2019 (11) TMI 361 - AT - Income Tax

Rectification of mistake - Charging of interest u/s 234B and 234C - HELD THAT - Whether interest under sections 234B and 234C of the Act is to be charged, or not, has been considered by the Tribunal in the case of the Radha Mohan Purshottam Das Agarwal Group, consisting of nine appeals, on facts exactly similar, mutatis mutandis, to those present in the case of the assessee presently under appeal and the Tribunal has decided the issue in favour of the assessees Following this view taken we set aside the order of the ld. CIT(A), and direct the Assessing Officer to compute the interest u/s 234B in accordance with the law, if at all it is leviable, only till the date when the assessee made an application to the Department for the adjustment of the cash seized towards the income tax liability. To that extent, we find there is a mistake apparent on record in the order of the Assessing Officer while computing the interest u/s 234B of the Act. Charging of interest under section 234C - search had taken place on 31/03/2011 and the surrender of the income has been made on that very day, therefore, it is not a case of deferment of the income, as the liability to pay the advance tax in the case of the assessee arose only at the moment the income was surrendered by the assessee, i.e., as on 31st March, and not prior to that. Since the liability to pay the advance tax has arisen on 31st March therefore, it cannot be regarded to be a case of deferment of income tax. Therefore, the interest u/s 234C cannot be levied and there has been a mistake apparent on record in the order of the Assessing Officer while levying the interest u/s 234C of the Act. Appeal of the assessee is partly allowed.

Issues Involved:
1. Dismissal of appeal ex parte by CIT(A).
2. Non-deposit of "admitted tax" as per Section 249(4).
3. Charging of interest under Section 234B and 234C.

Detailed Analysis:

1. Dismissal of Appeal Ex Parte by CIT(A):
The appellant contended that the CIT(A) erred on facts and in law by dismissing the appeal ex parte without providing adequate opportunity for a hearing. The appellant was prevented by sufficient and reasonable cause from attending the hearing in response to the notices issued. The Tribunal initially set aside the CIT(A)'s order and directed a fresh adjudication after providing an opportunity for hearing. However, the appellant subsequently did not press these grounds, and they were rejected.

2. Non-Deposit of "Admitted Tax" as per Section 249(4):
The appellant argued that the CIT(A) wrongly dismissed the appeal in limine, holding that the "admitted tax" had not been deposited, making the appeal non-maintainable. The appellant claimed that the entire "admitted tax" had been deposited, and the CIT(A) misinterpreted the provisions. The appellant highlighted that the case was related to an order under Section 154 and not Section 143(3), thus Section 249(4) was not applicable. The appellant also pointed out that the Assessing Officer had dropped penalty proceedings under Sections 140A/221, indicating that the "admitted tax" was deemed deposited. These grounds were also not pressed by the appellant and were rejected.

3. Charging of Interest under Section 234B and 234C:
The primary issue left for adjudication was the charging of interest under Sections 234B and 234C. The facts involved a search and seizure operation, resulting in the seizure of cash and postdated cheques towards the tax liability. The appellant contended that the seized amount should have been adjusted against the tax liability, and interest under Sections 234B and 234C should not have been charged.

The Tribunal noted that a similar issue had been addressed in the case of the 'Radha Mohan Purshottam Das Agarwal' Group, where it was held that interest under Section 234C could not be levied if the income was surrendered on the last day of the financial year, as the liability to pay advance tax arose only at that moment. For Section 234B, the Tribunal held that the interest should be computed only till the date the appellant requested the adjustment of the seized cash towards the tax liability.

The Tribunal found that the facts of the present case were identical to those in the 'Radha Mohan Purshottam Das Agarwal' Group and followed the same reasoning. The Tribunal directed the Assessing Officer to recompute the interest under Section 234B only till the date of the appellant's request for adjustment of the seized cash and held that interest under Section 234C could not be levied.

Conclusion:
The appeal was partly allowed. The Tribunal set aside the order of the CIT(A) regarding the charging of interest under Sections 234B and 234C, directing a recomputation in line with the established precedent. The other grounds were rejected as not pressed.

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