2017 (12) TMI 986 - AT - Income Tax

Rectification order u/s 154 passed an order to pay interest u/s 234A - whether charging of interest is a statutory provision and omission of applying statutory provision is a rectifiable mistake u/s 154 - Held that - We find that assessee filed a return of income declaring a loss of 2, 84, 909/- The return of income was filed on 31.03.2010 which was required to be filed on 30.09.2009. The Assessing Officer vide assessment order dated 23.12.2012 completed the assessment after making certain additions and in the body of assessment order charged interest u/s 234B. However he did not make any direction to charge any interest u/s 234A of the Act later on he passed an order u/s 154 on 10.05.2013 and created an additional demand of 2, 14, 9, 438/- being interest for six months which the assessee was liable to be charged u/s 234A of the Act. The Ld. CIT(A) has deleted the demand for interest by following the decision of Hon ble Supreme Court in the case of CIT Vs. Ranchi Club Ltd. 2000 (8) TMI 79 - SUPREME Court The conclusion of Hon ble Supreme Court in the case of CIT Vs. Ranchi Club Ltd. is that in the absence of any specific mention of the Assessing Officer in the assessment order for charging of interest u/s 234A and 234B no interest would be recovered from the assessee merely by way of a demand notice. We further find that Hon ble Delhi High Court in the case of CIT Vs. Kishan Lal (HUF) 2002 (8) TMI 74 - DELHI High Court has again followed the order of Hon ble Supreme Court and has held that in the absence of any direction in the assessment order for charging interest u/s 234A and 234B interest cannot be recovered. - Decided against revenue

Summary

Issues:
- Rectifiability of omission to charge interest u/s 234A of the Act in the original assessment order.
- Interpretation of the decision of the Hon'ble Supreme Court in the case of CIT Vs. Ranchi Club Ltd. regarding charging of interest.
- Application of statutory provisions for charging interest u/s 234A and 234B.

Analysis:
1. The primary issue in this case revolves around the rectifiability of the omission to charge interest u/s 234A of the Act in the original assessment order. The Assessing Officer passed a rectification order u/s 154 to demand interest, which the Ld. CIT(A) deleted, leading to the appeal by the revenue. The Ld. DR argued that the omission of applying the statutory provision for charging interest is a rectifiable mistake u/s 154 of the Act, citing the decision of the Hon'ble Punjab & Haryana High Court in a relevant case.

2. The interpretation of the decision of the Hon'ble Supreme Court in the case of CIT Vs. Ranchi Club Ltd. plays a crucial role in determining the outcome of this appeal. The Hon'ble Supreme Court held that in the absence of a specific direction in the assessment order for charging interest u/s 234A and 234B, no interest can be recovered merely through a demand notice. This interpretation was followed by the Ld. CIT(A) in deleting the demand for interest, which was further supported by the findings of the Hon'ble Delhi High Court in a similar case.

3. Another aspect of the case involves the application of statutory provisions for charging interest u/s 234A and 234B. The Assessing Officer, in the original assessment order, did not provide a specific direction to charge interest u/s 234A, leading to the subsequent rectification order. The Ld. AR argued that based on relevant case laws, including the decision of the Hon'ble Supreme Court and other High Courts, the interest cannot be recovered if there is no explicit direction in the assessment order.

4. The Ld. CIT(A) based the decision on the findings of the Hon'ble Supreme Court and other High Courts, emphasizing that if there is no direction in the original assessment order, no rectification can be made as there is no mistake apparent from the record. The case laws cited in the judgment directly address the issue of interest not charged in the original assessment and the rectifiability of such omissions. Ultimately, the appeal filed by the revenue was dismissed, affirming the decision of the Ld. CIT(A) based on the legal interpretations and precedents cited in the judgment.

By considering the legal principles and precedents established by the Hon'ble Supreme Court and other High Courts, the judgment provides a comprehensive analysis of the rectifiability of omissions in the assessment order regarding the charging of interest u/s 234A of the Act.