2010 (10) TMI 853 - HC - Income Tax

Levy of interest u/s 234B and 234C - Whether in the absence of any direction in the assessment order for levy of interest AO could charge such interest while computing the tax liability? - Held that - It has been held in Anjum Ghaswala and others 2001 (10) TMI 4 - SUPREME Court that levy of interest u/s 234B and 234C is mandatory.Mere non-mention of levy of interest in the order of assessment cannot render the said statutory provision nugatory. The interest being mandatory and not discretionary the recovery thereof does not depend on the language of the assessment order - in favour of the revenue.

Summary

Issues:
1. Levy of interest under Sections 234B and 234C of the Income Tax Act, 1961 in absence of any direction in the assessment order.

Analysis:
The judgment involves two appeals filed by the same assessee raising common questions of law regarding the levy of interest under Sections 234B and 234C of the Income Tax Act, 1961. The key issue framed in both appeals was whether the Assessing Officer could charge interest without a specific direction in the assessment order. The assessee had received an incentive bonus from the Life Insurance Corporation, treated as taxable under the head of 'Salary,' and the CIT(A) had dismissed the appeal challenging the levy of interest. The Tribunal had upheld this view based on a Supreme Court judgment.

The counsel for the assessee argued that without a specific direction in the assessment order, interest could not be levied under Sections 234B and 234C. They cited various judgments in support of their contention. However, the court disagreed with this submission, citing the Supreme Court's ruling in Anjum Ghaswala and others, which established the mandatory nature of interest levy under the mentioned sections. The court emphasized that the recovery of interest was not dependent on the language of the assessment order, as it was a statutory provision. Previous judgments cited by the assessee were deemed irrelevant as they either predated the Supreme Court's decision or did not consider it.

Ultimately, the court ruled against the assessee, upholding the mandatory nature of interest levy under Sections 234B and 234C even in the absence of a specific direction in the assessment order. Consequently, the appeals were dismissed, and the judgment favored the revenue authorities.