2008 (4) TMI 379 - AT - Income Tax

Summary

Issues:
- Appeal against intimation under section 143(1)
- Maintainability of appeal in interest matters
- Liability for advance tax and interest under sections 234B and 234C

Issue 1: Appeal against intimation under section 143(1)
The appeal filed by the revenue was directed against the order of the CIT(A)-VII at Chennai, challenging the intimation dated 10-12-2004 under section 143(1) requiring the assessee to pay interest under sections 234B and 234C. The CIT(A) had earlier held that no interest under these sections was leviable. The revenue contended that the appeal was non-maintainable, arguing that adjustments in respect of interest, especially in proceedings under section 143(1), are not appealable. The revenue's position was that appeals could only be filed for adjustments made in respect of total income, not for interest adjustments which are mandatory.

Issue 2: Maintainability of appeal in interest matters
The assessee's counsel argued that any "adjustments" made by the assessing authority under section 143(1) are appealable, emphasizing that the statutory expression used is "adjustments" and not specifically "adjustments of total income" as contended by the revenue. The counsel cited a Tribunal decision and a Special Bench decision supporting the position that in cases where tax is deductible at source, the employee would not be liable for advance tax, thus justifying that levy of interest under sections 234B and 234C is not warranted.

Issue 3: Liability for advance tax and interest under sections 234B and 234C
The Tribunal considered the payments made by the assessee or the employer for tax and interest under section 201(1A), noting that there was no de facto loss to the revenue. The Tribunal found that the revenue's objection had become academic as the due amounts had been paid, and there was no revenue loss. Referring to precedent cases, the Tribunal concluded that the issue raised by the revenue was in favor of the assessee both on merit and appealability. Consequently, the Tribunal dismissed the appeal filed by the revenue.

In summary, the judgment addressed the issues of appeal against the intimation under section 143(1), the maintainability of appeal in interest matters, and the liability for advance tax and interest under sections 234B and 234C. The Tribunal ruled in favor of the assessee, emphasizing that adjustments under section 143(1) are appealable, and in cases where tax is deductible at source, the employee may not be liable for advance tax. The Tribunal concluded that the appeal by the revenue was to be dismissed as the due amounts had been paid, and there was no revenue loss.