A roguish leeway of undue enrichment - Levy of Interest u/s 234B when refund is pending / delayed

[Harish Chander Bhatia]

Section 234B

Yes, it is about charging of interest for default in payment of advance tax, as the statues says, but how the ITD is using this section is in a bizarre way.

The Provisions of section 143(3) are applied in such a way that despite refund of tax after disallowance(s) if any, no refund is granted in the assessment order.

And to set off that refund due to the assessee the entire amount of admissible refund is adjusted under the head of section 234B, whereas , in those cases 234B whether applicable or not.

If government wants the tax payer to come with clean hands, CBDT should also set a similar example.

Is it justice and compliance of the law. NO officer is willing to grant you refund in 143(3) assessment order, for the fear of decline in revenue and recovery amount under its charge. Although the statues permits to grant refund but the statutory provisions are flouted in concerted manner by the entire department

The relevant part of section 143(3) says:-

⁴[(3) On the day specified in the notice,-

(i) issued under clause (i) of sub-section (2), or as soon afterwards as may be, after hearing such evidence and after taking into account such particulars as the assessee may produce, the Assessing Officer shall, by an order in writing, allow or reject the claim or claims specified in such notice and make an assessment determining the total income or loss accordingly, and determine the sum payable by the assessee on the basis of such assessment;

(ii) issued under clause (ii) of sub-section (2), or as soon afterwards as may be, after hearing such evidence as the assessee may produce and such other evidence as the Assessing Officer may require on specified points, and after taking into account all relevant material which he has gathered, the Assessing Officer shall, by an order in writing, make an assessment of the total income or loss of the assessee, and determine the sum payable by him or refund of any amount due to him on the basis of such assessment:]

NOW the remedy is you take it as mistake (albeit deliberate mistake) apparent on record and get it rectified and amount refunded, of course , it is matter of prudence, visiting the doctor twice, fee required to be paid again in commensurate with the quantum.

It seems, the policy makers did not anticipate that the executive will implement the policy in such a via-mode that delivery of justice will be compromised. Through this article, the author wishes to send a message to policy makers that a regular feed-back from assessees will give them better policy-making inputs.

Mera Bharat Mahan

 

Discussions to this article

[swaminathan venkataraman]

Cross Refer >

INTEREST FOR DELAY IN PAYMENT OF TDS/TCS AND ...

The captioned departmental circular details the interest and penalty consequences , in the event of failure to deduct and/or delay in payment of TDS in terms of inter alia Sec 194 IA.

The views/clarifications sought to be covered therein are, as independently examined and analyzed, noted to be drastically deficient and obnoxiously incomplete and misconceived in several respects. Such deficiencies , etc., are of a material nature. Hence, the Revenue will be well advised to have those thoroughly reviewed , - sooner the better , in order to avoid / obviate the otherwise possible controversies and legal disputes most likely to arise, if not that has already happened .

For the said purpose, the specific areas to be consciously looked through and remedied, it must be noted, are adequately covered in a plethora of useful feedback inputs as are readily available in public domain.

Two such areas of vital importance, potent with scope for varying points of debate, are, in brief, these:

1. The provisions of Sec 194IA , as presently framed and structured, cannot be rightly considered to apply, hence cannot be invoked, to cases in which the property is a 'flat' or 'apartment' , being covered/governed by the special law of the States.
2. Apart from / having no regard to the point open to be urged as indicated in 1. above, levy of any interest or penalty for reason/on the ground of failure to deduct or pay TDS, or within time, as envisaged by the law, should the related provisions be clinically studied and incisively under stood, it is strongly felt, does not arise.

In support of the view so canvassed, the provisions of section 194 IA , particularly of its sub-section (3), and sections 201, 203 and 203A are required to be read and understood harmoniously.

The aspects of the matter narrated above, in any case, do call for an in-depth study, independently by tax experts in field practice; so that, if so convinced, will require to be taken up with Revenue suitably for necessary amends and clarifications.