2020 (11) TMI 340 - AT - Income Tax

Interest u/s 234A 234B - Charging of interest u/s 220(2) - HELD THAT - As relying in SHRI ASHWIN S. MEHTA 2019 (7) TMI 932 - ITAT MUMBAI issue of charging of interest u/s 234A, 234B, 234C 220(2) has already been delved into by the co-ordinate bench - revenue authorities have been directed to follow the order passed in the case of Late Harshad S. Mehta vide para nos. 29 to 30.10 and charged interest accordingly. As held that interest u/s 220(2) was to be charged from the date of default of fresh demand notice issued after the fresh assessment made in consequent of the orders of the appellate authorities. Similarly, the issue of charging of interest u/s 234A, 234B 234C has also been dealt with by the coordinate bench, in other paras. Since a view has already been taken by the coordinate bench in the matter, refraining from delving into the issues any further, we direct Ld. AO to follow the cited order of the Tribunal. Also in LATE SHRI HARSHAD S. MEHTA (LEGAL HEIR JYOTI H. MEHTA) 2019 (2) TMI 1198 - ITAT MUMBAI when there is a case to which the computation provisions cannot apply at all, it is evident that such a case was not intended to fall within the charging section. In this case before us, there is a failure of computation of interest provision due to non-filing of valid return by the assessee, interest u/s 234C cannot be levied and we accordingly direct the AO not to charge interest u/s 234C. Levy of interest u/s 220(2) - No illegality or infirmity in the order of the CIT(A) directing the AO to charge interest u/s 220(2) from the date of default of the fresh demand notice issued after the fresh assessment made in consequence of the order of the appellate authorities

Issues:
1. Rectification of assessment order under Sec.154 for charging of interest u/s 234A & 234B.
2. Validity of rectification order under Sec.154 due to lapse of 4 years.
3. Computation of interest u/s 234A & 234B till the date of original assessment.
4. Charging of interest u/s 220(2) from the date of original assessment order.
5. Charging of interest u/s 234C on the basis of assessed income.
6. Appeal by revenue challenging the decision of Ld. CIT(A).

Issue 1: Rectification of assessment order under Sec.154 for charging of interest u/s 234A & 234B

The appeal by the revenue contested the order of Ld. Commissioner of Income-Tax (Appeals) for Assessment Year 1993-94 regarding the charging of interest u/s 234A & 234B. The Ld. AO rejected the rectification application by the assessee, stating no apparent mistake and the lapse of more than 4 years since the original assessment order. The Ld. CIT(A) held the rectification order to be bad in law due to the time lapse, rendering the grounds on merits infructuous.

Issue 2: Validity of rectification order under Sec.154 due to lapse of 4 years

Ld. CIT(A) deemed the rectification order invalid under Sec.154(7) as more than 4 years had passed since the original assessment order. Consequently, the grounds raised on merits were considered infructuous. The Ld. AO had charged interest u/s 234A & 234B only till the date of the original assessment, leading to dismissal of the grounds raised by the assessee.

Issue 3: Computation of interest u/s 234A & 234B till the date of original assessment

The Ld. CIT(A) observed a contradiction in the computation of interest u/s 234A & 234B by the Ld. AO, who had calculated it only up to the date of the original assessment. Relying on appellate orders, the issue was deemed debatable and not subject to rectification under Sec.154. Consequently, the grounds raised by the assessee were dismissed.

Issue 4: Charging of interest u/s 220(2) from the date of original assessment order

The Ld. AO's view of charging interest u/s 220(2) from the date of the original assessment order was held unjustified by the Ld. CIT(A). Although the ground raised by the assessee was allowed on merits, it was considered infructuous due to the invalidity of the rectification order under Sec.154.

Issue 5: Charging of interest u/s 234C on the basis of assessed income

The Ld. CIT(A) upheld the action of charging interest u/s 234C based on the assessed income. However, the grounds raised were deemed infructuous due to the invalidity of the rectification order under Sec.154.

Issue 6: Appeal by revenue challenging the decision of Ld. CIT(A)

The revenue appealed the decision of Ld. CIT(A) before the Appellate Tribunal. The Tribunal, considering previous orders in similar cases, directed the Ld. AO to follow the cited orders in computing interest u/s 234A, 234B, 234C, and 220(2). Consequently, the appeal by the revenue was dismissed, upholding the directions of the Tribunal for interest computation.

This detailed analysis covers the various issues involved in the legal judgment delivered by the Appellate Tribunal ITAT Mumbai regarding the rectification of assessment orders and the computation of interest under different sections of the Income Tax Act.

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