2018 (12) TMI 1567 - HC - Income Tax

Maintainability of appeal - assessee have not questioned the charging of interest under Section 234-B - Explanation to Section 140A(1) applicability to the case on hand - Held that - If an assessee is called upon to pay additional amount than what has been quantified, which was also under challenge, elementary principle of natural justice would require that the assessee be given an effective opportunity. As pointed out earlier, the Assessing Officer has not given any specific finding as to why the contention of the assessee that Explanation to Section 140(A)(1) of the Act will have no application. This is also a reason, which has weighed in our mind to hold that the matter requires a fresh examination. As pointed out above, the decision in the case of Central Provinces Manganese Ore Co. Ltd. 1986 (5) TMI 3 - SUPREME COURT will aid the assessee s case and the Tribunal was not right in holding that the appeal was not maintainable, as the appeal was not against an order rejecting the request for waiver. In any event, appeal under Section 253(1)(a) of the Act is maintainable before the Tribunal, as the order impugned before the Tribunal is an order passed under Section 250 of the Act. Thus, for the above reasons, we are of the considered view that the matter should be remanded to the Commissioner of Income Tax (Appeals) to take a fresh decision on merits and in accordance with law. Accordingly, the appeal filed by the assessee is allowed.

Summary

Issues Involved:
1. Maintainability of the appeal filed by the assessee.
2. Correct computation of interest under Section 234-B of the Income Tax Act, 1961.
3. Applicability of Explanation to Section 140A(1) of the Act in the case.

Issue 1: Maintainability of the Appeal:
The appeal raised concerns about the Tribunal's rejection of the appeal filed by the assessee as not maintainable due to the failure to question the charging of interest under Section 234-B of the Act. The primary issue was whether the Tribunal's decision was justified in deeming the appeal not maintainable based on this ground. The Tribunal's reasoning was challenged as the assessee had objected to the computation resulting in enhancement rather than the charging of interest itself. The Tribunal's reliance on a specific case law was questioned, emphasizing that the appeal was against the computation, not the waiver or reduction of interest. The High Court found that the matter required a fresh examination and remanded it to the Commissioner of Income Tax (Appeals) for a new decision.

Issue 2: Computation of Interest under Section 234-B:
The dispute revolved around the correct computation of interest under Section 234-B of the Act. The Assessing Officer adjusted the payment against interest first and then towards tax, resulting in a variance in the interest amount calculated by the assessee and the Assessing Officer. The assessee contended that the Explanation to Section 140A(1) should not apply to their case, as they did not pay self-assessment tax immediately after intimation under Section 143(1) of the Act. The Commissioner of Income Tax (Appeals) upheld the application of the Explanation without providing reasons, leading to an enhancement in the interest payable by the assessee. The High Court noted the need for a fresh examination of the matter due to procedural lapses and remanded it for reconsideration.

Issue 3: Applicability of Explanation to Section 140A(1) of the Act:
The main argument put forth by the assessee was that the Explanation to Section 140A(1) should not have been applied to their case as it is a special provision meant for specific circumstances. The assessee contended that the CITA did not consider their objection adequately and failed to address the reference to Section 234-B(2)(ii) of the Act. The High Court agreed that the matter required further scrutiny and directed the Commissioner of Income Tax (Appeals) to reevaluate the case in light of the submissions made by the assessee.

In conclusion, the High Court allowed the appeal filed by the assessee, set aside the orders passed by the Tribunal and the Commissioner of Income Tax (Appeals), and remanded the matter to the Commissioner of Income Tax (Appeals) for fresh consideration in accordance with the law. The High Court emphasized the need for a thorough review of the issues raised by the assessee and directed a prompt resolution of the matter within a specified timeframe.