2022 (3) TMI 904 - HC - Income Tax

Charging of interest u/s 234B - payment of advance tax -TDS was not deducted on the income received - As per ITAT Non-resident is liable to pay tax but there is no question of payment of advance tax; and that, therefore, assessee is not liable to pay interest under Section 234B on account of default of the payer in deducting tax at source from the payments made to the assessee - HELD THAT - This Court finds that in the impugned order, the Tribunal has relied upon the judgment passed by this Court in Director of Income Tax vs. Jacabs Civil Incorporated 2010 (8) TMI 37 - DELHI HIGH COURT which has been confirmed by the Supreme Court in M/s Mitsubishi Corporation 2021 (9) TMI 875 - SUPREME COURT This Court is also in agreement with the opinion of the Tribunal that the penalty can only be levied in such cases where concealment of income has been proven. If the quantum order itself has been set aside in an appeal preferred by the respondent/assessee, there is no question of penalty being levied. Also see M/S. HARSH INTERNATIONAL PVT. LTD. 2020 (12) TMI 1082 - DELHI HIGH COURT - No substantial question of law arises.

Summary

Issues:
1. Charging of interest under Section 234B of the Income Tax Act, 1961.
2. Levy of penalty in cases of proven concealment of income.

Analysis:

Issue 1: Charging of interest under Section 234B
The appellant challenged the order passed by the ITAT regarding the charging of interest under Section 234B of the Income Tax Act, 1961. The Tribunal relied on the judgment in Director of Income Tax vs. Jacabs Civil Incorporated, which was confirmed by the Supreme Court. The appellant argued that the non-levy of interest was a mistake apparent on the record and rectifiable under Section 154 of the Act. However, the Court agreed with the Tribunal's interpretation and upheld the decision based on legal precedents.

Issue 2: Levy of penalty in cases of proven concealment of income
The Court addressed the issue of penalty imposition in cases of proven concealment of income. It was established that penalty can only be levied when concealment of income is proven. If the quantum order itself is set aside in an appeal, there is no basis for levying a penalty. Citing previous cases, the Court emphasized that penalty imposition cannot be a matter of course and must be based on proven concealment. The Court highlighted that if an appeal is admitted, indicating the issue is debatable, the penalty levied by the assessing officer cannot be sustained. Based on these principles, the Court dismissed the appeal as no substantial question of law arose for consideration.

In conclusion, the High Court dismissed the appeal challenging the charging of interest under Section 234B and clarified the principles governing the levy of penalties in cases of proven concealment of income. The judgment reaffirmed the importance of legal precedents and the requirement for proven concealment before imposing penalties, ultimately emphasizing the need for a debatable issue to justify penalty imposition.