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TMI Blog2021 (9) TMI 556X X X X Extracts X X X X X X X X Extracts X X X X ..... though it was a case arising under Section 234B(3) of the Act wherein, it was held that interest payable under sub-section (1) of Section 234B was levied in the regular assessment and on re-assessment, the liability for advance tax was also stood increased and in such circumstances, the differential tax of reassessment has to be levied interest at the rate provided under sub-section (3) of Section 234B of the Act. There is no such provision in Section 234B of the Act and conspicuously, no provision in pari materia with Section 234B(3) is found in Section 234B of the Act. Thus, in the light of the above discussion, we are of the clear view that the assessment framed under Section 143(3) read with Section 147 dated 26.12.2008, being not the assessment made for the first time, the same cannot be regarded as a 'regular assessment' for the purposes of Section 234D and therefore, no interest can be levied on the respondent-assessee. - Decided against revenue. - T.C.A.No.733 of 2013 - - - Dated:- 24-8-2021 - Honourable Mr.Justice T.S.Sivagnanam And Honourable Mr.Justice Sathi Kumar Sukumara Kurup For the Appellant : Mr.T.Ravikumar, Senior Standing Counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,64,03,628/-. The Officer also levied interest under Section 234D at an amount of ₹ 10,50,78,864/- as against the interest levied at ₹ 2,71,08,878/-. 3.The assessee went on appeal before the Commissioner of Income Tax (Appeals) on various aspects of the assessment and it also questioned the levy of interest under Section 234D contending that the provisions under 234D was introduced into the Statute under the Finance Act, 2003, w.e.f. 01.06.2003 and hence, the same was not applicable to the assessee. Thus the demand was set aside by the Commissioner of Income Tax (Appeals). 4.Aggrieved by this, the Revenue went on appeal before the Income Tax Appellate Tribunal. The Tribunal dismissed the Revenue's appeal holding that there was no decision of the jurisdictional High Court on the issue and that the Delhi High Court in the case of Director of Income Tax vs. Jacabs Civil Incorporated [2011] 330 ITR 578 had already taken a decision that Section 234D was applicable only on and from assessment year 2004- 05 onwards only. Thus the Revenue's appeal was dismissed. Hence, the present appeal. 5.Learned Standing Counsel appearing for the Revenue pointe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provision is referable to re-assessment under Section 147 revising the original assessment order made under Section 143(3) of the Act? (ii) Whether the assessment made under Section 143(3) r/w 147 as by way of re-opening would also be covered by Section 234D? 4.From the above order, it is seen that the above substantial questions of law framed for consideration in this appeal, were not the grounds, which were canvassed before the Tribunal. Under normal circumstances, an appellant, who prefers an appeal under Section 260A of the Act, will be entitled for his appeal to be heard only on the questions so formulated and the respondent, shall at the hearing of the appeal, be allowed to argue that the case does not involve such question. 5.The proviso under sub-section (4) of Section 260A provides that nothing in sub-section (4) shall be deemed to take away or abridge the power of the Court to hear, for reasons to be recorded, the appeal on any other substantial question of law not formulated by it, if it is satisfied that the case involves such question. Precisely, the Division Bench while passing the order dated 21.03.2014, exercised its power under the proviso to su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was allowed holding that Section 234D will not be applicable for the assessment year 2001-02, as the said provision was introduced by Finance Act, 2003 with effect from 01.06.2003. Aggrieved by the same, the Revenue preferred appeal before the Tribunal, but the Tribunal dismissed the appeal by the impugned order, which is questioned before us in this tax case appeal. 8.As mentioned above, the questions to be decided were not an issue either before the CIT(A) or before the Tribunal. Thus, we are required to decide as to whether the assessment under Section 143(3) read with Section 147 of the Act dated 26.12.2008, would also be covered by Section 234D of the Act. 8.1.Section 234D deals with 'interest on excess refund'. 8.2.Sub-section (1) of Section 234 states that subject to the other provisions of the Act, where any refund is granted to the assessee under sub-section (1) of Section 143 and (a) no refund is due on regular assessment; or (b) the amount refunded under sub-section (1) of Section 143 exceeds the amount refundable on regular assessment, the assessee shall be liable to pay simple interest at the rate of one-half per cent on the whole or the excess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was made on 31.03.2004. Subsequently, notice under Section 148 was issued on 28.03.2008. The assessee, by letter dated 27.04.2008, requested to treat the original return filed on 31.10.2001 as a return in response to the notice under Section 148 of the Act. The reasons for reopening were furnished and the assessee objected to the reopening and ultimately, the assessment stood completed under Section 143(3) read with Section 147 of the Act, by order dated 26.12.2008. Thus, the facts clearly show that there was an assessment, which was made under Section 143(3) on 31.03.2004. In such circumstances, can the assessment order dated 26.12.2008 passed under Section 143(3) read with Section 147 of the Act be regarded as the assessment made made for the first time to be regarded as a regular assessment in terms of the definition contained in Section 2(40) of the Act. 10.The following decisions cited at the Bar would have facilitate us in answering the substantial questions of law, which have been framed for consideration:- 10.1.In Darshan Lal Gulati vs. CIT [(2008) 173 Taxman 268 (Punjab Haryana)], the assessee filed its return of income for the assessment year 1988-89 on 31 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... furnishing a return of income or furnishing such a return on being served a notice under Section 148, is a 'regular assessment' under Section 2(40) of the Act, but an order passed by the Assessing officer making a reassessment or revised assessment in a case where an assessment had been made, does not come within the meaning of the said expression. 10.3.In Modi Industries Ltd. vs. CIT [(1995) 216 ITR 759 (SC)], after examining the scheme of the Act without taking into consideration the amendments made to Section 2(40) from time to time, the Hon'ble Supreme Court held that if regular assessment means the final assessment made after and pursuant to the appellate order under Section 250, then the sub-section becomes meaningless. It was further pointed out that the sub-section speaks of the amount on which interest is payable under sub-section (1) being increased or decreased as a result of the appellate order, which necessarily means that the order of regular assessment referred to in sub-section (1) is not the order of assessment made pursuant to the appellate order, but the original assessment order, Explanation (2) introduced by the Amendment Act states that w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r section 147 of the Act, the amount refundable to the assessee got reduced to ₹ 8.75 crores. Hence a sum of ₹ 2.33 crores became collectible from the assessee. The Assessing Officer levied interest of ₹ 29,14,110 under section 234D of the Act on the amount so became collectible. The assessee challenged the said interest charged under section 234D of the Act before Learned CIT(A), who held that the interest under section 234D is not chargeable in the hands of the company in reassessment proceeding. The revenue has challenged the said decision of Learned CIT(A) before us. 5.3.1.The learned Departmental Representative submitted that the interest under section 234D can be charged if the amount of refund already granted became collectible in a regular assessment. For the said purpose, the assessment made for the first time under section 147 of the Act is treated as regular assessment . The impugned assessment is the assessment made for the first time under section 147 of the Act, i.e., there is no other section 147 assessment earlier. The only assessment order available is the assessment order made under section 143(3) of the Act. Accordingly, he submitted tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be termed as a regular assessment for the purpose of section 234D of the Act. According to the learned Departmental Representative the impugned assessment is the assessment made for the first time under section 147 of the Act and hence it can be called as regular assessment for the purpose of charging interest under section 234D, i.e., according to learned Departmental Representative the second and subsequent reassessments made under section 147 of the Act after the completion of first reassessment under section 147 of the Act are only excluded from the purview of section 234D of the Act. However, we are not able to agree with the said contentions of the learned CIT(DR). According to us the interpretation made by the learned CIT(A) appears to be acceptable. For the sake of convenience, we extract below the relevant observations of the learned CIT(A): 9.1 After hearing the learned Authorised Representative and on a careful consideration of the facts relating to the issue, it may be stated that regular assessment has been defined to mean assessment order passed under section 143(3) or under section 144 or where the assessment has been made for the first time under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed under Section 143(3) read with Section 254 giving effect to the Tribunal's order. 16.The other question was whether the provisions of Section 234D introduced with effect from 01.06.2003 is applicable to the assessment years prior to the assessment year 2004-05. This decision has been referred to by us, since the Court in the said case noted the memorandum explaining the provisions in the Finance Bill, 2012 to get clarity on the issues when Explanation (2) was inserted by Finance Act, 2012 with retrospective effect from 01.06.2003. Taking note of the said memorandum, the Court proceeded to consider and it was held that no interest can be charged under Section 234D of the Act, as it is not a 'regular assessment'. The operative portion of the judgment reads as follows:- 17.To get clarity on the issue, when Explanation (2) was inserted by the Finance Act, 2012 with retrospective effect from 01.6.2003, we will have to look into the Memorandum Explaining the Provisions in the Finance Bill, 2012. The issue relating to charging of interest on recovery of refund granted earlier is dealt in Clause 85 of the Memorandum, which reads as follows : Chargin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , which have completed on or after 01.6.2003 irrespective of the assessment year, to which, it pertains. In our considered view, Explanation (2) cannot be read in isolation from Sub-Section (2) of Section 234D of the Act and the entire Section should be read as a whole. If we adopt such a procedure, the correct legal position emanates because the charging provision is Sub-Section (1) of Section 234D of the Act. In the said Sub-Section namely SubSection (1), in three places, the expression 'regular assessment' occurs namely in Section 234D(1)(a), Section 234D(1)(b) and the remaining portion of Section 234D of the Act. 20.The question would be as to whether the order passed by the Assessing Officer dated 20.6.2008 could be taken as a regular assessment. 21.In our considered view, the same cannot be done so because an order passed under Section 154 cannot be taken to be framing of a regular assessment for such a year. Further, in our opinion, the regular assessment in the assessee's case is the assessment order passed under Section 143(3) of the Act on 30.3.2001. Admittedly, in the said order dated 30.3.2001, there was no levy of interest on the assessee. Fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment under Section 147 read with Section 143(3) was the assessment done for the first time. 18.In CIT vs. K.P.Baburaj [(1998) 234 ITR 0718 (Kerala)], it was held that any assessment made for the first time by resort to Section 147 will also be a 'regular assessment' for the purpose of invoking Section 147 of the Act. Though the legal position which emerges from the above decision is that Explanation (1) would stand attracted, if an assessment is made for the first time under Section 147 or Section 153A and the assessment if it is done for the first time, it shall be regarded as a 'regular assessment' under Section 2(40) of the Act. 19.In the instant case, admittedly, the assessment order dated 26.12.2008 under Section 143(3) read with Section 147 was not the first assessment, as the assessment was under Section 143(3) dated 31.03.2004, which fact is not disputed. 20.The decision in the case of CIT vs. Fertilizers Chemicals Travancore Ltd. [(2019) 307 CTR 0349 (Ker.)] would also help us in answering the substantial questions of law, though it was a case arising under Section 234B(3) of the Act wherein, it was held that interest payable ..... X X X X Extracts X X X X X X X X Extracts X X X X
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