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2013 (10) TMI 1025 - HC - Income TaxChargeability of interest for late filing of return under section 234A - tax was paid before the due date - enhancement of tax during assessment proceedings Held that - Reliance has been placed on the judgment in the case of Dr. Prannoy Roy 2001 (12) TMI 68 - DELHI High Court - There is a minor difference between the case of Dr. Prannoy Roy and the case of the present assessee on hand - In the case of Dr. Prannoy Roy, the assessee had paid up the entire tax before the due date. In the present case, the assessee deposited a sum of Rs. 10 lakhs under section 140A of the Act. In addition thereto, the assessee had also suffered tax deduction at source to the tune of Rs. 25,533. Eventually, the Assessing Officer assessed the tax liability of the assessee at a total of Rs. 15,08,474. Thus, the assessee had short-paid tax to the tune of Rs. 4,82,941. However, ratio of the decision of the Delhi High Court in the case of Dr. Prannoy Roy, such distinction would not be material - What was held by the Delhi High Court was that charging of interest from an assessee for late filing of return though the tax was already paid, would render the provision penal in nature, which the statute did not provide In the present case, only modification, needed to adopt is that the assessee must be held to be liable to pay interest under section 234A of the Act on the difference of amount between the tax assessed and the amount which he had paid before the due date to which even the assessee has not raised any serious objection - Payment of interest on the entire amount of Rs. 14,82,941 is set aside Revenue entitled to collect such interest under section 234A of the Act on a sum of Rs. 4,82,941 for the entire period, i.e., September 1, 1996, (after due date of filing of return) till March 27, 1998, (date on which the return was filed) Decided in favor of Assessee.
Issues Involved:
1. Liability of the petitioner to pay interest under section 234A of the Income-tax Act, 1961. 2. Liability of the petitioner to pay interest under section 234C of the Income-tax Act, 1961. Detailed Analysis: Issue 1: Liability under Section 234A Factual Background: The petitioner filed the return of income for the assessment year 1996-97 on March 27, 1998, well past the due date of August 31, 1996. The petitioner had paid Rs. 10 lakhs as tax under section 140A of the Act before the due date. The Assessing Officer assessed the tax at Rs. 15,08,474, leaving a remaining liability of Rs. 14,82,941 after accounting for tax deducted at source. The Revenue demanded interest under section 234A for the entire amount of Rs. 14,82,941, while the petitioner contended that interest should only be charged on the remaining amount of Rs. 4,82,941. Petitioner's Argument: The petitioner argued that since a substantial amount of Rs. 10 lakhs was paid before the due date, interest under section 234A should only be charged on the remaining amount of Rs. 4,82,941. The petitioner relied heavily on the Delhi High Court's decision in Dr. Prannoy Roy v. CIT [2002] 254 ITR 755 (Delhi), which was upheld by the Supreme Court in CIT v. Pranoy Roy [2009] 309 ITR 231 (SC). Revenue's Argument: The Revenue contended that the statutory provisions in section 234A are clear and mandatory, requiring interest to be charged on the entire assessed tax amount if the return is filed late. They cited the Gujarat High Court's decision in Roshanlal S. Jain v. Deputy CIT (Assessment) [2009] 309 ITR 174 (Guj), which upheld the interest liability under section 234A. Court's Analysis: The court noted that the issue is no longer res integra as a similar issue was addressed by the Delhi High Court in Dr. Prannoy Roy's case, which was upheld by the Supreme Court. The court observed that charging interest on the entire amount, despite substantial tax payment before the due date, would render section 234A penal in nature, which was not the legislative intent. The court distinguished the present case from Roshanlal Jain by noting that the Supreme Court's decision in Pranoy Roy was not considered in Roshanlal Jain due to the timing of the decisions. Judgment: The court concluded that the Revenue can only collect interest under section 234A on the unpaid amount of Rs. 4,82,941 and not on the entire assessed amount. The petition was allowed, setting aside the interest on the entire amount and permitting interest only on the remaining Rs. 4,82,941 from September 1, 1996, to March 27, 1998. Issue 2: Liability under Section 234C Factual Background: The petitioner also questioned the liability to pay interest under section 234C amounting to Rs. 82,303. However, during the pendency of the petition, the Commissioner granted substantial relief, reducing the interest to Rs. 22,244. Petitioner's Argument: The petitioner chose not to press for relief regarding the reduced amount of Rs. 22,244 under section 234C, focusing solely on the issue under section 234A. Court's Analysis: Given the petitioner's decision not to pursue the issue under section 234C, the court did not delve into this matter further. Judgment: The court focused solely on the issue under section 234A as per the petitioner's request and did not make any further observations regarding section 234C. Conclusion: The petition was allowed with the court setting aside the interest charged on the entire amount of Rs. 14,82,941 under section 234A. The Revenue was permitted to collect interest only on the unpaid amount of Rs. 4,82,941 for the specified period. The issue under section 234C was not pressed by the petitioner and thus was not addressed in detail. The rule was made absolute accordingly.
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