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TMI Blog2012 (10) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... st under Sections 234A and 234B of the Act could be charged for the first time in the order passed under Section 154, even though such charging of interest was mandated by the specific provisions contained in Sections 234A(4) and 234B(4) of the Act? 3. Whether on the facts and in the circumstances of the case, the Hon'ble Tribunal was justified in not following the decision of its own Special Bench in the case of Motorola Inc. Vs. DCIT (95 ITD 269), on the ground that the said decision was distinguishable on fact, when the said fact was of no relevance in the said decision of the Special Bench? 2. Though as many as three questions have been framed, after hearing the parties we are of the considered opinion that the real question of law which arises in this case is as follows:- "Whether interest under Section 234B of the Act could be charged in the notice of demand issued under Section 156 in the absence of any specific order demanding interest in the assessment or rectification orders?" 3. The facts, briefly stated, are that for the assessment year 1996-97 i.e. accounting period 1.4.1995 to 31.3.1996 the assessee filed its return of income declaring income of Rs.1,31,40,450/-. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ench of the Apex Court held as follows:- "If the scheme of levy of interest is thus to be analysed on the anvil of the provisions referred to hereinabove, it shows that eh interest contemplated under Section 234A, 234B and 234C is mandatory in nature and the power of waiver or reduction having not been expressly conferred on the Commission, the same indicates that so far as the payment of statutory interest is concerned, the same is outside the purview of the settlement contemplated in Chapter XIX-A of the Act." 5. The Court finally went on to hold as follows:- "For the reasons stated above, we hold that the Commission in exercise of its power under section 245D(4) and (6) does not have the power to reduce or waive interest statutorily payable under Sections 234A, 234B and 234C except to the extent of granting relief under the circulars issued by the Board under Section 119 of the Act." 6. In the present case an order passed in a rectification petition whereby the income was enhanced and the Assessing Officer while rectifying the income did not issue any direction to pay interest under the requisite provisions of law. 7. A learned Single Judge of the Karnataka High Court in Uni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ish information on such points or matters as the Assessing Officer may require. It also provides for notice to persons who have not filed the return within the time allowed under Section 139(1) to furnish the return of income. It is thus obvious that section 142(1) envisages two types of notices. When section 234A refers to the notice under section 142(1) it obviously means notice to file the return of income in case of non-filing. The object underlying section 234A is to create additional liability to pay interest for the default in furnishing the return of income, the object is not to penalize an assessee, who has already filed the return under Section 139 for not producing accounts or documents and so on under clause (ii) or (iii) of section 142(1). In my considered opinion, therefore, the necessary conditions as required under section 234A are not made out in the instant case and, therefore, the levy of interest is not justified." 10. The judgement of the Patna High Court was upheld by the Apex Court in Commissioner of Income-tax and others vs. Ranchi Club Ltd. (2001) 247 ITR 209. 11. In Commissioner of Income-tax vs. R.Ramalingair (2000) 241 ITR 753 the Kerala High Court als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t case the Assessing Officer had not issued any direction in respect of charging of interest under Section 234B of the Act. Pursuant to the assessment order a notice of demand was issued demanding interest. The question which arose before the Uttarakhand High Court was whether interest under Section 234B of the Act could be charged in the notice of demand issued under Section 156 in the absence of any specific order demanding interest in the assessment order. After analyzing the legal provisions and discussing various judgements the Uttarakhand High Court held as follows:- "11. A perusal of the aforesaid provision clearly indicates that the tax, interest, penalty, or fine is payable in consequence of an order passed under the Act, namely, the assessment order. There has to be a specific order passed by the assessing officer charging interest and, only thereafter, a notice of demand levying interest could be issued. xxx... xxx... xxx... 16. The learned counsel for the appellant submitted that the provision of charging interest under Section 234A, 234B & 234C of the Act is mandatory as held by the Supreme Court in Commissioner of Income Tax Vs. Anjum M. H. Ghaswala & others 252 I. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fferent things." 17. We are in respectful agreement with the judgement rendered by the Uttarakhand and Allahabad High Courts. No doubt, payment of interest under Sections 234A, 234B and 234C is mandatory but it is for the Assessing Authority while passing the original assessment order or while passing the reassessment or rectification order to direct payment of interest. Even if he orders that interest be paid in accordance with law without specifying a particular provision the revenue may be able to take benefit of the judgement in Ghaswala's case since payment of interest is mandatory. However, in case the assessment order is silent with regard to the payment of interest then without challenging the assessment order the revenue cannot, while issuing notice of demand, claim interest under the aforesaid sections. 18. There can be no dispute that if the return is not filed within time or if advance tax is not paid within time then the assessee is liable to pay interest and the payment of interest is mandatory. However, if the assessing officer or the appellate authority does not order the payment of interest, the assessee in our opinion cannot be directed to pay interest by the d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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