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TMI Blog2013 (11) TMI 830X X X X Extracts X X X X X X X X Extracts X X X X ..... ently, when the last date for payment of advance tax or even the last date of the financial year preceding the assessment year was over and the assessee had no liability to pay advance tax. In these circumstances it has been held that assessee was liable to pay advance tax for the year under consideration - It had failed to pay advance tax on stipulated dates. Therefore, the order passed by the FAA u/s. 154 of the Act; to recalculate the interest u/s. 234B and 234C of the Act, after giving credit to the taxes paid by the assessee;does not suffer from any legal infirmity – Decided against the Assessee. - ITA No. 8121/Mum/2011 - - - Dated:- 13-11-2013 - Sh. I. P. Bansal And Rajendra,JJ. For the Petitioner : Shri M. C. Maniwadekar For the Respondent : Shri Sanjeev Jain ORDER Per Rajendra, AM. Following Grounds of appeal have been filed by the assessee against the order dated 03-10-2011 of the CIT(A)-3, Mumbai: On the facts and circumstances of the case and in law the Learned C. I. T (Appeals) -3 erred in passing the order under section 154 of the Income Tax Act 1961 dated 03. 10. 2011 and thereby holding that the Assessee is liable to pay advance tax and failu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt of the assessee, that interest u/s. 234B and 234C was not leviable. Departmental Representative(DR)submitted that there was shortfall of Rs. 15. 59 lacs between the tax payable and the tax paid, that tax payable was more than 10, 000/-, that assessee had to pay advance tax, that it did not pay advance tax as envisaged by the provisions of the Act, that FAA had rightly directed the AO to recalculate interest chargeable u/s. 234 B and 234 C of the Act. 4. We have heard the rival submissions and perused the material before us. Before proceeding further, we would like to mention the history of provisions of section 234 and general principles governing the said section. Collection of tax, being an act of the State for providing protection, security and other amenities to the society, cannot be termed a penalty or a punishment. The purpose and object of the Act is to realise taxes. One of the reasonable mode of collection is to collect taxes in instalments. If assessees fail to adhere to schedule of payment, provisions have to be made to compensate the exchequer. Payment of interest or imposition of penalty can be considered justified modes of compensation. Section 28 of the 1868 Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... beyond the financial year has to be considered for calculating the exact tax liability, but such payment has to be accompanied by the interest. In other words failure on the part of the assessee to abide by the provisions of the Act has been made a basis for forcing him to compensate Sovereign by paying interest in terms of section 234B/234C of the Act. The amount on which interest is levied is an amount which can legitimately be said to be public revenue though payable by the assessee, but not paid by him, despite his knowledge of the position of law. Levy of interest on such amount which is utilised by the assessee for his own purposes has been directed to be compensated by means of directing him to pay the interest at the rates specified under the sections. Considering the above Courts have held that interest levied u/s. 234 of the Act is compensatory nature. The period for which this additional liability is imposed is an important feature which very clearly shows the true legislative intent behind the levy. iii). Provisions of the said sections are meant to deter the assessees from repeatedly committing default, but it does not mean that the provisions are penal in character ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on refunds due to the assessees. vii). Where there is non-payment or short payment due to the computation of income u/s. 115J of the Act, interest can be levied under sections 234B and 234C. That apart, section 115J is no more available for the assessee for delaying the payment of advance tax in view of the insertion of sections 115JA and 115JB. viii). Though, section 234B pertains to liability to pay interest for default in payment of advance tax, however, in the provision interest is payable on the amount which is the difference between the amount of tax payable on the total income as determined u/s. 143(1) of the Act or on regular assessment as reduced by the tax paid by way of advance tax;tax collected or deducted at source; relief allowed under sections 90 and 90A of the Act in respect of tax paid outside India or allowed u/s. 91 and also any tax credit allowed u/s. 115JAA of the Act. ix). Sections 234A, 234B and 234C do not envisage the grant of any hearing or the grant of any relief to the assessees concerned in so far as the levy of interest is concerned. The levy of interest is automatic the moment it is proved that the assessee has committed a default within the com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arch and seizure cases, where an assessee makes a request to adjust advance tax payable out of cash seized, prior to due date for payment of instalment of advance tax, he is entitled to adjustment of seized cash against the payable advance tax and no interest can be charged u/s. 234B of the Act. xvi). Once the issue of levy of interest u/s. 234 B has been considered by the FAA and the Tribunal same issue cannot be agitated before the CIT under section 264 of the Act. xvii). Interest under sections 234B of the Act is leviable on the tax on the total income as declared in the return and not on the income as assessed and determined by the assessing authority. xviii). When AO does not dispute the fact that the amount received by the assessee, a non- resident, is subjected to 100 % tax deduction at source and that there is no liability on the assessee to pay advance tax, the question of levy of interest under section 234B of the Act alleging short payment cannot arise. xix). Interest under section 234B can be levied in the cases where loss is shown and accepted in original return, but reassessment proceedings result in positive income. In such cases it is not material that AO had ..... X X X X Extracts X X X X X X X X Extracts X X X X
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