2017 (10) TMI 942 - HC - Income Tax

Levy of interest under Sections 234 (A) and 234 (B) - Held that - In the light of the decision of the Constitution Bench of the Hon ble Supreme Court in the case of Brij Lal and Others Vs. CIT 2010 (10) TMI 8 - SUPREME COURT interest under Section 234(B) can be charged only upto to the stage under Section 245 (D)(1) of the Act. However, in the impugned order, the Commission has charged interest upto the stage of 245 (D)(4). So far as the interest under Section 234 (A) is concerned, the learned counsel appearing for the petitioner would submit that the assessee does not dispute their liability but would contend that there is some computation error committed by the Commission. However, for such a matter, the case cannot be sent back to the said Commission as the Commission has no power to review its order. Nevertheless, the assessing officer of the petitioner is well within his jurisdiction to examine the correctness of the stand taken by the assessee, as regards the error in computation. With regard to the interest under Section 220 (2) of the Act, the learned counsel appearing for the petitioner would submit that the petitioner will workout their remedies under the Act.

Summary

Issues:
Challenge to common order passed by Settlement Commission regarding applications for settlement, Levy of interest under Sections 234(A) and 234(B) of the Income Tax Act,1961, Interest payable under Section 220(2) of the Act.

Analysis:

1. The petitioners challenged a common order by the Settlement Commission regarding applications for settlement covering various assessment years. The challenge was not on the merits of findings but on the levy of interest under Sections 234(A) and 234(B) of the Income Tax Act,1961, and interest under Section 220(2) of the Act.

2. During the proceedings, the assessee requested to hold the levy of interest under Sections 234(A), 234(B), and 234(C) in abeyance due to a legal issue pending before the Supreme Court. The assessee agreed to the order revision based on the Supreme Court's decision, but the Commission proceeded to levy interest based on existing law.

3. The Commission declined the assessee's request for waiver of interest under Section 220(2) of the Act, stating the assessee could approach after discharging liabilities. The Supreme Court's decision clarified that interest under Section 234(B) is payable only up to a specific stage, not beyond, as charged in the impugned order.

4. The Court allowed the writ petitions partly, directing the setting aside of interest charged under Section 234(B) up to a specific stage for recomputation. The petitioners were granted liberty to address computation errors under Section 234(A) before the Assessing Officer and to work out remedies for interest under Section 220(2) of the Act.

5. The judgment concluded without costs, and the connected miscellaneous petition was closed, providing specific directions for recalculating interest and addressing computation errors as per the legal provisions.

This detailed analysis covers the issues involved in the legal judgment, highlighting the key points and decisions made by the court regarding the challenges to the Settlement Commission's order and the levy of interest under relevant sections of the Income Tax Act,1961.