2013 (7) TMI 66 - HC - Income Tax

Application of Section 234B - Levy of interest u/s 234B(1) or 234B(3) - Tribunal initiated proceedings for levy of interest against Assessee - Held that - Assessee returned an original assessment under Section 143(1) of the Income Tax Act - Therefore, assessment was completed under Section 147 read with Section 143(3) of the Income Tax Act, computing the total income of the assessee - When the assessment in the assessee s case was admittedly made for the first time under Section 147 read with Section 143(3) of the Income Tax Act, the said assessment is a regular assessment attracting sub section (1) of Section 234B - Decided against the assessee.

Summary

Issues:
1. Interpretation of interest under Section 234B of the Income Tax Act.
2. Application of Mumbai Bench Tribunal decision on interest levy.

Issue 1:
The case involved a dispute regarding the levy of interest under Section 234B of the Income Tax Act for the Assessment Year 2004-05. The assessee contested the interest levy under Section 234B(1) after the assessment was completed under Section 147 read with Section 143(3) of the Income Tax Act. The Commissioner of Income Tax (Appeals) initially ruled in favor of the assessee, following a decision of the Mumbai Bench Tribunal. However, the Revenue argued that the assessment being a regular one, interest under Section 234B(1) was applicable. The Tribunal held that as per Explanation (2) to Section 234B, the interest was chargeable under Section 234B(1) due to the nature of the assessment. The High Court agreed with the Tribunal's interpretation, dismissing the appeal.

Issue 2:
The second issue revolved around the applicability of a decision by the Mumbai Bench Tribunal in a similar case (Datamatics Ltd. Vs. ACIT) on interest levy. The assessee contended that the Tribunal should have followed the Mumbai Bench decision and not levied interest under Section 234B(1). However, the Tribunal differentiated the present case as a regular assessment, unlike the Mumbai Bench case, which involved reassessment. The High Court concurred with the Tribunal's reasoning, emphasizing that the assessment in question was indeed a regular assessment, leading to the rightful levy of interest under Section 234B(1) as per the clear provisions of the Income Tax Act.

In conclusion, the High Court upheld the Tribunal's decision, confirming the levy of interest under Section 234B(1) for the regular assessment conducted under Section 147 read with Section 143(3) of the Income Tax Act for the Assessment Year 2004-05. The Court dismissed the Tax Case Appeal, emphasizing the clear wording of the relevant legal provisions and the nature of the assessment as determining factors in the interest levy dispute.