2006 (3) TMI 551 - AT - Income Tax

Summary

Issues:
Computation of interest under section 234A of the Income-tax Act - Whether interest starts from the due date of filing the return under section 139 or from the date of notice issued under section 148.

Analysis:
The appellant raised concerns regarding the computation of interest under section 234A of the Income-tax Act. The main dispute centered around whether the interest should commence from the due date of filing the return under section 139 or from the date of notice issued under section 148 of the Act. The appellant argued that prior to the assessment year 1993-94, they were not obligated to file a return of income as they solely received salary income with TDS deducted by the employer. However, the appellant's stance shifted post-1993-94, acknowledging the requirement to file a return. The appellant cited a Tribunal order to support their argument that an assessee cannot be compelled to perform an impossible act. Conversely, the Departmental Representative contended that despite the obligation to file a return, the appellant failed to do so and did not respond to notices, leading to ex parte assessments. The Department emphasized the mandatory nature of interest under section 234A and highlighted the provisions of Explanation 3, indicating interest should be charged from the due date until the completion of assessment under section 144.

The Tribunal scrutinized the contentions and found that the appellant did not file a return or respond to notices under sections 148 and 142(1) of the Act, resulting in ex parte assessments by the Assessing Officer. The Tribunal rejected the appellant's argument that they were not required to file a return pre-1993-94 due to deriving salary income alone. The Tribunal clarified that only specific categories of salaried individuals were exempt from filing returns under section 139A, which did not encompass all salary income recipients. The Tribunal also examined the provisions of section 234A and noted that the assessments in question were regular assessments for interest calculation purposes. The Tribunal upheld the Assessing Officer's computation of interest under section 234A, confirming the CIT(A)'s order and dismissing the appeals.

In conclusion, the Tribunal ruled in favor of charging interest under section 234A from the due date of filing the return under section 139(1) until the completion of assessment, based on the appellant's non-compliance with filing requirements and failure to respond to notices. The decision underscored the mandatory nature of interest computation under the Income-tax Act, emphasizing adherence to statutory provisions and rejecting any relaxation of interest charges.