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Issues Involved:
1. Levy of interest under section 234B. 2. Applicability of section 154 for rectification of mistakes. Detailed Analysis: Issue 1: Levy of Interest under Section 234B Facts of the Case: - The original assessment for the assessment year 1997-98 was completed under section 143(1)(a) on 16-12-1998. - A reassessment notice was issued under section 148, and reassessment was completed on 22-3-2002 under section 143(3) read with section 147. - The Assessing Officer added Rs. 1,43,847 to the returned income of Rs. 69,536, resulting in a total income of Rs. 2,13,373. - Interest under sections 234A and 234B was levied. Assessee's Contention: - The assessee argued that the total tax liability as per the return was below Rs. 5,000, and interest under section 234B was not charged while processing the return under section 143(1)(a). - The income was enhanced due to an addition on account of the difference in the cost of construction, which the assessee could not have foreseen. - The assessee cited the Tribunal's decision in Sri Renukeswara Rice Mills v. ITO and Vikshara Trading & Investment (P.) Ltd v. Dy. CIT to support the claim that interest under section 234B was not chargeable as there was no obligation to pay advance tax under section 208. Department's Contention: - The Departmental Representative argued that the Finance Act (No.1), 1996, applicable for the period 1-4-1988 to 30-9-1996, required the assessee to pay advance tax if the tax liability exceeded Rs. 1,500. - The Finance Act (No.2), 1996, which raised the threshold to Rs. 5,000, came into effect from 1-10-1996 and was not applicable to the assessee's case. Tribunal's Analysis: - Section 207 mandates that tax shall be payable in advance during any financial year in accordance with sections 208 to 219. - Section 208 was amended to raise the threshold limit from Rs. 1,500 to Rs. 5,000 effective from 1-10-1996. - The assessee was required to send a statement of advance tax to the ITO as per section 209 before the first instalment due date (15-9-1996), making the Finance Act (No.1), 1996 applicable. - Section 234B(1) mandates interest for failure to pay advance tax or for paying less than 90% of the assessed tax. - The Tribunal emphasized that section 234B is mandatory and does not allow for discretionary powers to waive interest based on bona fide explanations. Conclusion: - The assessee's total tax liability exceeded Rs. 1,500, making the assessee liable for advance tax under the Finance Act (No.1), 1996. - The Tribunal held that the assessee's plea of not foreseeing the addition and hence not paying advance tax was not acceptable. - The appeal by the assessee on the ground of levy of interest under section 234B was dismissed. Issue 2: Applicability of Section 154 for Rectification of Mistakes Facts of the Case: - The assessee filed a petition under section 154 for the deletion of interest levied under section 234B, which was dismissed by the Assessing Officer. - The CIT(A) confirmed the order of the Assessing Officer. Assessee's Contention: - The assessee argued that there was no liability to pay advance tax as per the return of income, and thus, interest under section 234B should not have been levied. Department's Contention: - The Departmental Representative contended that rectification under section 154 was not possible as the issue was debatable. Tribunal's Analysis: - Section 154 allows rectification of any mistake apparent from the record. - The Tribunal noted that the required materials to support the claim that the assessee was not liable for interest under section 234B were not available on record. - The Tribunal referenced the Supreme Court's decision in T.S. Balaram, ITO v. Volkart Bros. which stated that a mistake apparent from the record must be obvious and not debatable. - The Tribunal concluded that the issue of liability under section 234B was debatable and not a clear mistake apparent from the record. Conclusion: - The Tribunal held that the Assessing Officer did not commit any mistake in rejecting the petition under section 154. - The appeal by the assessee on the ground of rectification under section 154 was dismissed. Final Judgment: The appeal filed by the assessee was dismissed, upholding the levy of interest under section 234B and rejecting the rectification petition under section 154.
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