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TMI Blog2019 (1) TMI 203X X X X Extracts X X X X X X X X Extracts X X X X ..... been filed by the assessee against the order of the Commissioner of Income Tax (Appeals)-1, Amritsar Camp at Palampur (in short CIT(A) dated 3.11.2016 passed u/s 250 (6) of the Income Tax Act, 1961 (in short referred to as Act ). 2. The sole issue in the present appeal relates to charging of interest u/s 234B of the Act for non payment of advance tax. 3. Brief facts relating to the case are that the assessee had filed its return of income declaring an income of ₹ 1,48,150/- which was processed u/s 143(1) of the Act and no interest u/s 234B was charged. Later on the case of the assessee was reopened u/s 148 of the Act making addition to the returned income of the assessee of ₹ 4 lacs and thus assessing the taxable income at ₹ 5,48,150/-. Consequently interest u/s 234B of the Act amounting to ₹ 92,937/- for non payment of advance tax was charged vide the assessment order dated 27.3.2006. The assessee filed a petition before the A.O. u/s 154 of the Act against the charging of interest u/s 234B of the Act, which was dismissed by the A.O. vide order dated 30.7.2009. Aggrieved by the same the assessee went in appeal before the CIT (A) who upheld the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the advance tax paid falls short of the assessed tax.. [ 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.] (3) Where, as a result of an order of reassessment or recomputation under section 147 or section 153A the amount on which interest was payable under section (1) is increased, 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 following the date of determination of total income under subsection (1) of section 143 [and where a regular assessment is made as is referred to in sub-section (1) following the date of such regular assessment]] and ending on the date of the reassessment or recomputation under section 147 [or section 153A], on the amount by which the tax on the total income determined on the basis of the reassessment' or recomputation exceeds the tax on the total income determined [under sub-section (1) of section 143 or] on the basis of the regular assessment aforesaid. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act, interest under section 234B was imposable only if the amount on which interest was payable under section 234B(1), was increased. In other words, it was contended, if no interest was payable under section 234B(1) at all, any interest leviable thereafter could not be termed as increase and no interest. thus, could be imposed under section 234B(3). The contention of the assessee was that since in the present case no interest was payable as per Intimation made under section 143(1) of the Act, no interest, therefore, was leviable as per section 234B(3) of the Act. The assessee relied upon the decision of the Mumbai Bench of the I.T.A.T. in the case of Datamatics Ltd. Vs. ACIT reported in 111 TTJ (Mum) 55. A copy of the order was placed before us. 8. The Ld. D.R., on the other hand, relied upon heavily on the orders of the authorities below stating that the provisions of section 234B were clear and even as per section 234B(3) interest had to be charged on the increased tax liability upto the date of re-assessment. 9. We have heard the rival contentions and perused the orders of authorities below and also gone through the case law cited before us. The issue before us relate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a regular assessment for the purposes of this section. (2) Where, before the date of [determination of total income under sub-section (1) of section 143 or] completion of a regular assessment, tax is paid by the assessee under section 140A or otherwise,- (i) interest shall be calculated in accordance with the foregoing provisions of this section up to the date on which the tax is so paid, and reduced by the interest, if any, paid under section 140A towards the interest chargeable 'under this section; (ii) thereafter, interest shall be calculated at the rate aforesaid on the amount by which the tax so paid together with the advance tax paid falls short of the assessed tax.. [ 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.] (3) Where, as a result of an order of reassessment or recomputation under section 147 or section 153A the amount on which interest was payable under section (1) is increased, the assessee shall be liable to pay simple interest at the rate of [one] per cent for ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of re assessment framed, on the additional/increased advance tax payable on account of the additional income so assessed. 14. In the present case, since the assessee s income had been initially determined under section 143(1), the levy of interest under section 234B was to be determined as per provisions of section 234B(3) on account of addition made to the income of the assessee on re-assessment of income under section 147 of the Act. And since on account of the re assessment the assessee was, undisputedly, liable to pay advance tax as per the relevant provisions, which was not paid by the assessee, the liability to pay the same stood increased and interest under section 234B had to be mandatorily paid. It may be pointed out that payment of interest u/s 234B ,is mandatory once the default occurs .Sub-section (1) and (3) only lay down the manner of calculating the quantum of interest payable. In sub section (1) , the same is payable on the shortfall of the advance tax for the period as beginning from the end of the financial year to the date of intimation u/s 143(1) or regular assessment .And in case of reassessment ,under sub section 3,on the excess advance tax payable on acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e I.T.A.T. held that when the assessee had initially paid huge amount of taxes, generating refund, it could not be said that the assessee had defaulted in payment of advance tax later on, on assessment. The Hon'ble Bench relied upon the judgment of the Hon'ble Delhi High Court in the case of CIT Vs. K.K. Marketing in this regard. The ITAT also found that the addition made could not have possibly been anticipated by the assessee for the purposes of calculating advance tax, since it was a disputed issue with different views being taken by different courts and the assessee therefore could not be held to be a defaulter for payment of advance tax. The I.T.A.T. held that charging of interest under section 234B is mandatory only when conditions are fulfilled of the assessee having defaulted in the payment of advance tax, for which purpose the assessee has to estimate his current income and if a bonafide dispute is pending which is clarified later on by the Legislature which the assessee could not have anticipated and on account of which the addition is made to his income on reopening, it is difficult to hold such an assessee as a defaulter. The I.T.A.T. held that if the assessee t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or thing and they were not entitled to deduction under Sections 80HHA and 80-1. AO issued notice under Section 148. On receipt of the notice, assessee deposited all the tax payable. Assessment was completed and interest was charged under Section 234B. Assessee approached the Chief CIT with waiver petition and the Chief CIT waived the interest partly. On appeal, their Lordships of the Hon'ble Karnataka High Court held that there is no provision in the Act requiring the assessee to file a revised return of income in regard to the relevant assessment years after the Supreme Court had reversed the judgment of the High Court. It was for the AO to issue a notice under Section 148 to assess the escaped income. Notice under Section 148 was issued to the assessee only on 27th Dec, 2000, and the assessee filed its revised returns within the time allowed by that notice and the assessments were completed. The tax that became due in terms of the revised returns had also been paid within time and thus no delay could be attributed to the assessee. The Chief CIT should have waived the entire interest that was levied by the AO. The order of the single Judge affirming that of the Chief CIT cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncreased as a consequence of this. The case of the assessee is that, to charge interest, first of all there should be a liability on the part of the assessee and assessee should be in default. 53. Section 234B reads as under: 234B(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 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 from the 1 st day of April next following such financial year to the date of determination of total income under Subsection (1) of Section 143 and where a regular assessment is made, to the date of such regular assessment, on an amount equal to the assessed tax or, as the case may be, on the amount by which the advance tax paid as aforesaid falls short of the assessed tax. Explanation 1 : In this section, assessed tax means the tax on the total income determined under Subsection (1) of Section 143 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee would not have defaulted in making advance tax under Section 206 or the payment of advance tax would not have fallen 90 per cent of the assessed tax as contemplated under Section 210, then the assessee becomes a defaulter. The decisions cited supra makes it clear that if the assessee could not have contemplated such a situation, charging of interest under Section 234B cannot be justified. 56. Reading of Section 234B(3) makes it clear that where, as a result of an order of reassessment or recomputation under Section 147 or Section 153A, the amount on which interest was payable under Sub-section (1) is increased, the assessee shall be liable to pay simple interest at the rate of one per cent.... The reading of the section further makes it clear that first of all there should be a default on the part of the assessee in the regular assessment and the assessee should have been held liable to pay interest under Section 234B. In that case, if there is reassessment or recomputation under Section 147 or Section 153 A, the liability of the assessee is increased and not otherwise. 15. In the present case,no taxes had been paid initially by the assessee and the addition made u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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