2023 (3) TMI 922 - AT - Income Tax

Enhancement of interest u/s 234A - Rectification of order u/s 154 - Defective return - distinction between cases where an assessee claims payment of tax and otherwise - HELD THAT - As assessee had filed her former return u/s. 139 (4) of the Act without payment of self-assessment tax qua the admitted income - The Revenue could hardly dispute that sec.139(9) of the Act is a specific provision wherein an AO could held a return as a defective one after following the due procedure as per Explanation (c) (i) thereto which treats a return filed by an assessee to be defective only if there is self-assessment tax claimed to have been paid and not otherwise. The assessee s above former return dated 08.02.2013 could not have been treated as a defective one so as to trigger applicability of sec.234A interest herein levied in sec.154 rectification proceedings in issue. Both the learned lower authorities action to this effect stands reversed therefore. The assessee s arguments stands accepted in very terms. Decided in favour of assessee.

Summary

Issues Involved:
1. Enhancement of interest under Section 234A.
2. Validity of the order under Section 154 rectifying the assessment order.
3. Treatment of the original return filed without payment of tax.
4. Applicability of Section 234A interest from the due date of return filing to the date of filing in response to Section 148 notice.

Summary:

Issue 1: Enhancement of Interest under Section 234A
The assessee challenged the CIT(A)'s decision confirming the enhancement of interest under Section 234A by Rs.54,65,481/- made by the A.O. in the order under Section 154. The tribunal noted that the assessee's original return filed on 08.02.2013 without paying self-assessment tax was considered defective, leading to the levy of interest from 01.08.2011 to 19.11.2018.

Issue 2: Validity of the Order Under Section 154 Rectifying the Assessment Order
The tribunal examined whether the issue of enhancing interest under Section 234A constituted a "mistake apparent from record" justifying rectification under Section 154. The tribunal found the rectification invalid, referencing T.S. Balram, ITO vs. Volkart Bros. [1971] 82 ITR 50 (SC), as the matter was debatable and not a clear mistake.

Issue 3: Treatment of the Original Return Filed Without Payment of Tax
The tribunal scrutinized the original return filed without self-assessment tax, determining that it was not defective under Section 139(9) because the provision applies only if tax is claimed to have been paid. The tribunal cited Meters and Instruments Pvt. Ltd., vs. Inspecting Assistant Commissioner [1991] 39 ITD 269 (Del.), distinguishing between returns where tax is claimed and those where it is not.

Issue 4: Applicability of Section 234A Interest
The tribunal held that the original return filed on 08.02.2013 was valid and should not attract Section 234A interest from 01.08.2011 to 19.11.2018. The tribunal reversed the lower authorities' actions, stating that the interest under Section 234A could not be levied through Section 154 rectification proceedings.

Conclusion:
The tribunal allowed the assessee's appeal, reversing the enhancement of interest under Section 234A and declaring the rectification order under Section 154 invalid. The original return was deemed valid, and the interest levied from 01.08.2011 to 19.11.2018 was not warranted.