2017 (3) TMI 798 - AT - Income Tax

Liability towards interest u/s 234-A & 234-B - assessment u/s 153A - whether interest liability on tax under s.234A & 234B can be fastened on the assessee on the income already assessed in the course of regular assessment in the garb of fresh proceedings under s.153A of the Act when the income assessed earlier remains unaltered in section 153A proceedings also? - Held that - A bare reading of the text of both the sections, similarly worded unravel that the liability towards interest under s.234-A & 234-B would arise under s.153A only on the amount by which the tax on total income determined under s.153A exceeds tax amount on total income determined in any earlier assessment. Therefore, in our view, the fresh liability towards interest under s.234A & 234-B shall arise in pursuance of order under s.153A of the Act only upon increase in the total income determined qua the earlier assessment. The earlier regular assessment in the instant case survives and does not stands abated. The interest liability already determined thereon under s.234-A & 234-B survives and is an enforceable recovery as per law. Merely because fresh assessment has been carried out pursuant to search, the interest liability on the assessed income earlier cannot resurface on the same amount already assessed earlier in view of the scheme of the Act. Resultantly, in our view, liability towards interest under s.234-B & 234-C could not have been raised without disturbing the assessed income assessed earlier. As a result, we are inclined to agree with the case of the assessee seeking relief towards interest liability under s.234A & 234-B of the Act. - Decided in favour of assessee

Issues:
1. Failure of the Commissioner of Income Tax(Appeals) to address various grounds of appeal raised by the appellant.
2. Legality of the notice of demand served on the appellant.
3. Working of the notice of demand for the year under consideration.
4. Calculation of interest under section 234A of the Act.
5. Calculation of interest under section 234A & 234B of the Act and the chargeable period.
6. Determination of the assessment order amount.
7. Calculation of interest under section 234A and 234B without deducting tax already paid.
8. Calculation of interest and the period for which it is payable under section 234A and 234B.
9. Liability towards interest under section 234A & 234B in proceedings under section 153A when no fresh addition has been made.

Analysis:
1. The appellant raised several grounds of appeal against the order of the Commissioner of Income Tax(Appeals). The appellant argued that the Commissioner failed to address multiple grounds and only focused on one issue, which the appellant contended was a violation of natural justice principles.

2. The appellant challenged the legality of the notice of demand served, arguing that the interest liability was raised despite no fresh addition in the order passed under section 153A. The appellant contended that the notice of demand was erroneous in law and fact.

3. The working of the notice of demand for the relevant year was questioned by the appellant, alleging errors in upholding the calculation of interest under section 234A of the Act by the Assistant Commissioner of Income-tax, Central Circle.

4. The appellant contended that the Commissioner failed to consider the grounds related to the calculation of interest under section 234A of the Act while deciding the appeal, leading to a violation of natural justice principles.

5. Issues related to the calculation of interest under sections 234A and 234B of the Act, including the chargeable period, were raised by the appellant, emphasizing the Commissioner's failure to address these crucial aspects in the appeal.

6. The determination of the assessment order amount was disputed by the appellant, highlighting discrepancies in the assessment process and the failure to consider previous income determinations under section 153A.

7. The appellant argued that interest calculations under sections 234A and 234B did not account for the tax already paid, leading to an erroneous calculation of interest liability by the tax authorities.

8. The Commissioner was criticized for not considering the correct calculation of interest and the period for which interest was payable under sections 234A and 234B of the Act, leading to inaccuracies in the assessment process.

9. The appellant challenged the imposition of interest liability under sections 234A and 234B in proceedings under section 153A when no fresh additions were made, emphasizing that interest liabilities should not be extended without disturbing the assessed income from previous assessments. The Tribunal agreed with the appellant's arguments and allowed the appeal, concluding that interest liabilities should only arise on increased total income determined under section 153A compared to earlier assessments.

← Previous Next →