2022 (2) TMI 1321 - AT - Income Tax

Liability to pay advance tax u/s 207 - charging of interest u/s. 234B and section 234C for non-compliance of advance tax provisions - Assessee is a senior citizen of more than 60 years - HELD THAT - A perusal of the income tax return submitted before us during the year under consideration shows the assessee had no income which is chargeable under the head profits and gains of business and profession. On a perusal of the order of the ld. CIT(A) we see that he has not brought on record any cogent material to demonstrate that the assessee is earning income from business or profession and is not drawing salary from these concerns on which TDS has been deducted u/s. 192 - CIT(A) has primarily relied on the understanding that since the assessee himself is a managing director of the company in which he is having control he is not entitled to earn salary from the said company and the income so earned from the company bears the character business and professional income . In view of the fact that the assessee is a senior citizen above 60 years of age has been consistently filing return declaring income earned as Salary income from these concerns tax has been deducted at source u/s 192 of the Act on the payments made to the assessee and that the Ld. CIT(Appeals) has not brought any material on record to exhibit that the assessee has not earned salary income we are of the view that the assessee has satisfied conditions of section 207 of the Act and is not liable to pay advance tax. In the result we hold that ld. CIT(A) has erred in confirming the charging of interest u/s. 234B and section 234C for non-compliance of advance tax provisions. Appeal of the assessee is allowed.

Summary

Issues involved:
1. Appeal against order of Commissioner of Income Tax (Appeals) for assessment year 2016-17.
2. Dispute over addition made, opportunity for personal hearing, and legal validity of the order.
3. Charging of interest under sections 234B/C and compliance with advance tax provisions.
4. Classification of income as professional fees or salary, and implications on tax liability.

Analysis:
1. The appeal was filed against the order of the Commissioner of Income Tax (Appeals) for the assessment year 2016-17. The appellant contested the addition confirmed by the Commissioner, claiming it to be unwarranted and unjustified. The appellant argued that the order was contrary to legal pronouncements and should be quashed. The issue of opportunity for personal hearing was also raised, challenging the legal validity of the order.

2. The dispute revolved around the charging of interest under sections 234B/C and compliance with advance tax provisions. The Commissioner held that interest was mandatory and consequential, citing the Supreme Court's decision in CIT vs. M. H. Ghaswala. The appellant argued that the provisions of section 207 of the Act were not considered, and the charging of interest should be quashed. The Commissioner's decision was based on the appellant's classification as a managing director rather than an employee, leading to the dismissal of the appeal.

3. The classification of income as professional fees or salary was a crucial aspect of the case. The appellant, a senior citizen, contended that as per section 207(2) of the Act, he was not required to pay advance tax since he did not have income chargeable under the head "profits and gains of business or profession." The appellant's professional qualifications and consistent filing of returns declaring salary income were highlighted to support his position. The Tribunal found that the appellant satisfied the conditions of section 207 and was not liable to pay advance tax, leading to the allowance of the appeal.

4. Ultimately, the Tribunal allowed the appeal, concluding that the appellant was not liable to pay interest under sections 234B and 234C for non-compliance with advance tax provisions. The decision emphasized the appellant's status as a senior citizen and the nature of his income, affirming that the charging of interest was not justified in this case.

This detailed analysis of the judgment highlights the key issues raised, arguments presented, legal interpretations applied, and the final decision reached by the Tribunal.