2009 (5) TMI 908 - HC - Income Tax

Summary

Issues Involved:
1. Legality of reopening the assessment u/s 147 for the assessment year 1994-95.
2. Legality of assessing interest u/s 244A in the assessment year 1994-95.
3. Justification of charging interest u/s 234B without a specific order by the Assessing Officer.

Summary:

Issue 1: Legality of reopening the assessment u/s 147 for the assessment year 1994-95

During the course of submissions, learned counsel for the appellant did not press the question of law regarding the legality of reopening the assessment u/s 147. Therefore, this issue was dismissed as not pressed.

Issue 2: Legality of assessing interest u/s 244A in the assessment year 1994-95

Similarly, the question of law regarding the assessment of interest u/s 244A was not pressed by the appellant's counsel and was dismissed as not pressed.

Issue 3: Justification of charging interest u/s 234B without a specific order by the Assessing Officer

The appellant-assessee contested the imposition of interest u/s 234B, arguing that there was no specific order by the Assessing Officer for charging interest, and thus it could not be included in the demand notice. The Tribunal had noted that the Assessing Officer did not order for interest to be charged u/s 234B in the assessment order u/s 143(3). However, the Tribunal concluded that the amendment in the Income Tax Act applicable retrospectively from 1.4.1989 made the provision of section 234B mandatory, and thus the interest was applicable.

The Court held that the provisions of section 234B are mandatory and do not require specific mention in the assessment order. The interest can be incorporated in the demand notice as it is automatically applicable by force of law for periods after 1.4.1989. The Court found that the judgment in Vimla Stores was Per Incuriam as it did not consider the mandatory provisions of section 234B. The Court agreed with the Tribunal's view and dismissed the appeal, holding that the interest u/s 234B was correctly imposed.

In conclusion, the appeal was dismissed, and the question was answered against the assessee and in favor of the Revenue. There was no order as to costs.