2012 (7) TMI 465 - AT - Income Tax

Justification on levy of interest u/s 234B - CIT(A) deleted levy of interest - assessee s return declaring book profits in terms of provisions of section 115JB - Held that - The CIT(A) without analyzing the facts of the case deleted levy of interest merely on the submissions of the assessee and did not analyse the facts of the case in the light of decision of the Hon ble Supreme Court in the case of JCIT Vs. Rolta India Ltd. 2011 (1) TMI 5 (SC) holding that section 115JA/115JB is a self contained code and all the companies were liable for payment of advance tax u/s 115JB and consequently, the provisions of section 234B and 234C were applicable in the event of default in the payment of advance tax. Section 250(6) mandates that the order of the CIT(A) while disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reasons for the decision whereas a mere glance at the impugned order reveals that the order passed by the ld. CIT(A) is cryptic and grossly violative of one of the facets of the rules of natural justice that every judicial /quasi -judicial body/authority must pass a reasoned order, which should reflect application of mind by the concerned authority to the issues/points raised before it which was missing in the order - as the impugned order suffers from lack of reasoning and is not a speaking order the case is restored back to file of CIT(A) with the directions to readjudicate the issue - decided against assessee.

Summary

Issues:
1. Charging of interest u/s 234B.
2. Analysis of relevant judgments and legal provisions.
3. Lack of reasoning in the order of the ld. CIT(A).

Issue 1: Charging of interest u/s 234B
The appeal filed by the Revenue challenged the decision of the ld. CIT(A) regarding the charging of interest u/s 234B. The assessee argued against the levy of interest based on previous judgments and amendments in the Finance Act, 2009. The ld. CIT(A) concluded that interest u/s 234B was not chargeable in this case and directed its deletion. However, the Revenue contended that the ld. CIT(A) did not analyze the facts of the case properly and deleted the levy of interest solely based on the submissions of the assessee.

Issue 2: Analysis of relevant judgments and legal provisions
The Hon'ble Supreme Court's decision in JCIT Vs. Rolta India Ltd. was crucial in this case. The Court held that sections 115JA and 115JB of the Income Tax Act are special provisions, making all companies liable for the payment of advance tax. The provisions of section 234B and 234C were applicable in case of default in advance tax payment. The Court emphasized that the self-contained code of sections 115JA and 115JB imposes the liability for advance tax on MAT companies, necessitating the payment of interest under sections 234B and 234C in case of default. The judgment highlighted the importance of estimating profits before the end of the financial year for tax liability determination, contrary to the view of other High Courts. The circular issued by CBDT clarified the applicability of advance tax provisions to MAT companies, emphasizing the liability for payment of advance tax and interest on default.

Issue 3: Lack of reasoning in the order of the ld. CIT(A)
The Tribunal noted the lack of proper analysis and reasoning in the order passed by the ld. CIT(A). The Tribunal emphasized the importance of passing a reasoned order reflecting the application of mind by the authority to the issues raised. Citing legal provisions mandating the recording of reasons for decisions, the Tribunal highlighted the necessity of clarity and fairness in decision-making processes. Referring to the jurisdictional High Court's decision, the Tribunal stressed the obligation of quasi-judicial authorities to provide cogent and germane reasons in their orders. Due to the deficiency in the reasoning in the ld. CIT(A)'s order and the failure to consider the Hon'ble Apex Court's observations, the Tribunal vacated the findings and directed a reevaluation of the issue with a speaking order, allowing sufficient opportunity to both parties.

In conclusion, the Tribunal allowed the appeal but for statistical purposes, emphasizing the need for a reasoned order and proper analysis in tax matters to ensure fairness and clarity in decision-making processes.