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TMI Blog2018 (3) TMI 1471X X X X Extracts X X X X X X X X Extracts X X X X ..... re as follows: (i) The appellant/assessee, is an individual, regularly assessed, under the Income Tax Act. A search was conducted in his premises, on 24.11.2011, under Section 132, of the Income Tax Act. (ii) The assessee, though, liable to pay wealth tax, did not file any wealth tax return, for the assessment years 2007-08 and 2008-09. (iii) The Assessing Officer, issued a Notice under Section 17 of the Wealth Tax Act, 1957 (hereinafter referred to as the Act ) to the assessee on 12.11.2013, calling upon him to file the wealth tax returns. (iv) In response to the said notice, the assessee, filed wealth tax Returns on 19.02.2014, declaring a net worth of Rs. 8,85,84,300/-, for assessment year 2007-08 and Rs. 19,22,50,591/- for assessment year 2008-09. (v) These returns were taken up for scrutiny and assessments were completed on 30.01.2015, accepting the net wealth as stated in the returns. However, the respondent, proposed levy of interest under Section 17B(1) of the Act to the tune of Rs. 6,70,550/- for the assessment year 2007-08 and Rs. 12,39,879/- for the assessment year 2008-09, respectively. (vi) But the assessee, calculated the interest payable under Section 17B(3), a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the instant case are identical with the case quoted above, respectfully following the Hon'ble Tribunal's decision, the AO is directed to modify the interest calculated accordingly. Hence this ground of appeal, for both the Ays 2007-08 and 2008-09, is allowed." 7. Aggrieved by the order of the Commissioner of Wealth Tax (Appeals)-18, the Revenue preferred appeals before the Income Tax Appellate Tribunal 'A' Bench, Chennai (in short the Tribunal ) in W.T.A.Nos.18 and 19 of 2017. 8. By placing reliance on the decision in the case of Smt.M.T.Prabhavathy Vs. ACIT reported in 80 ITD 520 (Bang) by a common order dated 16.08.2017, the Tribunal, reversed the order of the Commissioner of Wealth Tax (Appeals)-18, Chennai in respect of assessment years 2007-08 and 2008-09. The Tribunal observed that merely because the due date for filing of the Wealth Tax Return expired and the assessee had not filed his return within the due date, it cannot be said that the assessee is exempt from the levy of interest u/s 17B of the Wealth Tax Act. In respect of the period between the due date under Section 14(1) of the Wealth Tax Act and the date of Notice u/s 17 of the Act, the Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uctuous." 9. Aggrieved by the common order of the Tribunal dated 16.08.2017, the assessee has filed the instant tax case appeals before this Court with the following substantial questions of law: "(i) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that the interest for defaults in furnishing return of net wealth would commence from the due date of filing of Wealth Tax return u/s.14(1) of the Wealth Tax Act, 1957, even in the case of a first time assessment u/s.17 of the Wealth Tax Act ? (ii) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in confirming the levy of interest u/s.17B(1) of the Wealth Tax Act instead of Section 17B(3) in the case of a first time assessment u/s.17 of the Wealth Tax Act ? (iii) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in confirming the levy of interest u/s.17B(1) of the Wealth Tax Act from the due date u/s/14(1) of the Wealth Tax Act in the absence of statutory provision for filing of the Wealth Tax returns after the due date u/s.15 of the Act ? ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the period between the due date and the date of notice u/s.17. (iii) That the levy of interest u/s.17B was compensatory as held in Smt.M.R.Prabhavathy Vs. ACIT, reported in 80 ITD 520 (Bang.). 12. Learned counsel for the Revenue relied on a Hon'ble Division Bench decision of this Court in Textile Dye-Chem Corporation Vs. Assistant Commissioner of Income Tax reported in (2013) 85 CCH 0096 and prayed for dismissal of the tax appeals. 13. Heard the learned counsel appearing for the parties and perused the materials available on record. 14. From the materials available on record, it can be seen that at the first instant, before the Assessing Officer, the assessee, calculated interest under Section 17B(3) for 3 months only for the delay i.e. from the due date u/s 17 i.e. 12.11.2013, to the date of filing of return of wealth i.e. 19.02.2014, for the assessment years 2007-08 and 2008-09 respectively and accordingly, paid interest to the tune of Rs. 52,248/- and Rs. 1,14,449/-, for assessment years 2007-08 and 2008-09 respectively. Before the Assessing Officer, the assessee contended that since notice u/s 17 has been issued in this case, only Section 17B(3), is applicable. 15. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Smt.M.R.Prabhavathy Vs. ACIT reported in 80 ITD 520 (Bang) the Tribunal held that in respect of the assessment years 2007-08 & 2008-09, the filing of the return of wealth is a mandatory duty on the assessee once the net wealth exceeds the prescribed limit. Just because, the due date for filing of the Wealth Tax Returns expired and the assessee had not filed his return within the due date, it cannot be said that the assessee is exempted from the levy of interest u/s.17B in respect of the period between the due date and the date of the notice u/s.17. Further stating that the levy of interest u/s.17B is compensatory in nature, the Tribunal reversed the order of the Commissioner of Wealth Tax (Appeals) levying interest u/s 17B(3) and restored the order of the Assessing Officer levying interest u/s 17B(1) of the Act. 20. In nut shell, the contention of the assessee is that interest should be calculated under Section 17B(3). But, according to the Assessing Officer, on the facts and circumstances of the case, interest has to be calculated under Section 17B(1). In the appeal filed by the assessee, the Commissioner of Wealth Tax (Appeals) held that assessee is liable to pay interest un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e valuation date as would have been adopted in respect of the net wealth of the deceased if he were alive; *** "14. Return of Wealth. (1) Every person, if his net wealth or the net wealth of any other person in respect of which he is assessable under this Act on the valuation date exceeded the maximum amount which is not chargeable to wealth-tax, shall, on or before the due date, furnish a return of his net wealth or the net wealth of such other person as on that valuation date in the prescribed form and verified in the prescribed manner setting forth particulars of such net wealth and such other particulars as may be prescribed. Explanation. In this sub-section, due date in relation to an assessee under this Act shall be the same date as that applicable to an assessee under the Income-tax Act under the Explanation to sub-section (1) of section 139 of the Income-tax Act. (2) Notwithstanding anything contained in any other provision of this Act, a return of net wealth which shows the net wealth below the maximum amount which is not chargeable to tax shall be deemed never to have been furnished: Provided that this sub-section shall not apply to a return furnished in resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lause (i) of sub-section (4) of this section, the Assessing Officer shall, if he considers it necessary or expedient to ensure that the assessee has not understated the net wealth or has not under-paid the tax in any manner serve on the assessee a notice requiring him, on a date to be specified therein, either to attend at the office of the Assessing Officer or to produce, or cause to be produced there, any evidence on which the assessee may rely in support of the return: Provided that no notice under this sub-section shall be served on the assessee after the expiry of twelve months from the end of the month in which the return is furnished. (3) On the day specified in the notice issued under sub-section (2) or as soon afterwards as may be, after hearing such evidence as the assessee may produce and such other evidence as the Assessing Officer may require on specified points, and after taking into account all relevant material which he has gathered, the Assessing Officer shall, by order in writing, assess the net wealth of the assessee and determine the sum payable by him on the basis of such assessment. (4) For the purposes of making an assessment under this Act, the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to believe that the net wealth chargeable to tax in respect of which any person is assessable under this Act has escaped assessment for any assessment year whether by reason of under-assessment or assessment at too low a rate or otherwise, he may, subject to the other provisions of this section and section 17A, serve on such person a notice requiring him to furnish within such period, as may be specified in the notice, a return in the prescribed form and verified in the prescribed manner setting forth the net wealth in respect of which such person is assessable as on the valuation date mentioned in the notice, along with such other particulars as may be required by the notice, and may proceed to assess or reassess such net wealth and also any other net wealth chargeable to tax in respect of which such person is assessable, which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section for the assessment year concerned (hereafter in this section referred to as the relevant assessment year), and the provisions of this Act shall, so far as may be, apply as if the return were a return required to be furnished under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ealth or has claimed excessive exemption or deduction in the return. (1B)(a) In a case where an assessment under sub-section (3) of section 16 or sub-section (1) of this section has been made for the relevant assessment year, no notice shall be issued under sub-section (1) by an Assessing Officer, who is below the rank of Assistant Commissioner or Deputy Commissioner, unless the Joint Commissioner is satisfied on the reasons recorded by such Assessing Officer that it is a fit case for the issue of such notice: Provided that after the expiry of four years from the end of the relevant assessment year, no such notice shall be issued unless the Chief Commissioner or Commissioner is satisfied, on the reasons recorded by the Assessing Officer aforesaid, that it is a fit case for the issue of such notice. (b) In a case other than a case falling under clause (a), no notice shall be issued under sub-section (1) by an Assessing Officer, who is below the rank of Joint Commissioner, after the expiry of four years from the end of the relevant assessment year, unless the Joint Commissioner is satisfied, on the reasons recorded by such Assessing Officer, that it is a fit case for the issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -section, tax payable on the net wealth as determined under sub-section (1) of section 16 or on regular assessment shall, for the purposes of computing the interest payable under section 15B, be deemed to be tax payable on the net wealth as declared in the return. (2) The interest payable under sub-section (1) shall be reduced by the interest, if any, paid under section 15B towards the interest chargeable under this section. (3) Where the return of net wealth for any assessment year, required by a notice under sub-section (1) of section 17 issued after the determination of net wealth under sub-section (1) of section 16 or after the completion of an assessment under sub-section (3) or sub-section (5) of section 16 or section 17 is furnished after the expiry of the time allowed under such notice, or is not furnished, the assessee shall be liable to pay simple interest at the rate of one per cent. for every month or part of a month comprised in the period commencing on the day immediately following the expiry of the time allowed as aforesaid, and, (a) where the return is furnished after the expiry of the time aforesaid, ending on the date of furnishing the return; or (b) where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h assessed including liability to interest under Section 17B, if chargeable. 27. The intention of the Legislature in enacting the provisions of Section 17B is clear. It is to levy interest which is compensatory in nature for withholding the revenue due to the Government on account of delay in filing the return of net wealth. 28. In the present case, such a delay has occurred on the part of the assessee in not filing the return of net wealth for the assessment years 2007-08 and 2008-09 on or before the due date, i.e., 01.10.2007 and 01.10.2008 respectively. The assessee chose to do so only on 19.02.2014. The return disclosed substantial net wealth assessable to tax. There is a delay in the filing of the return of net wealth during the period between the aforesaid dates. Hence, interest is clearly chargeable under Section 17B. In these circumstances, we conclude that the Assessing Officer has rightly levied interest under Section 17B which is mandatory under the provisions of the Act. 29. Since Section 17B is attracted, on the facts and circumstances of the case, now we have to analyse whether the interest has to be levied under sub-section (1) or sub-section (3) of Section 17B of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te Tribunal was right in law in holding that interest under Section 234B (Interest for defaults in payment of advance tax) is chargeable under Section 234B(1) and Section 234B(3) has no application " The Hon'ble Division Bench at paragraph 4 to 6 held as follows: "4. We do not agree with the submission of the assessee herein on the admitted fact that the assessment made on the assessee is a regular assessment made for the first time under Section 147 read with Section 143(3) of the Income Tax Act. 5. Given the fact that the assessment is a regular assessment, rightly, the Assessing Officer levied interest under Section 234B(1), as confirmed by the Tribunal. For the sake of convenience, we extract the relevant portion from Section 234B(1) Explanation (2) and Section 234B(3) of the Income Tax Act: "234-B. Interest for defaults in payment of advance tax: (1) Subject to the other provisions of this section, where, in any financial year, an assessee who is liable to pay advance tax under Section 208 has failed to pay such tax or, where the advance tax paid by such assessee under the provisions of Section 210 is less than ninety per cent of the assessed tax, the assessee s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the facts and circumstances of the present case, we are of the considered view that the assessment made for the assessment years 2007-08 and 2008-09 is made for the first time under Section 17, the same is a regular assessment and therefore attracts Section 17B(1) of the Act and not otherwise. Hence the Assessee is liable to pay interest u/s 17B(1) from the due date u/s 14(1) to the date of filing of the return u/s 17. In view of the above, we reject the argument advanced by the learned counsel for the assessee that the assessee could not be asked to do the impossible, as the due date for filing of the wealth tax returns expired and the assessee had not filed his return within the due date and there was no provision for the assessee to file his returns beyond the due date and the assessee had to await the issuance of notice u/s17 of the Act and therefore the assessee must be exempted from the levy of interest u/s 17B in respect of the period between the due date and the date of the notice u/s 17 of the Act. 33. In the light of the above discussion and decisions, we do not find any question of law much less a substantial question of law warranting interference by this Court, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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