2014 (4) TMI 973 - HC - Income Tax

Liability to pay interest u/s 234A, 234B and 234C of the Act - Assessee being a notified person under the Special Court (Trial of Offences relating to Transactions in Securities) Act 1992 - Held that - Following The Commissioner of Income Tax Versus Divine Holdings Pvt. Ltd. 2012 (4) TMI 100 - BOMBAY HIGH COURT - The Tribunal has erred in taking a view that the assessee being a notified person under the Special Court (Trial of Offences relating to Transaction in Securities) Act, 1992 is not liable to pay interest u/s 234A, 234B and 234C of the Act - the interest is chargeable and merely because the assets and properties are attached, does not mean that the liability to pay interest will not arise - merely because certain aspects were not considered or that relevant provisions were not brought to the notice of the Court, is not enough to ignore and brush aside a binding precedent - The remedy of correcting an erroneous judgment and order is to file an appeal challenging it and, then, convince the Appeal Court in exercise of such appellate power to quash or reverse such judgment thus, the order of the Tribunal is set aside Decided in favour of Revenue.

Summary

Issues:
Challenge to order passed by Income Tax Appellate Tribunal regarding liability to pay interest under Income Tax Act, 1961 for a notified person under Special Court Act, 1992.

Analysis:
1. The appeals challenge the order passed by the Income Tax Appellate Tribunal regarding the liability of the assessee, a notified person under the Special Court Act, 1992, to pay interest under sections 234A, 234B, and 234C of the Income Tax Act, 1961 for the assessment year 2004-05. The key issues raised include whether the Tribunal was correct in holding that the assessee is not liable to pay interest under these sections, despite the mandatory nature of the interest charges. The arguments presented by both parties revolve around the interpretation of legal provisions and previous judgments.

2. The respondent's counsel argues that the Division Bench judgment in a related case is not applicable to the present appeal, emphasizing that the assets and properties of the assessee were statutorily attached, preventing the discharge of tax liability. However, the Division Bench had already addressed similar questions of law in the previous judgment, concluding that the assessee is indeed liable to pay interest under the Income Tax Act, irrespective of property attachment by the Special Court.

3. The Division Bench's detailed analysis led to the conclusion that the Tribunal erred in its interpretation by exempting the notified person from interest payment. The judgment emphasized that the binding nature of the previous decision cannot be disregarded based on arguments of overlooking certain aspects or judgments, as long as the decision holds the field. The principle of judicial discipline requires adherence to binding precedents, even if considered erroneous by the parties involved.

4. The judgment further cites legal principles regarding the term "per incuriam," highlighting that a decision cannot be considered as such merely because certain aspects were not considered or relevant provisions were not brought to the court's notice. The judgment in the case of "Divine Holdings Pvt.Ltd." is deemed binding, and any challenge to its correctness should be pursued through the proper appellate channels. Consequently, the High Court held that the controversy in the appeals is settled by the previous judgment, leading to the allowance of the appeals and setting aside the Tribunal's order.