2024 (4) TMI 1199 - AT - Income Tax

Chargeability of interest u/s 234A - According to ld. CPC, due date of assessee for filing return of income u/s 139(1) would be 05.08.2013 being the extended due date u/s 139(1) of the Act for AY 2013-14 and not 31.10.2013 - HELD THAT - As per provisions of section 139(1) of the Act, the due date for the partnership firm not liable for tax audit would be 05.08.2013 for the year under consideration and the due date for partnership which is eligible for tax audit would be 31.10.2013. This is very clear from Explanation to section 139 of the Act, which defines the expression due date . Hence, the department in the hands of the firm i.e. M3M holding had accepted the fact that it is liable for tax audit and accordingly had accepted the due date of filing of return of income u/s 139(1) of the Act to be 31.10.2013. Hence, the department cannot take the divergent stand for the assessee herein by holding that the firm in which assessee is a partner is not liable for tax audit u/s 44AB of the Act and consequently, the due date for assessee would get advanced to 05.08.2013, instead of 31.10.2013. In view of this, we have no hesitation to direct the AO to delete the chargeability of interest u/s 234A of the Act in the sum in the instant case. The chargeability of interest u/s 234B of the Act is consequential in nature. Assessee appeal allowed.

Summary

Issues:
1. Determination of net tax liability and interest charges under sections 234A, 234B, and 234C of the Income-tax Act, 1961.
2. Due date for filing the return of income for a partnership firm under section 139(1) of the Act.
3. Applicability of tax audit u/s 44AB of the Act to the partnership firm.
4. Principles of natural justice in passing the impugned order by the Commissioner of Income Tax (Appeals).

Analysis:

1. Determination of net tax liability and interest charges under sections 234A, 234B, and 234C of the Income-tax Act, 1961:
The appeal before the Appellate Tribunal concerned the determination of net tax liability and interest charges under sections 234A, 234B, and 234C of the Income-tax Act for the assessment year 2013-14. The assessee contested the imposition of interest under these sections, challenging the calculation and applicability of the charges. The Tribunal examined the facts and legal provisions to decide on the correctness of the interest levied. Ultimately, the Tribunal directed the Assessing Officer to delete the chargeability of interest under section 234A, considering the due date for filing the return of income and the applicability of tax audit provisions to the partnership firm. The appeal of the assessee was allowed in this regard.

2. Due date for filing the return of income for a partnership firm under section 139(1) of the Act:
The issue of the due date for filing the return of income for a partnership firm under section 139(1) of the Act was crucial in this case. The Tribunal analyzed the provisions related to the due date and considered the implications of tax audit requirements under section 44AB of the Act on the filing deadlines. The Tribunal noted that the due date for the partnership firm, subject to tax audit, was distinct from the due date for a partnership not liable for tax audit. The Tribunal emphasized the importance of correctly determining the due date based on the nature of the firm's audit requirements. This analysis played a significant role in deciding the interest charges imposed on the assessee.

3. Applicability of tax audit u/s 44AB of the Act to the partnership firm:
The Tribunal delved into the issue of the applicability of tax audit provisions under section 44AB of the Act to the partnership firm in question. It was observed that the partnership firm, M3M India Holdings, was indeed subjected to tax audit for the relevant assessment year. The Tribunal highlighted the relevance of the firm's audit status in determining the due dates for filing the return of income. The correct interpretation of the tax audit requirements for the firm influenced the decision regarding the interest charges imposed on the assessee as a partner of the firm. The Tribunal's analysis underscored the necessity of aligning the due dates with the firm's audit obligations.

4. Principles of natural justice in passing the impugned order by the Commissioner of Income Tax (Appeals):
The Tribunal scrutinized the impugned order passed by the Commissioner of Income Tax (Appeals) to assess compliance with the principles of natural justice. The Tribunal considered whether the appellant was afforded a fair and meaningful opportunity during the proceedings. The adherence to principles of natural justice in tax matters is crucial to ensure procedural fairness and protect the rights of the taxpayer. The Tribunal's evaluation of the procedural aspects of the case highlighted the significance of providing adequate opportunities for the appellant to present their case effectively.

In conclusion, the Tribunal's detailed analysis and decision in this case underscored the importance of accurate interpretation and application of tax laws, especially concerning due dates for filing returns and the impact of tax audit requirements on such deadlines. The judgment emphasized the need for consistency and fairness in determining tax liabilities and interest charges, while also emphasizing the fundamental principles of natural justice in tax proceedings.