2011 (2) TMI 1413 - AT - Income Tax

Summary

Issues Involved:
1. Quantum of interest under sections 234A, 234B, and 234C.
2. Debatable nature of the levy of interest u/s 234A, 234B, and 234C.
3. Invocation of section 154 for rectifying the mistake of non-levy of interest.

Summary:

Quantum of Interest:
The Tribunal first addressed the quantum of interest. It was noted that the provisions of section 234A(3) and 234B(3) specify the computation of interest for returns filed in response to a notice u/s 153A. The Tribunal clarified that a return filed in response to a notice u/s 153A is treated as a return filed u/s 139(1). Consequently, the due date for filing the return shifts to the date prescribed in the notice u/s 153A. The Tribunal directed that the computation of interest u/s 234A should commence from the day immediately following the expiry of the time allowed in the notice u/s 153A. Interest u/s 234B should be computed on the amount by which the tax on the total income determined in the assessment u/s 153A exceeds the tax on the total income determined under section 143(1) on the return filed in response to the notice u/s 153A. The issue of computation of interest was restored to the file of the Assessing Officer for re-adjudication.

Debatable Nature of Levy of Interest:
The Tribunal held that the levy of interest is compensatory in nature and the method of computation is specifically provided in sections 234A(3) and 234B(3) for assessments u/s 153A. Non-application of a specific provision of the Act constitutes a mistake apparent from the record. Therefore, the finding of the CIT(A) that the Assessing Officer was right in invoking the provisions of section 154 for rectifying the mistake of non-levy of interest was upheld. The Tribunal concluded that there can be no two views regarding the levy of interest under sections 234A, 234B, and 234C, as the provisions themselves specifically provide for the levy.

Invocation of Section 154:
The Tribunal agreed with the CIT(A) that the non-application of specific provisions of the Act was a mistake apparent from the record, justifying the invocation of section 154. The Tribunal found that the Assessing Officer was correct in invoking section 154 to rectify the mistake of non-levy of interest under sections 234A, 234B, and 234C in the original assessment.

Conclusion:
The appeals of the assessees were partly allowed, with directions for re-adjudication of the computation of interest under sections 234A and 234B by the Assessing Officer. The Tribunal upheld the invocation of section 154 for rectifying the mistake of non-levy of interest.