2009 (7) TMI 119 - HC - Income Tax

Deletion of interest under section 234A or 234B held that - The plea taken is that since the charging of interest is not specifically mentioned in the assessment order, though it is mentioned in the ITNS 150, no interest could be charged from the assessee. That issue is yet to be decided by the tribunal in the assessee s appeal. The question raised by the revenue before the tribunal was not with regard to the levy of interest per se, but the question as to whether interest could be levied on the basis of returned income or assessed income ? That issue was, of course, not decided by the tribunal. For these reasons, we feel that the appropriate course to follow would be to set aside the impugned order and to remand the matter to the tribunal so that the revenue s appeal is heard alongwith the assessee s appeal

Summary

Issues:
1. Computation of interest under Sections 234A & 234B of the Income Tax Act, 1961 based on returned income or assessed income.
2. Tribunal's authority to delete interest when not specifically mentioned in the assessment order.

Issue 1 - Computation of Interest:
The case involved a dispute regarding the computation of interest under Sections 234A & 234B of the Income Tax Act, 1961, whether it should be based on returned income or assessed income. The Commissioner of Income Tax (Appeals) directed the Assessing Officer to re-compute the interest on the returned income. The Revenue appealed before the Income Tax Appellate Tribunal, challenging this decision. However, the Tribunal did not address this specific issue but focused on the chargeability of interest when not explicitly mentioned in the assessment order. The Tribunal cited precedents and held that without a specific direction in the assessment order, the levy of interest would be invalid. The Tribunal dismissed the appeal based on this reasoning.

Issue 2 - Tribunal's Authority to Delete Interest:
The Revenue raised objections before the High Court, arguing that the Tribunal erred in deleting the interest entirely without addressing the specific issue raised by the Revenue. The High Court noted that the grounds of appeal before the Tribunal were not properly worded, and the issue of interest levy based on returned or assessed income was not conclusively decided. The High Court set aside the Tribunal's order and remanded the matter to the Tribunal for a joint hearing with the assessee's appeal. The High Court permitted the Revenue to amend the grounds of appeal before the Tribunal for a definitive decision on the raised issues.

In conclusion, the High Court clarified the scope of the controversy before the Tribunal, emphasizing the need for a clear determination on the computation of interest and the authority to levy interest when not explicitly mentioned in the assessment order. The case highlighted the importance of precise legal arguments and proper framing of issues before the appellate authorities for a comprehensive and accurate resolution of tax disputes.