (Pvt.) Ltd. A Company Registered under Companies Act, through Director Namita Agrawal, 187, A.P. Colony, Gaya ---- Assessee--- Appellant. Versus 1. The Commissioner of Income Tax I, Patna. 2. The Asstt. Commissioner of Income Tax, Gaya ---- Assessing Officer/Respondents. ---------- For the Appellant : Mr. Ajay Kumar Rastogi. For Respondents: Mr. Harshwardhan Prasad, Sr. Standing Counsel & Mrs. Archana Sinha. ---------------- P R E S E N T THE HON'BLE MR. JUSTICE SUDHIR KUMAR KATRIAR THE HON'BLE MR. JUSTICE KISHORE K.MANDAL S.K. Katriar & Kishore K.Mandal,JJ. The present miscellaneous appeal filed under section 260A of the Income Tax Act, 1961(hereinafter referred to as the Act), has been preferred against the order dated 30.10.2001, passed by Income Tax Appellate Tribunal, Patna Bench, Patna (hereinafter referred to as the Tribunal), in ITA No. 59/Pat/2001, and is with respect to the assessment year 1994-95, whereby the learned Tribunal has affirmed the 2 appellate order passed by the Commissioner of Income Tax(Appeals)-II, Patna. 2. While admitting the appeal by order dated 10.10.2006, the following substantial questions of law have been formulated to be answered by this Court: (i) Whether on the facts and in the circumstances of the case, the ITAT was justified in holding that the assessment for the assessment year 1994-95 was legally re-opened u/s 147? (ii) Whether on the facts and in the circumstances of the case, in respect of refund relating to assessment year 1993-94, the interest u/s 244A quantified u/s 143(1)(a)in Assessment year 1994-95 on 13.01.1994 and subsequently reduced in the assessment order u/s 143(3) dated 22.03.1995 which was served on the appellant in the assessment year 1996-97 on 12.04.1995, was legally assessable in the assessment year 1994-95 ? (iii) Whether on the facts and in the circumstances of the case, the ITAT is justified in upholding charging of interest u/s 234B in absence of any order by the Assessing officer in the order of assessment ? 3. During the course of submissions, learned counsel for the appellant did not press the question of law at serial nos. (i) and (ii) above. We are now called upon to answer the question no. (iii) only. 4. A brief statement of facts essential for the disposal of the appeal may be indicated. 3 The appellant-assessee filed returns on 29.11.1994, in respect of assessment year 1994-95, showing taxable income of Rs. 95,22,612/-. The return was processed under section 143(1) (a) on 29.12.1994. The assessment was made on 22.3.1995. It appears that the same was thereafter reopened under section 147 of the Act. The assessee appeared on notice and contested the same by filing written statement/reply. The assessing officer (Deputy Commissioner, Income Tax, Special Range, Patna), by order dated 31.1.1997, passed under section 143(3) read with sections 147 and 264 of the Act, finally disposed of the same. The total taxable income of the assessee was estimated at Rs. 97, 67,533/-, followed by a demand notice as contemplated by section 156 of the Act. 5. The appellant preferred appeal bearing Appeal No. 532/P/A-II/96-97, before the Commissioner of Income Tax, Patna. The appeal was dismissed by order dated 11.12.2000. Not satisfied with the order passed on appeal, the appellant preferred appeal before the learned Tribunal which was registered as ITA No. 59/Pat/2001, and was dismissed by order dated 30.10.2001. One of the grounds taken in the 4 appeal before the Tribunal was with respect to non-charging of interest under section 234B of the Act amounting to Rs.1,53,856/-. Contention was made that there is no specific order passed by the assessing authority for charging of interest on the amount of tax assessed and found due and as such the same can not be charged or levied. 6. During the course of submissions, learned counsel for the appellant submits that he does not wish to press question nos. (i) and (ii). The same are accordingly dismissed as not pressed. 7. In so far as third question is concerned, he submits that leviability of interest on all taxes is a judicial act, it needs application of mind and adjudication must be clearly reflected in the order of the learned assessing authority. Unless a specific order with reasons is recorded in the order of the assessing officer, the same can not be included in the demand notice, being a ministerial act. He relies on the following judgments: (i)(1991)191 I.T.R.634, Kalyan Kumar Ray Vrs. Commissioner of Income Tax. 5 (ii) (2009) 308 I.T.R. 89 (Patna), Vimla Stores V. Commissioner of Income-Tax and another. In other words the learned Tribunal has erred in up-holding the ministerial act of imposition of interest in the demand notice. 8. Learned Senior Standing Counsel has supported the impugned order and submits that the issues are covered by the provisions of section 234 B of the Act. He relies on the following reported judgments: (i) Judgment dated 30.10.2007, passed by a Division Bench of Punjab and Haryana High Court in CM No. 23598 of 2006 & IT Appeal No.600 of 2006, Parkash Agro Industries Vs. Deputy Commissioner of Income Tax, (2008)2 Direct Taxes Reporter( P & H) 356. (ii) (2007) 294 ITR 374(Ker), Seapearl Enterprises V. Deputy Commissioner of Income-Tax. 9. It appears from a perusal of the assessment order that he has not discussed the question of imposition of interest on the part 6 payment or delayed payment of advance income tax notwithstanding which interest has been calculated and included in the demand notice. Indeed the learned Tribunal noted as follows in the impugned order: “… Moreover, the learned A.O. in his assessment order u/s 143(3) had never ordered for interest to be charged u/s 234B.” He has, however, concluded as follows in paragraph 4.2 of the impugned order: “Regarding the ground with respect to interest u/s 234B, amounting to Rs.1,53,856/-, all the controversies have been put to rest by the amendment in the Income Tax Act applicable retrospectively from 1.4.89. This being the AY 1994-95 is clearly applicable and hence, this ground is also rejected.” 10. We shall now proceed to consider the correctness of the logic in the impugned order for imposition of interest on part payment of advance income-tax. The present appeal relates to assessment year 1994-95. Section 234B of the Act was inserted in the Act by Direct Tax Laws (Amendment Act) 1987, with effect from 1.4.1989. It is evident on a bare perusal of Section 234B of the Act that interest at the rate and in the manner indicated therein has to be imposed on delayed payment of taxes. Learned senior Standing Counsel is right in 7 his submission that, for applicability of this mandatory provision of law, it does not need any discussion, or application of the mind, in the order of the learned assessing officer so long it is clear that the period in question is after 1.4.1989. Once it is clear that the period in question is after 1.4.1989, the interest as per the provisions of Section 234B of the Act, which is mandatory in nature, which is automatically applicable by force of law, and can be incorporated in the demand notice, even though the same has not specifically been mentioned in the order of assessment. 11. We shall now consider the reported judgments relied by the learned counsel for the parties. The judgment of the Supreme Court Kalyan Kumar Ray(supra), related to assessment years 1981-82 and 1982-83. The Supreme Court obviously did not have the occasion to consider the provisions of section 234B of the Act. However, certain observations made therein in substance and spirit go against the contention advanced on behalf of the appellant. In other words, the Supreme Court has in substance observed that calculation and inclusion of interest in the demand is an 8 arithmetical and ministerial act, which would be more so in a situation like the present one where the provisions of section 234B of the Act are mandatory in nature. 12. The judgment of a Division Bench of this Court in the case of Vimla Stores(supra) on the face of it supports the appellant‟s case and needs serious consideration. The relevant portion of the said judgment is reproduced hereinbelow for the facility of quick reference: “Mr. Rastogi draws our attention to the order of the Assessing Officer and submits that no specific order has been passed by the Tribunal charging interest. This is not disputed by Mr. Sinha. Although, such a contention was not raised before the Tribunal but in view of the fact such a question of law was formulated while admitting the appeal and in the face of the judgment of the Full Bench of this Court in the case of Smt. Tej Kumari V. CIT (2001) 247 ITR 210, we have no option than to accept Mr. Rastogi‟s contention. In the said case the Full Bench of this court has held as follows (page 218): “ In the absence of any specific order of the assessing authority interest could not be charged and recovered from the assessee.”” It is evident that the same relates to the assessment year 1996-97, yet the provisions of section 234B of the Act were not brought to the notice of the Bench. In other words, the 9 judgment in the case of Vimla Stores (supra) is without consideration of the mandatory provisions of section 234B of the Act. In such a situation, we are of the view that the judgment is Per Incuriam and does not bind us. The provisions of section 234B of the Act are mandatory in nature and we are of the view that, if it were considered in the case of Vimla Stores(supra), the conclusion may have been different. 13. One of us (S.K. Katriar,J.) had occasion to consider the doctrine of Per Incuriam in the case of M/s. Ram Laxman Glass (P) Ltd. & Ors. Vs. State of Bihar and others, reported in 2000(2) PLJR 122. The relevant portion of the judgment is reproduced hereinbelow for the facility of quick reference: “7.1.The Supreme Court has dealt with the law relating to Per Incuriam in its judgment reported in (1990) 3 SCC 684 (Punjab Land Development and Reclamation Corporation Ltd. Vs. the Presiding Officer). The following portion of the judgment occurring in paragraph 40 of the judgment illumines the position: “We now deal with the question of Per Incuriam by a reason of allegedly not following the Constitution Bench decisions. The Latin expression Per Incuriam means through inadvertence. A decision can be said generally to be given Per Incuriam when this 10 Court has acted in ignorance of a previous decision of its own or when a High Court has acted in ignorance of a decision of this Court….” The Supreme Court observed as follows in paragraph 43 of the report. “As regards the judgment of the Supreme Court allegedly rendered in ignorance of a relevant constitutional provision or other statutory provisions on the subjects covered by them, it is true that the Supreme Court may not be said to “declare the law” on those subjects if the relevant provisions were not really present to its mind….” 7.2. This issue had arisen before the Supreme Court in its judgment reported in (1991)4 SCC 139 (State of U.P. vs. Synthetics and Chemicals Ltd.) Paragraphs 40 and 41 are relevant in the present context and are set out hereinbelow for the facility of quick reference. “40. „Incuria‟ literally means `carelessness‟. In practice, Per Incuriam appears to mean per ignoratium. English courts have developed this principle in relaxation of the rule of stare decisis. The `quotable in law‟ is avoided and ignored if it is rendered, `in ignoratium of a statute or other binding authority‟. (Young v. Bristol Aeroplane Co. Ltd.). Same has been accepted, approved and adopted by this Court while interpreting Article 141 of the Constitution which embodies the doctrine of precedents as a matter of law. In Jaisri Sahu v. Rajdewan Dubey this Court while pointing out the procedure to be followed when conflicting decisions are placed before a bench extracted a passage from Halsbury‟s Laws of England incorporating one of the exceptions 11 when the decision of an appellate court is not binding. 41. Does this principle extend and apply to a conclusion of law, which was neither raised nor preceded by any consideration. In other words can such conclusions be considered as declaration of law? Here again the English courts and jurists have carved out an exception to the rule of precedents. It has been explained as rule of sub-silentio. “A decisions passes sub-silentio, in the technical sense that has come to be attached to the phrase, when the particular point of law involved in the decision is not perceived by the Court or present to its mind.” (Salmond on Jurisprudence 12th Edn., p. 153). In Lancaster Motor Company (London) Ltd. v. Bremith Ltd. the Court did not feel bound by earlier decision as it was rendered without any argument, without reference to the crucial words of the rule and without any citation of the authority‟. It was approved by this Court in Municipal Corporation of Delhi v. Gurnam Kaur. The Bench held that, „precedents sub-silentio and without argument are of no moment‟. The courts thus have taken recourse to this principle for relieving from injustice perpetrated by unjust precedents. A decision which is not express and is not founded on reasons nor it proceeds on consideration of issue cannot be deemed to be a law declared to have a binding effect as is contemplated by Article 141. Uniformity and consistency are core of judicial discipline. But that which escapes in the judgment without any occasion is not ratio decidendi. In B. Sharma Rao v. Union Territory of Pondicherry it was observed, “it is trite to say that a decision is binding not because of its conclusions but in regard to its ratio and the principles, laid down therein‟. Any 12 declaration or conclusion arrived without application of mind or preceded without any reason cannot be deemed to be declaration of law or authority of a general nature binding as a precedent. Restraint in dissenting or overruling is for sake of stability and uniformity but rigidity beyond reasonable limits is inimical to the growth of law.” 14. The same was up-held by a Division Bench of this Court reported in 2000(4) PLJR 572, M/s. Ram Laxman Glass (P) Ltd. & Ors. Vs. The State of Bihar & Ors. I must state that judgment of the learned Single Judge was up- held by the Division Bench, not by application of the doctrine of Per Incuriam, but after following a judgment of the Supreme Court taking the same view as the learned Single Judge. The judgment of the Supreme Court was delivered after that of the Single Judge. 15. Learned Senior Standing Counsel has rightly relied on the judgments in the case of Parkash Agro Industries(supra), and Seapearl Enterprises(supra). 16. In the result, we entirely agree with the view taken by the learned Tribunal in the impugned order. The question is accordingly answered against the assessee (appellant), and in favour of the Revenue. This appeal is accordingly dismissed. In the facts and 13 circumstances of the case, there shall be no order as to costs. ( S. K. Katriar,J.) (Kishore K. Mandal, J.) High Court Patna, Dated 8th May, 2009. Vinay/ AFR. "