2005 (4) TMI 41 - HC - Income Tax

Waiver of interest levied under section 234B assessee claimed the benefit of special deduction under sections 80HHA and 80-I basing its claim on the decision of this court dated October 23, 1992, in Rahebar Farms s case - assessments were completed under section 143(3) of the Act and the assessee was not required to pay any advance tax on the amounts which were claimed as deductions under sections 80HH and 80-I - judgment of this court dated October 23, 1992, was reversed by the apex court in Venkateswara Hatcheries s case Held that, we do not agree with the reasoning of the Chief Commissioner that the assessee was required to file a revised return voluntarily after the judgment of this court had been reversed in appeal - Moreover, the tax that became due in terms of the revised returns had also been paid within time. No delay could, thus, be attributed to the assessee Thus, interest levied on the assessee under section 234B is waived

Summary

Issues:
Assessment of interest under section 234B of the Income-tax Act, 1961 for the relevant assessment years.

Analysis:
The case involved the assessee, a hatchery business, filing returns of income for assessment years claiming special deductions under sections 80HHA and 80-I of the Income-tax Act. The Assessing Officer accepted the claims based on a High Court judgment but later, the Supreme Court reversed the decision. The Assessing Officer then issued notices for escaped income, and interest under section 234B was levied due to non-payment of advance tax on the now taxable amounts. The assessee sought waiver of interest, and the Chief Commissioner partially allowed it, considering the reversal of the High Court judgment. The assessee challenged this decision through writ petitions, claiming full waiver of interest. The single judge upheld the Chief Commissioner's decision, leading to the present writ appeals.

The High Court noted that the assessee had filed returns on time, paid due taxes, and claimed deductions based on the High Court judgment. After the Supreme Court's reversal, the Assessing Officer issued notices for escaped income, and revised returns were filed within the given time, with taxes paid promptly. The court disagreed with the Chief Commissioner's view that the assessee should have voluntarily filed revised returns post the Supreme Court decision. As the notices were issued later, the assessee acted promptly, and no delay could be attributed. Therefore, the court held that the Chief Commissioner should have waived the entire interest levied by the Assessing Officer. Consequently, the orders of the single judge and the Chief Commissioner were set aside, and the writ petitions were allowed, leading to the waiver of interest under section 234B for the assessee.

In conclusion, the High Court ruled in favor of the assessee, emphasizing the timely compliance with tax obligations and the lack of requirement for voluntary revised returns post the Supreme Court's decision. The court held that the Chief Commissioner should have waived the interest levied by the Assessing Officer, leading to the successful outcome for the assessee in the writ appeals.