2021 (3) TMI 769 - AT - Income Tax

Rectification u/s 154 - Interest liability u/s 234A(1) or as per Sec. 234A(3) - assessee did not file the return of income u/s 139(1) but filed her return of income for the first time in compliance to notice u/s 148 - HELD THAT - On perusal of the facts, we found that it is an admitted position that in the present case, the assessee had not filed any return of income either U/s 139(1) or U/s 139(4) of the Act and for the first time the return of income was filed by the assessee in response to notice U/s 148 of the Act on 11/02/2016. Since no return of income was earlier filed U/s 139(1) or U/s 139(4) of the Act, therefore there was no question of any assessment U/s 143(3)/144/147 of the Act. Therefore, for this reason alone, the assessee s case do not fall U/s 234A(3) of the Act and it is plainly covered by the provisions of Section 234A(1) explanation (3) of the Act whereas where interest is to be charged from the due date of filing of return till the date of filing of return in response to notice U/s 147 of the Act. It has categorically been mentioned in sub-section (3) of Section 234A of the Act that provisions of said sub-section can only be invoked in the case where the completion of assessment U/s 143(3)/144 or 147 of the Act takes place, but admittedly in the present case, no return was filed. There was no occasion for completion of the assessment under the above provisions, therefore, the assesse cannot take benefit of sub-section (3) of Section 234A of the Act. Provisions of rectification can only be invoked for correcting the mistake which are apparent on record and in the present case, the mistake is obvious and patent and do not involve any dispute which is debatable in nature. The decision relied upon by the ld AR is not applicable to the facts of the present case. No new facts and circumstances have been brought on record before us by the ld AR as the dispute involved in the present case is only applicability of the period of charging of interest which can be gathered on the plain reading of provisions of Section 234A(1) - Decided against assessee.

Summary

Issues:
Challenge to addition of interest under Section 234A(1) of the Income Tax Act, 1961.

Analysis:
1. The appeal was filed against the order of the ld. CIT(A) confirming the addition of interest under Section 234A(1) of the Act. The assessee contended that the interest should have been charged under Section 234A(3) instead of Section 234A(1), as there was a delay in filing the return of income. The argument was based on the interpretation of the provisions and the applicability of the two subsections for charging interest.

2. The assessee highlighted that the rectification order increasing the interest charged under Section 234A from ?2,66,950 to ?9,41,283 was debatable as it involved two sub-sections for charging interest. The assessee relied on legal precedents to support the argument that a decision on a debatable point of law is not a mistake apparent from records. The provisions of Section 234A(1) and (3) were reproduced to emphasize the difference in the period for charging interest under each subsection.

3. The Tribunal noted that the assessee had not filed a return of income under Section 139(1) or 139(4) but filed it for the first time in response to a notice under Section 148. As there was no assessment under Section 143(3)/144/147, the case did not fall under Section 234A(3) but was covered by Section 234A(1) explanation (3). The Tribunal interpreted the provisions to determine the period for charging interest based on the due date of filing the return.

4. The Tribunal held that the mistake in charging interest under Section 234A(1) instead of Section 234A(3) was not debatable and was apparent from the records. The decision of the Hon'ble Supreme Court cited by the assessee was deemed inapplicable to the present case. The Tribunal concluded that the rectification was valid as it corrected a clear mistake in charging interest under the appropriate section.

5. Considering the facts and legal provisions, the Tribunal dismissed the appeal of the assessee, upholding the order of the ld. CIT(A) regarding the addition of interest under Section 234A(1) of the Income Tax Act, 1961.

This detailed analysis of the judgment provides a comprehensive understanding of the issues raised, the arguments presented, and the Tribunal's decision based on the interpretation of relevant legal provisions and precedents.