2016 (12) TMI 504 - HC - Income Tax

Interest under sections 234-A and 234-B - Held that - The petitioner was liable to file his return for the assessment year 1999-2000 by 31.07.1999. The petitioner infact filed the returns for all the years on 08.01.1999 which the respondents accepted and acted upon. It would be unfair now for the respondents to raise a contention that those returns are non-est. The question, therefore, of the petitioner being liable to pay interest under section 234-A does not arise. The interest under section 234-B of the Act is on account of the delay in payment of advance tax. The interest is now sought to be levied for the period 01.10.1998 to 07.01.1999. Here again the interest could be charged at the highest only upto 23.12.1998 the date on which the respondents received the petitioner s letter dated 21.12.1998 calling upon the respondents to recover the tax due from the account attached on 13.10.1998. Infact the advance tax was payable only in the year of the receipt of the amount and by 15.12.1998. The advance tax in that event would have been payable only by 15.12.1998. Accordingly the petitioner s liability to pay the interest under section 234-B would be only from 15.12.1998 to 23.12.1998. We are conscious of the fact that no appeal has been filed against the assessment order. However, the petitioner made a representation for waiver of interest in view of these facts which was partially accepted. Further orders on the representation are purportedly under section 119(2)(a) of the Act against which an appeal is not maintainable. The only question is whether it ought to have been accepted in full or not.We are also informed that in the petitioner s brother s case which is identical to the petitioner s case, a similar representation has been accepted in its entirety. In these the circumstances, the impugned order is set aside/modified by providing that the petitioner s liability to pay interest is restricted only under section 234-B and only for the period 15.12.1998 to 23.12.1998.

Summary

Issues:
Challenge to imposition of interest under sections 234-A and 234-B of the Income Tax Act, 1961.

Analysis:
The petitioner filed returns and paid tax before due dates, but faced an attachment of account by respondents under section 281-B of the Act to recover tax dues. A TDS certificate was issued for interest components on enhanced compensation. The Commissioner of Income Tax advised paying tax on interest on a yearly basis, and the petitioner requested recovery of liability from the attached account. Returns for assessment years 1991-92 to 1999-2000 were filed based on advice from the Commissioner. Interest under section 234(C) was waived entirely, but questions arose regarding liability under sections 234-A and 234-B. The respondents made the petitioner liable for interest from 01.12.1998 till 07.01.1999, which was contested due to the timing of events and advice received. The interest under section 234-B was sought for the period 01.10.1998 to 07.01.1999, but the liability was limited to 15.12.1998 to 23.12.1998 based on the petitioner's actions and timelines.

The petitioner's representation for waiver of interest was partially accepted, and no appeal was filed against the assessment order. The court considered the petitioner's case in comparison to a similar case involving the petitioner's brother where the representation was accepted in full. The court decided to exercise its writ jurisdiction under Article 226 of the Constitution of India to set aside/modify the impugned order, restricting the petitioner's liability to pay interest only under section 234-B for the period 15.12.1998 to 23.12.1998. The petition was disposed of accordingly.