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TMI Blog2016 (2) TMI 633X X X X Extracts X X X X X X X X Extracts X X X X ..... discretion with respect to rate of interest and/or to levy any interest considering the facts and circumstances of the case. As observed hereinabove, as such, A.O. had no such discretion and moment he determines the “assessed tax” and on the eventuality as mentioned in section 234B, i.e. (i) an assessee who is liable to pay advance tax under section 208 has failed to pay such tax, or, where advance tax paid by such assessee under the provisions of section 210 is less than 90% of the “assessed tax”, assessee shall, be liable to pay simple interest at the rate of 1% for every month or part of a month comprised in the period from the first day of April next following such financial year to the date of determination of total income under sub-section (1) of section 143 and (ii) where regular assessment is made to the date of such regular assessment, on the amount equal to assessed tax, or, as the case may be, on the amount by which advance tax paid, as aforesaid, falls short of assessed tax. Under the circumstances and considering the subsequent decisions of the Hon'ble Supreme Court in the case of Anjum M.H. Ghaswala (2001 (10) TMI 4 - SUPREME Court) and in the case of Karanvir Si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), both, assessee as well as the revenue preferred Appeals before the learned Income Tax Appellate Tribunal. 3.04. One of the grounds raised by the assessee before the learned tribunal was regarding interest under section 234B of the Act. It was the case on behalf of the assessee that as in the order of assessment the Assessing Officer has not charged any interest under section 234 of the Act and therefore, no such interest is chargeable. That the assessee relied upon the decision of Patna High Court in the case of Uday Mistanna Bhandar Complex Versus Commissioner of Income Tax, reported in 137 CTR 376 (Patna) and decision of this Court in the case of Commissioner of Income Tax, Gujarat-II, Versus Bharat Machinery, Hardware Mart, reported in 136 ITR 875 (Gujarat). 3.05. That relying upon the aforesaid two decisions, the learned tribunal held that as in the order of assessment the Assessing Officer had not charged any interest and therefore, no such interest is chargeable. 3.06. Feeling aggrieved and dissatisfied with the impugned order passed by the learned tribunal in so far as holding that as in the order of assessment the Assessing Officer has not charged any interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he aforesaid case, after the matter was remanded by the Hon'ble Supreme Court, the Delhi High Court has held that non-mentioning of section 234B of the Income Tax in the assessment order and straightway charging interest in the computation sheet would not be of much consequence and the same would be permissible. 5.05. Mr.Mehta, learned counsel appearing on behalf of the revenue has also referred to and relied upon para 5 of the decision of the Delhi High Court in the case of Bill Peggy Marketing India Pvt. Ltd. Versus Assistant Commissioner of Income Tax, reported in [2013] 350 ITR 465 with respect to the scheme of payment of advance tax. 5.06. Mr.Mehta, learned counsel appearing on behalf of the revenue has also relied upon the decision of the Hon'ble Supreme Court in the case of Joint Commissioner of Income Tax, Mumbai Versus Rolta India Ltd., reported in 330 ITR 470 (S.C.), more particularly para 6. 5.07. Mr.Mehta, learned counsel appearing on behalf of the revenue has also relied upon the decision of the Kerala High Court in the case of Commissioner of Income Tax Versus R. Ramalingair reported in [2000] 241 ITR 753, more particularly para 5 to 7 and has submitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the revenue has further submitted that apart from the fact that decision of the Hon'ble Supreme Court in the case of Rachi Club Ltd. (supra) subsequently came to be considered by the Hon'ble Supreme Court in the case of CIT Versus Anjum M.H. Ghaswala, reported in [2001] 252 ITR 1, even Patna High Court in the case of Rachi Club Ltd. (supra) and even the Hon'ble Supreme Court in the appeal against the order passed by the Patna High Court in the case of Rachi Club Ltd. (supra) had not considered the decision of the Hon'ble Supreme Court in the case of Kalyan Kumar Ray Versus CIT, reported in [1996] 191 ITR 645. 5.14. Mr.Mehta, learned counsel appearing on behalf of the revenue has further submitted that even notice under section 156 of the Act is issued by the Assessing Officer and therefore, reasons given by the Hon'ble Supreme Court in the case of Kalyan Ray (supra) shall be applicable. 5.15. Mr.Mehta, learned counsel appearing on behalf of the revenue has further submitted that in any case, in view of the subsequent decisions of the Hon'ble Supreme Court as well as decision in the case of Rachi Club Ltd. (supra) in which it is specifically observe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivision Bench in Rachi Club Ltd. (supra) and the same has been affirmed by the Hon'ble Supreme Court in Civil Appeal and therefore, there is no question of taking any different view in the matter. It is submitted that in view of the aforesaid facts and the decision of the Patna High Court in the case of Rachi Club Ltd. (supra) taking the view that in absence of any specific order of charging interest under section 2354B by the Assessing Officer in the body of the assessment order, thereafter it is not open to levy charge / demand interest being confirmed by the Hon'ble Supreme Court by dismissing the Civil Appeals in a judgement reported in [247 ITR 209 (S.C.)] and therefore, it is requested to answer the question raised in the present appeals in favour of the assessee and against the revenue. 6.01. It is vehemently submitted by Mr.Soparkar, learned advocate appearing on behalf of the assessee that the decision of the Hon'ble Supreme Court in the case of Rachi Club Ltd. (supra) reported in [247 ITR 209 (S.C.)] is a Three Judge Bench decision and is a judgement of the Hon'ble Supreme Court under Article 141 of the Constitution of India and not under Article 136 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es under section 245BA of the Act. It is submitted that while coming to this conclusion, the Commission held that the constitution of the Commission is based on the concept of compromise and settlement and hence it has necessary powers to waive or reduce interest even if statutorily mandated, in view of wordings of section 245D(6) of the Act. It is submitted that, it was further held that in view of the definition of the term Income Tax Authority under section 245A(D), Commission being an Income Tax Authority has all powers of the Board which are incidental to functions of the Commission which includes power under section 119 to relax rigors of section 234A, 234B and 234C of the Act. It is submitted that, therefore, the moot question which was posed for consideration before the Hon'ble Supreme Court was : Does section 245(D)(6) which contemplates providing for the term of settlement of tax, penalty or interest empowers the Commission, in any manner, either to waive or reduce the interest payable under section 234A, 234B or 234C, in any case that arises for settlement before the Commission? If so, would this waiver of interest be in accordance with provisions of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (supra) is that, such authority by the Assessing Officer should be specific and clear and the assessee must to be made to know that the Assessing Officer has applied its mind and has ordered charging of interest. It is submitted that mandatory nature of charging of interest and the actual charing of interest by application of mind and mention of proviso of law under which such interest is charged, are two different things. 6.09. Mr.Soparkar, learned advocate appearing on behalf of the assessee has further submitted that the assessment order must contained imposition of interest and only thereafter a notice of demand could be issued under section 156 of the Act. It is submitted that a notice of demand is somewhat like a decree in a Civil Suit which must follow the order. It is submitted that when the judgement in a Civil Suit does not specify any amount to be recovered, decree could not contain such amount. It is submitted that similarly when the assessment order under section 143(3) of the Act does not indicate that interest would be leviable, notice of demand under section 156 of the Act to levy interest would be wholly illegal since interest is payable in consequence of an or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bservation / obiter dicta and not having any binding effect on subsequent proceedings. 6.12. In support of his above submission, Mr.Soparkar, learned advocate appearing on behalf of the assessee has heavily relied upon the following decisions of the Hon'ble Supreme Court : (1) Deepak Bajaj Versus State of Makarashetra - 2009 SC 625 (para 7 to 16); (2) Hardeep Singh Sohal Versus State of Punjab - AIR 2004 SC 4778 (para 9 to 12); (3) Arun Kumar Aggarwal - (2014) 13 SCC 707 (para 24 to 34); (4) MCD Versus Gurunam Kaur - (1989) 1 SCC 101 (Para 11 to 13); (5) Narmada Bachao - 2011 (7) SCC 639 (Para 64 to 85) (6) Delhi Administration Vs. Manoharlal - AIR 2002 SC 3088 (para 5) 6.13. Mr.Soparkar, learned advocate appearing on behalf of the assessee has further submitted that all the aforesaid three decisions of the Hon'ble Supreme Court namely (1) in the case of Anjum M. H. Ghaswala (supra); (2) in the case of Karanvir Singh Gossal (supra) and in the case of Rachi Club Ltd. (supra) came to be considered by the Allahabad High Court in the case of M/s. Oswal Exports Company. It is submitted that after analyzing the aforesaid three decisions of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at Construction Pvt. Ltd. (supra), the Hon'ble Supreme Court has also held that every ITNS 150 Form must be treated as a part of assessment order in the waiver since in which expression has to be understood in the context of section 143, which is referred to in Explanation 1 to section 234B and hence levy of interest under section 234B was to be sustained. It is further submitted that in the aforesaid decision, the Hon'ble Supreme Court has not held that the decision of the the Hon'ble Supreme Court in the case of Rachi Club Ltd. (supra) in any way overruled by the decision in the case of Anjum M. H. Ghaswala (supra). It is submitted that, therefore, combined reading of decision in the case of Rachi Club Ltd. (supra) and Bhagat Construction Pvt. Ltd. (supra) leads to a conclusion that as long as levy / charge is found in the assessment order (inclusive of ITNS 150 Form), the Assessing Officer can demand interest vide notice under section 156 but if there is no mention in the assessment order (inclusive of ITNS 150 Form), the same cannot be demanded vide notice under section 156 directly). 6.16. Mr.R.K. Patel, learned advocate appearing on behalf of assessee in Tax Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urce in accordance with the provisions of Chapter XVII on any income which is subject to such deduction or collection and which is taken into account in computing such total income; (ii) any relief of tax allowed under section 90 on account of tax paid in a country outside India; (iii) any relief of tax allowed under section 90A on account of tax paid in a specified territory outside India referred to in that section; (iv) any deduction, from the Indian income-tax payable, allowed under section 91, on account of tax paid in a country outside India; and (v) any tax credit allowed to be set off in accordance with the provisions of section 115]AA [or section 115]D].] Explanation 2. Where, in relation to an assessment year, an assessment is made for the first time under [section 147 or section 153A], the assessment so made shall be regarded as a regular assessment for the purposes of this section. [Explanation 3. In Explanation 1 and in sub-section (3), tax on the total income determined under sub-section (1) of section 143 shall not include the additional income-tax, if any, payable under section 143.] (2) Where, before the date of [determination of total income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the assessment year commencing on the 1st day of April, 1989 and subsequent assessment years.] Section 143 : Assessment. [(1) Where a return has been made under section 139 or in response to a notice under sub-section (1) of Section 142, Such return shall be processed in the following manner, namely:- (a) the total income or loss shall be computed after making the following adjustments, namely:- (i) any arithmetical error in the return; or (ii) an incorrect claim, if such incorrect claim is apparent from any information in the return; (b) the tax and interest, if any, shall be computed on the basis of the tota1 income computed under clause (a); (c) the sum payable by, or the amount of refund due to, the assessee shall be determined after adjustment of the tax and interest, if any, computed under clause (b) by any tax deducted at source, any tax collected at source, any advance tax paid, any relief allowable under an agreement under section 90 or section 90A, or any relief allowable under section 91, any rebate allowable under Part A of Chapter VIII, any tax paid on self-assessment and any amount paid otherwise by way of tax or interest; (d) an intimatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oon as may be after the notification is issued, be laid before each House of Parliament] [(1 D) Notwithstanding anything contained in subsection (1), the processing of a return shall not be necessary, where a notice has been issued to the assessee under sub-section (2).] [(2) Where a return has been furnished under section 139, or in response to a notice under sub-section (1) of section 142, the Assessing Officer shall,-- (i) where he has reason to believe that any claim of loss, exemption, deduction, allowance or relief made in the return is inadmissible, serve on the assessee a notice specifying particulars of such claim of loss, exemption, deduction, allowance or relief and require him, on a date to be specified therein to produce, or cause to be produced, any evidence or particulars specified therein or on which the assessee may rely, in support of such claim: [Provided that no notice under this clause shall be served on the assessee on or after the 1st day of June, 2003;] (ii) notwithstanding anything contained in clause (i), if he considers it necessary or expedient to ensure that the assessee has not under-stated the income or has not computed excessive loss o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall be made by the Assessing Officer, without giving effect to the Provisions of section 10, unless- (i) the Assessing Officer has intimated the Central Government or the prescribed authority the contravention of the provisions of clause (21) or clause (22B) or clause (23A) or clause (23B) or sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10, as the case may be, by such [research association], news agency, association or institution or fund or trust or university or other educational institution or any hospital, or other medical institution, where in his view such contravention has taken place; and (ii) the approval granted to such [research association] or other association [or fund or trust] or institution or university or other educational institution or hospital or other medical institution has been withdrawn or notification issued in respect of such news agency or fund or trust or institution has been rescinded:] [Provided further that where the Assessing Officer is satisfied that the activities of the university, college or other institution referred to in clause (ii) and clause (iii) of sub-section (1) of secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eme Court in the case of Anjum M.H. Ghaswala (supra) and in the case Karanvir Singh Gossal (supra) has specifically observed and held that charging of interest under section 234B of the Income Tax Act is mandatory and statutory. Therefore, it is the case on behalf of the revenue that once levy and charge of interest under section 234B of the Income Tax Act is automatic and mandatory and levy of interest is on the assessed tax and that the provision does not confer any discretion upon the A.O. whether to levy / charge interest or not and/or even with respect to rate of interest, even if in the order of assessment no demand of interest can be raised in the notice issued under section 156 of the Act be raised. On the other hand, it is the case on behalf of the assessed that in view of the decision of the Patna High Court in the case of Rachi Club Ltd. (supra) which was confirmed by the Hon'ble Supreme Court by dismissing the SLP preferred against the decision of the Patna High Court in the case of Rachi Club Ltd., the view taken by the Patna High Court in the case of Rachi Club Ltd. (supra) is to be accepted and considered in which it was held that unless and until question of l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... la (supra), it is held by the Hon'ble Supreme Court that if interest is leviable under section 234B/234C, then in such a case that levy is mandatory and compensatory in nature. Under the circumstances, subsequent decision of the Hon'ble Supreme Court in the case of Karanvir Singh Gossal (supra), in which the Hon'ble Supreme Court has considered its earlier decisions in the case of Rachi Club Ltd. (supra) and in the case of Anjum M.H. Ghaswala (supra), is binding to this Court and the same is required to be considered. 7.06. The learned counsel appearing on behalf of the assessed have tried to distinguish the decision of the Hon'ble Supreme Court in the case of Anjum M.H. Ghaswala (supra) and decision of the Hon'ble Supreme Court in the case of Karanvir Singh Gossal (supra) by submitting that the question that arose for consideration before the Hon'ble Supreme Court in the case of Anjum M.H. Ghaswala (supra), was with respect to powers of the Settlement commission constituted under section 245B and as to jurisdiction to reduce or waive interest chargeable under section 234A, 234B and 234C while passing orders of settlement under section 245D(4). 7.07. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod from the first day of April next following such financial year to the date of determination of total income under sub-section (1) of section 143 and where regular assessment is made to the date of such regular assessment, on the amount equal to assessed tax, or, as the case may be, on the amount by which advance tax paid, as aforesaid, falls short of assessed tax. As per explanation 1 to section 234B assessed tax means tax on the total income determined under sub-section (1) of section 143 and where regular assessment is made, tax on the total income determined under such regular assessment. 7.11. As observed hereinabove, levy of interest under section 234B of the Income Tax Act is held to be mandatory and automatic and at the rate prescribed and mentioned under section 234B of the Income Tax Act. The A.O. has no discretion to levy any interest other than right of interest mentioned in section 234B of the Income Tax Act. The A.O. has no jurisdiction and/or authority to reduce and/or charge interest less than provided under section 234B of the Act. 7.12. That thereafter, section 156 of the Income Tax Act is required to be considered. Section 156 provides that when an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he date of such regular assessment, on the amount equal to assessed tax, or, as the case may be, on the amount by which advance tax paid, as aforesaid, falls short of assessed tax. Under the circumstances and considering the subsequent decisions of the Hon'ble Supreme Court in the case of Anjum M.H. Ghaswala (supra) and in the case of Karanvir Singh Gossal (supra), question of law posed for consideration of this Court is to be answered in favour of the revenue and against the assessee. 7.15. Now, so far as the decisions of the other High Courts, relied upon the learned counsel appearing on behalf of the assessee, which are referred to hereinabove, are concerned, it is required to be noted that in all such cases, concerned High Courts have relied upon the decision in the case of Rachi Club Ltd. (supra). However, in view of the aforesaid two subsequent decisions of the Hon'ble Supreme Court and for the reasons stated hereinabove, in respectful submission we are not in agreement with the contrary view taken than what we are taking in the present case. 7.16. Similarly, the submissions on behalf of the assessee that the decision of th Patna High Court in the case of Rachi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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