2024 (1) TMI 419 - AT - Income Tax

Rectification u/s 154 charging interest u/s 234A, 234B 234C - rectification on debatable issue - HELD THAT - We noted that now assessee filed a copy of one Tribunal judgment in the case of Ms. Priti Pithawala 2003 (3) TMI 743 - ITAT MUMBAI wherein the chargeability of interest u/s. 234A in case of return filed u/s. 147 r.w.s. 148 of the Act was under dispute. This is one of the view of the Tribunal. Even in the case of CIT vs. Salora International Limited 2010 (5) TMI 67 - HIGH COURT OF DELHI held that charging of interest u/s. 234B and 234C of the Act by the ld. AO, as a consequence of the order passed u/s. 154 of the Act, was a debatable issue which a AO could not do by invoking the provisions of Sec. 154 of the Act. Hence, while acting u/s. 154 of the Act, interest u/s. 234A of the Act in the present case cannot be charged. Hence, this jurisdictional issue of the assessee s cross objection is allowed,

Summary

Issues involved:
The appeal and cross objection arising from the orders of Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC) regarding the charging of interest under sections 234A, 234B, and 234C of the Income-tax Act, 1961.

Jurisdictional Issue:
The assessee raised a jurisdictional issue in the Cross Objection, contending that the charging of interest under sections 234A, 234B, and 234C of the Act is debatable and cannot be rectified by the Assessing Officer under section 154. The Assessing Officer issued a rectification order to correct the interest calculation, leading to a dispute.

Facts and Assessment:
The assessee did not file the income tax return for the assessment year 2010-11 initially. After a notice under section 148, the return was filed, and the assessment was completed by the Assessing Officer, who charged interest under section 234A. A rectification order was issued due to an audit objection, leading to a revised interest calculation and a demand notice.

CIT(A) Decision:
The CIT(A) deleted the disallowance of interest charged by the rectification order, citing provisions of the Act and section 234A. The assessee contended that the charging of interest was debatable, but the CIT(A) did not address the jurisdictional issue, focusing on the provisions of section 234A(1)(b).

Tribunal Decision:
The Tribunal considered the jurisdictional issue raised by the assessee, citing a previous judgment and the view that interest cannot be charged under section 154 for a debatable issue like interest under section 234A. The Tribunal allowed the jurisdictional issue in favor of the assessee, leading to the dismissal of the revenue's appeal and the allowance of the assessee's Cross Objection.

Conclusion:
The Tribunal ruled in favor of the assessee, allowing the jurisdictional issue and dismissing the revenue's appeal. The decision was pronounced in Chennai on 29th December 2023.