2021 (7) TMI 413 - AT - Income Tax

Calculation of the interest u/s. 220(2) - order passed order u/s. 143(3) by which the tax was calculated at NIL - HELD THAT - As decided in BHARAT COMMERCE AND INDUSTRIES LIMITED 1994 (5) TMI 14 - DELHI HIGH COURT when the very basis of calculation of interest, i.e., the amount of tax payable on the basis of which interest calculation has to be made is unknown the mistake is not apparent from record and the notice under section 154 as well as order under section 154 both are bad and illegal which are liable to be quashed. Since the ld. CIT(A) deleted the interest by following the binding precedent rendered by Hon ble jurisdictional High Court, in the absence of any decision to the contrary by any higher forum, we cannot find fault with the findings of the ld. CIT(A). We, consequently find the grounds of appeal as devoid of merits and dismiss the same.

Summary

Issues:
Appeal against order passed by CIT(A) for assessment year 2011-12 - Charging of interest u/s. 234A, 234B, 234C, and 220(2) of the Income-tax Act - Non-representation by the assessee - Reliance on decision of Hon’ble jurisdictional High Court in Bharat Commerce and Industries case.

Analysis:
The appeal was filed by the Revenue against the order passed by the CIT(A) for the assessment year 2011-12. The assessee, an individual deriving income from various sources, had filed a return showing an income of ?20,18,25,050. The Assessing Officer later issued a notice under section 154 of the Income-tax Act, stating that an erroneous total tax computation had been made, resulting in the incorrect calculation of interest under sections 234A, 234B, 234C, and 220(2) of the Act. The Assessing Officer contended that interest could not be charged due to the incorrect tax credit given. Consequently, an order was passed charging interest under the specified sections.

Upon the assessee's appeal, the CIT(A) deleted the interest charges, citing that the Assessing Officer had made errors in the tax calculation and interest imposition. The CIT(A) relied on the decision of the Hon’ble jurisdictional High Court in the Bharat Commerce and Industries case, which emphasized that interest could only be levied if the tax amount specified in a demand had not been paid in accordance with the Act. Since the tax amount for interest calculation was unclear, the CIT(A) deemed the notice and order under section 154 as illegal and quashed the interest charges.

In the absence of representation from the assessee during the proceedings, the Tribunal proceeded to decide the appeal based on the available record. The Tribunal, after considering the submissions made by the Learned DR and the legal precedents, upheld the CIT(A)'s decision to delete the interest charges. The Tribunal concurred with the CIT(A)'s interpretation of the law based on the binding precedent set by the Hon’ble jurisdictional High Court. Consequently, the Tribunal found no merit in the Revenue's appeal and dismissed it, affirming the deletion of interest charges by the CIT(A).

In conclusion, the Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision to delete the interest charges based on the legal principles established by the Hon’ble jurisdictional High Court.