2024 (9) TMI 1099 - AT - Income Tax

Rectification u/s 154 - Maintainability of the levy in the absence of the direction by the AO in the assessment order for levy of interest u/s. 234A - HELD THAT - The said legal ground could be raised only in appeal against the order charging the said interest without a direction to that effect in the assessment order. The rectification order only seeks to compute the same correctly, i.e., in accordance with the relevant provision of law inasmuch as the assessment made, though u/s. 147, is the first assessment and the return in response to notice u/s. 148(1), the first return. The said order having not been appealed against, had attained finality. The raising of this issue before us is not maintainable. Reference in this context be made to, inter alia, Bhopal Sugar Industries Ltd 1960 (9) TMI 11 - SUPREME COURT , Hindustan Coco Cola Beverages 2007 (8) TMI 12 - SUPREME COURT Continuing further, it was nevertheless a common contention before us that the said ground is not maintainable in view of the law as clarified by the Apex Court per it s decisions in Mansarovar Commercial Pvt. Ltd. 2023 (4) TMI 419 - SUPREME COURT and Bhagat Construction Co. Pvt. Ltd. 2015 (8) TMI 621 - SUPREME COURT following it s constitutional Bench decision in CIT v. Anjum M.H.Ghaswala 2001 (10) TMI 4 - SUPREME COURT as also it s subsequent decision in Karanvir Singh Gossal 2012 (9) TMI 334 - SUPREME COURT . Per the same, adverted to during hearing, it stands abundantly clarified that the matter admits of no two views; the charging of interest u/s. 234A, as indeed u/ss. 234B and 234C, mandatory and compensatory in nature, is automatic. Decisions, holding to the contrary, viz. Tej Kumari 2000 (9) TMI 52 - PATNA HIGH COURT do not represent good law. That being the case, the AO has no discretion in the matter. His failure, therefore, in not issuing the direction to charge interest in the assessment order, is to no consequence, and clearly a mistake, rectifiable u/s. 154. Finally, we consider the aspect of computation of interest, on which, again, no issue was raised by the assessee. The assessment being for the first time, even as observed in South Indian Bank Ltd. 2009 (12) TMI 542 - KERALA HIGH COURT albeit in the context of s. 234B, which is in para materia, as also by the Tribunal in Mariamma Joseph 2024 (6) TMI 802 - ITAT COCHIN - The action of the AO is in clear conformity of the provision, admitting, again, no two views and, thus, liable to be rectified u/s. 154.

Summary

Issues:
1. Validity of rectification order u/s. 154 for assessment year 2011-2012.
2. Maintainability of interest u/s. 234A without direction in the assessment order.

Analysis:

Issue 1: Validity of Rectification Order u/s. 154
The appeal arose from the Commissioner of Income-tax (Appeals) dismissing the assessee's appeal against the rectification of its assessment u/s. 147 read with section 143(3) of the Income-tax Act, 1961. The assessee contended that the order u/s. 154 was time-barred. The ld. CIT(A) held that the order was within the permissible time limit of four years from the original order proposed to be amended. The Tribunal concurred with the CIT(A) and rejected the time-barred argument, emphasizing the statutory time limit for passing a rectification order u/s. 154.

Issue 2: Maintainability of Interest u/s. 234A
The additional ground raised by the assessee questioned the levy of interest u/s. 234A without a specific direction in the assessment order. The Tribunal noted that this legal ground should have been raised in appeal against the original assessment order dated 30.12.2016. Since the assessment order was not appealed against, the issue of interest levy had attained finality. The Tribunal cited legal precedents to support its decision, emphasizing that the AO's failure to direct the interest levy in the assessment order was rectifiable under section 154. The Tribunal also highlighted that the charging of interest u/s. 234A is mandatory and compensatory, and the AO has no discretion in this matter. The Tribunal further clarified that the computation of interest was in accordance with the law and liable to be rectified under section 154.

In conclusion, the Tribunal dismissed the appeal filed by the assessee and deemed the stay petition as infructuous. The decision was pronounced on May 31, 2024, under Rule 34 of The Income Tax (Appellate Tribunal) Rules, 1963.