2014 (12) TMI 637 - HC - Income Tax

Interest charged u/s 234B(4) though no interest levied at the time of framing of regular assessment u/s 143(3)- Whether the Tribunal was justified in holding that interest was rightly charged u/s 234B(4) Held that - The Tribunal was rightly of the view that the income of the assessee in the original assessment was determined at NIL there was no occasion for charging the interest under the provisions, otherwise as far as levy of interest is concerned, it is a mandatory and while giving the consequential effect, AO has rightly charged the interest relying upon Commissioner of Income Tax Versus Anjum MH Ghaswala And Others 2001 (10) TMI 4 - SUPREME Court thus, the order of the Tribunal is upheld Decided against assessee.

Summary

Issues:
1. Interpretation of Section 234B(4) of the Income-tax Act, 1961 regarding levy of interest.
2. Validity of interest charged under Section 234B(4) despite no interest levied under Section 234B(1) at the time of original assessment.

Analysis:

Issue 1: Interpretation of Section 234B(4)
The judgment pertains to an appeal against an order passed by the Income Tax Appellate Tribunal regarding the levy of interest under Section 234B(4) of the Income-tax Act, 1961. The assessee, engaged in the business of manufacturing and trading in industrial gases, filed a return of income for the assessment year, claiming set off of brought forward business loss and unabsorbed depreciation of earlier years. Initially, no interest under Section 234B was charged by the Assessing Officer. However, a subsequent modification by the Assessing Officer led to the levy of interest under Section 234B. The assessee's application for rectification against this levy was rejected, leading to appeals before the CIT(Appeals) and the Tribunal.

Issue 2: Validity of Interest Charged
The appellant contended that the authorities erred in confirming the rectification made by the Assessing Officer and failed to appreciate the provisions of Section 234B(4) of the Act. The appellant argued that Section 234B(4) allows for an increase or reduction of interest already charged under other subsections. The appellant relied on the decision of the Calcutta High Court in a similar case. On the other hand, the revenue supported the impugned order, stating that the Tribunal correctly observed that since the assessee's income turned positive in a subsequent order, interest was rightfully charged. The revenue cited relevant case law to support their stance.

The High Court, after considering the arguments and perusing the relevant provisions of the Act, upheld the Tribunal's decision. It emphasized that Section 234B(4) empowers the Assessing Officer to adjust interest based on subsequent orders. The Court agreed with the Tribunal's findings and dismissed the appeal, confirming the impugned order. The judgment highlighted the mandatory nature of interest levy and the correctness of the Assessing Officer's actions in charging interest in the given circumstances.

In conclusion, the High Court's judgment affirms the Tribunal's decision regarding the application and interpretation of Section 234B(4) of the Income-tax Act, 1961, underscoring the Assessing Officer's authority to adjust interest based on subsequent orders and circumstances.