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2017 (11) TMI 742 - HC - Income TaxDemand of interest u/s 234-A and 234-B - failure to pay advance tax and file the return in time - Held that - In the present case, the assessee admittedly failed to furnish the return as also not deposited the advance tax as required under the law, therefore, the appellant/assessee is liable to pay interest under Sections 234A and section 234B. Both the appellate authorities after considering the judgments which are relied upon by the learned counsel for the assessee correctly arrived at the conclusion to hold that the assessee/appellant is liable to pay interest under section 234A and under section 234B of the Act. The Tribunal has held that no infirmity is noticed in levy of interest in the present case. - Decided against assessee.
Issues Involved:
1. Justification of demand of interest under Sections 234A and 234B of the Income Tax Act. 2. Deletion of interest under Section 234A due to the seizure and appropriation of ?4,90,899. 3. Deletion of interest under Section 234B due to the seizure and appropriation of ?4,90,899. 4. Correct interpretation and application of the term 'existing liability under the Act'. Issue-wise Detailed Analysis: 1. Justification of demand of interest under Sections 234A and 234B of the Income Tax Act: The central issue revolves around the confirmation of interest demand under Sections 234A and 234B. Section 234A pertains to interest for defaults in furnishing the return of income, while Section 234B deals with interest for defaults in payment of advance tax. The Tribunal, CIT(A), and ITAT all concluded that the appellant failed to furnish the return and did not deposit advance tax as required by law. The Tribunal noted that the levy of interest is mandatory and not subject to discretion, as it becomes payable the moment legitimate tax is not paid by the specified date. The Tribunal upheld the CIT(A)'s decision, which relied on various High Court and Supreme Court judgments affirming that the levy of interest under these sections is mandatory. 2. Deletion of interest under Section 234A due to the seizure and appropriation of ?4,90,899: The appellant argued that interest under Section 234A should be deleted because the amount of ?4,90,899 was seized and appropriated by the department. However, the CIT(A) and ITAT found that the appellant had purchased five bank drafts amounting to ?4,90,899 for lifting coal, and the source of this investment was unexplained. The CIT(A) noted that the drafts were purchased in the appellant's name, and the appellant failed to provide a plausible explanation for the source of this cash. Consequently, the amount was treated as undisclosed income, and the interest under Section 234A was deemed justified. 3. Deletion of interest under Section 234B due to the seizure and appropriation of ?4,90,899: Similar to the argument under Section 234A, the appellant contended that interest under Section 234B should be deleted because of the seizure and appropriation of ?4,90,899. The CIT(A) and ITAT rejected this argument, stating that the appellant failed to furnish the return and did not deposit the advance tax as mandated by law. The interest under Section 234B, which pertains to the shortfall in payment of advance tax, was thus considered justified. 4. Correct interpretation and application of the term 'existing liability under the Act': The appellant challenged the interpretation and application of the term 'existing liability under the Act'. The CIT(A) and ITAT found that the appellant had failed to provide a clear explanation for the source of the investment in the bank drafts. The assessing authority concluded that the investment was made by the appellant himself from undisclosed sources, leading to the addition under Section 69 of the Act. The CIT(A) further noted that the appellant did not make earnest efforts to obtain information from the bank regarding the drafts. The Tribunal upheld the CIT(A)'s decision, affirming that the appellant was liable to pay interest under Sections 234A and 234B due to the failure to meet existing liabilities under the Act. Conclusion: The High Court dismissed the appeal, finding no illegality in the orders of the CIT(A) and ITAT. Both appellate authorities correctly concluded that the appellant was liable to pay interest under Sections 234A and 234B, supported by categorical findings of fact and relevant legal precedents.
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