2015 (7) TMI 359 - AT - Income Tax

Double disallowance on account of Provident Fund contribution - appellant claimed that it had already disallowed ₹ 34,43,868/- in original return filed but Assessing Officer again made disallowance resulting in double disallowance - Held that - In the instant case, the CIT(A) vide its order had deleted the disallowance of ₹ 18,88,427/- out of total disallowance of ₹ 36,10,361/-. The AO gave effect of the aforesaid order of the CIT(A) vide order dated 20.10.2010. A perusal of the said order shows that though the AO deleted disallowance of ₹ 18,88,427/- but his order is silent in respect of direction of the CIT(A) to verify the fact whether there was double addition to the extent of ₹ 34,43,868/-, and if found to be correct, then the delete the disallowance of ₹ 34,43,868/-. Thus, such a non-speaking order passed by the AO while giving effect to the order of the CIT(A) is bad in law, and unsustainable. We, therefore, set aside the orders of the orders of the lower authorities on this issue and remit back the matter to the file of the AO with the same directions as given by the CIT(A) vide its order dated 31.8.2010 quoted above in the order. The AO is directed to pass a speaking order on this issue - Decided in favour of assessee for statistical purposes. Charging interest under section 234A - Held that - In order under section 143(3) r.w.s. section 147 the AO inter alia ordered for charging interest under section 234A of the Act. Thus, the assessee was not correct in submitting that no interest under section 234A was originally levied by the AO, and the same was only levied for the first time in the order which was passed to grant effect to the order of the CIT(A). We, therefore, do not find any force in the ground of appeal, and accordingly, the same is dismissed.- Decided against assessee. Charging interest under section 234B - Held that - Case of Freightship Consultants P. Ltd. Vs. ITO, (2007 (5) TMI 259 - ITAT DELHI-A) wherein it was held that it is mandatory for the AO to charge interest under section 234B of the Act and after the decision of the Tribunal, he was duty bound to increase or reduce the same as per the order of the Tribunal, the interest which he had charged while passing the assessment order and upto the date of the assessment order and not upto the date of the order passed by him in consequence of the order passed by the Tribunal. The order passed by the AO under section 254/154 of the Act charging interest under section 234B of the Act upto the date of the orders passed by him in consequence of the order of the Tribunal was against the provisions of the law. We, therefore, set aside the order of the lower authorities and direct the AO to charge interest under section 234B of the Act after giving effect to the order of the Tribunal till the date of the order of the original assessment. - Decided partly in favour of assessee.

Summary

Issues:
1. Disallowance of Provident Fund contribution.
2. Charging of interest under section 234A.
3. Charging of interest under section 234B.

Issue 1: Disallowance of Provident Fund contribution:
The appeal concerned disallowance of Provident Fund (PF) contributions by the assessee. The original assessment did not disallow any PF contribution, but upon re-assessment, a significant amount was disallowed. The CIT(A) partially allowed the appeal, directing the AO to remove any double disallowance. However, the AO's order giving effect to the CIT(A)'s decision was non-speaking and did not address the double disallowance issue. Consequently, the Tribunal set aside the lower authorities' orders and remitted the matter to the AO for proper verification and a speaking order. The Tribunal emphasized the need for a thorough examination and an opportunity for the assessee to be heard, allowing the appeal for statistical purposes.

Issue 2: Charging of interest under section 234A:
The assessee contested the interest charged under section 234A, arguing that no interest was levied in the original assessment order. However, the AO had ordered interest under section 234A in the original assessment. The Tribunal found no merit in the appeal, dismissing it as the interest was correctly charged in the appeal effect order to comply with the original assessment decision.

Issue 3: Charging of interest under section 234B:
Regarding interest under section 234B, the assessee claimed that no interest was charged in the original order and that the AO mechanically imposed interest till the appeal effect order date. The Tribunal noted that the order under section 143(3) was not final due to pending appeals, but the CIT(A)'s decision was considered final until varied by the Tribunal. Citing legal precedent, the Tribunal directed the AO to charge interest under section 234B only up to the original assessment order date, not the appeal effect order date. The Tribunal partially allowed the appeal on this ground, setting aside the lower authorities' orders and providing clear directions for charging interest under section 234B.

In conclusion, the Tribunal partly allowed the assessee's appeal, addressing the issues of Provident Fund contribution disallowance, interest under section 234A, and interest under section 234B comprehensively. The judgment emphasized the importance of proper verification, speaking orders, and adherence to legal provisions in tax assessments.