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TMI Blog2024 (5) TMI 292X X X X Extracts X X X X X X X X Extracts X X X X ..... rest payable to or, as the case may be, by the assessee, i.e., ss. 214, 215, also adverting to ss. 243 and 244 - The said provisions are no longer operative, with, further, there being legislative changes, the legal import of which is to be judicially determined. The decision in Mahesh Investments . [ 2020 (10) TMI 428 - KARNATAKA HIGH COURT] and by the Tribunal in Santhimadom Herbal City Trust [ 2013 (7) TMI 1219 - ITAT COCHIN] stand rendered de hors the same. There being no consideration of the changed legal scenario, we only consider it fit and proper to restore this issue, i.e., computation of interest u/ss. 234A 234B, back to the file of the ld. CIT(A) for a consideration afresh, who shall adjudicate thereon per a speaking order after allowing adequate opportunity of hearing to the parties before him, in accordance with law, considering all the decisions that may be relied upon by them, or that he may wish to rely upon, confronting them therewith. All contentions qua this issue, whether raised and considered in this order or not, are, without reservation, open to both the sides. We may not be construed as having expressed any final view in the matter, save as to the instant ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o for each of the years under appeal, specifying the Grounds being not pressed, viz. Grounds 1 to 3, for AY 2005-06. The issue, he would continue, which stands discussed by the ld. CIT(A) at paras 5.6 through 5.14 of his order, is covered by the Tribunal s order in a group case (Santhimadom Herbal City Trust v. Asst. CIT, in ITA Nos. 920 921/Coch/2022, dated 14.11.2023). Though the same is w.r.t. sec. 234A only, the issue is common, the provision of s. 234B r/w Explanation 2 thereto being pari materia. Smt. Devi, the ld. Sr. DR, would rely on the impugned order, though concede that if, as stated, covered, the Tribunal may follow the same. The hearing was closed at this stage. 4. We have heard the parties, and perused the material on record, as well as considered the legal position in the matter, including the order by the Tribunal in Santhimadom Herbal City Trust(supra). 4.1 We begin by recounting the facts of the case in brief. Assessment/s in the first instance was made u/s. 153C r/w s. 144 on 28.12.2010. The Tribunal, in appeal, set aside the assessment for fresh consideration vide it s order dated 10.07.2013 (in ITA Nos. 223 to 227/Coch/2013 / copy on record); the relevant part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 date immediately following the due date, and, (a) where the return is furnished after the due date, ending on the date of furnishing of the return; or (b) where no return has been furnished, ending on the date of completion of the assessment under section 144, on the amount of the tax on the total income as determined under sub-section (1) of section 143, and where a regular assessment is made, on the amount of the tax on the total income determined under regular assessment, as reduced by the amount of, (i) advance tax, if any, paid; (ii) any tax deducted or collected at source; (iia) any relief of tax allowed under section 89; (iii) any relief of tax allowed under section 90 on account of tax paid in a country outside India; (iv) any relief of tax allowed under section 90A on account of tax paid in a specified territory outside India referred to in that section; (v) any deduction, from the Indian income-tax payable, allowed under section 91, on account of tax paid in a country outside India; and (vi) any tax credit allowed to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest shall be increased or reduced accordingly, and (i) in a case where the interest is increased, the Assessing Officer shall serve on the assessee a notice of demand in the prescribed form specifying the sum payable, and such notice of demand shall be deemed to be a notice under section 156 and the provisions of this Act shall apply accordingly; (ii) in a case where the interest is reduced, the excess interest paid, if any, shall be refunded. (5) The provisions of this section shall apply in respect of assessments for the assessment year commencing on the 1st day of April, 1989 and subsequent assessment years. (emphasis, ours) Interest for defaults in payment of advance tax. 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 1st day of April next following such financial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 156 and the provisions of this Act shall apply accordingly ; (ii) in a case where the interest is reduced, the excess interest paid, if any, shall be refunded. (5) The provisions of this section shall apply in respect of assessments for the assessment year commencing on the 1st day of April, 1989, and subsequent assessment years. 4.3 The terms of the provisions are plain. Section 234A provides for levy of interest for not filing the return of income in time, so that it crystallizes on the due date of it s filing and, interest period, accordingly, commences from the date following the said date, continuing upto the date of filing the return or, in case of non-filing, the date of determination of income u/s. 143(1) or, where followed by regular assessment defined u/s. 2(40) to mean an assessment u/s. 143(3) or s. 144, the said date. An assessment u/s. 147 or s. 153A, where made for the first time, is to be regarded as the regular assessment. Where an assessment is modified in appeal or revision, increasing or decreasing the assessee s tax liability, interest being compensatory in character, i.e., w.r.t. the shortfall in the payment of tax, is modified proportionately. Interest u/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bal City Trust (supra), wherein, after noting the primary facts, which are in agreement with the instant case, it held as: 5.3 The primary facts are not in dispute. No return/s was furnished under any provision of the Act, with that on 31.12.2010 being non-est. There has accordingly been no processing of return/s u/s. 143(1), or even assessment/s u/s. 143(3). The assessment/s dated 28/12/2020 is the first assessment/s, which accordingly is to be regarded as the regular assessments referred to in sec.234A(1)(b). Accordingly, the interest chargeable would be u/s.234A, from 01.8.2007 (01.8.2008) to 28.12.2010. The amendment to an assessment pursuant to an order, inter alia, u/s.254, as in the instant case, only impacts interest u/s. 234A(1) in terms of the principal sum, on variation, downward or upward, in assessed tax. The same would not operate to extend the period for which the interest is charged, which gets crystallized on the completion of regular assessment for the first time. True, the original assessment/s stands set aside, but the same is accompanied by a direction to frame a fresh assessment/s, which thus is in consequence thereof. The order u/s.254(1), it may be noted, ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eing supportive of the assessee s case. 4.6 The Apex Court in ITO v. Seghu Buchiah Setty [1964] 52 ITR 538 (SC) held that there was not much difference between annulment and set aside of an order inasmuch as both wipe out the original order; in it s words:(pg. 544) There is not much difference between annulling an order and setting it aside; both wipe out the original order. In the facts of the case the issue was as to whether the demand notice per the original order survived on the demand being subsequently reduced in appellate proceedings, and which was, we emphasize, without a set aside , much less total, of the original order. The issue arose in the context of the assessee being or, not being, in default, which could only be in respect of an undischarged valid demand notice. The majority view held it as not inasmuch as the AO had to issue fresh notice for recovery of the reduced demand, and which he had not. The order of reduction, in it s opinion, must necessarily have the effect of setting aside the original order as a whole. The relevance of this, inasmuch as the law, per sub-sections (4) of ss. 234A / 234B, itself contemplates consequential amendment in interest, i.e., corr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onally infirm. The result of a review of his order and its set aside by the Collector, the Hon ble Court observed, was that the proceedings before the Additional Collector were restored. The effect, like-wise, of the review of the appellate order by the Tribunal vide it s order dated 10/7/2013, is that the said order is set aside, and the assessment proceedings restored before the AO, who is to accordingly proceed as per it s order. In Suptd. (Central Excise) v. Pratap Rai [1978] 114 ITR 231 (SC), the appellate authority, observing lack of principle of natural justice, vacated, without prejudice, the adjudication by an order levying penalty. The challenge to a fresh notice issued in the penalty proceedings was found misconceived by the Apex Court. As explained by it, where an order passed in appeal vacates the order of the first Tribunal on purely technical grounds and expressly states that it was being passed without prejudice, which means an order not on the merits of the case, such an order does not debar fresh proceedings which may be justified under the law. It is necessary for the court interpreting an order of this kind to give full and complete effect to the exact words use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay at this stage advert to the decision in Mahesh Investments (supra), relied upon by the Revenue before us (refer para 5.12 of the impugned order), even as the assessee had in Santhimadom Herbal City Trust (supra), found opposite by the Tribunal. The said decision, as its reading shows, states that even where set aside and, thus, effaced, it is the original assessment that shall be regarded as the regular assessment for reckoning the period of interest, which in that case was u/s. 234A of the Act. The decision does not, however, dwell on how an assessment which obtains no longer, could be deemed as valid, with it being at the same time trite law that it is the operative principle, the ratio decidendi of the decision, that has precedent value (The Mavilayi Service Cooperative Bank Ltd. Ors. v. CIT [2021] 431 ITR 1 (SC); Sree Bhagavathi Textiles Ltd. v. CIT[2000] 244 ITR 496 (Ker)). The only opinion therefore on record is that by the Tribunal in Santhimadom Herbal City Trust (supra), which we have, for the reasons afore-stated, found as not commending itself for adoption, with there being no estoppel against law. The Tribunal, in rendering it s said decision, did not consider the le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to and by the assessee on excess or, as the case may be, shortfall of advance tax, are operative only upto AY 1988-89. Section 234A provides for interest on delay in furnishing the return of income, either absolutely or belatedly, and ss. 234B and 234C for shortfall in the aggregate/individual installments of advance-tax, stand inserted under Part F (Interest chargeable in certain cases) in Chapter XVII w.e.f. 01.04.1989, i.e. AY 1989-90 onwards. Sections 243 and 244, providing for refunds under sections, inter alia, s. 214, were again, only up to AY 1988-89, and found expression, in a modified form, in s. 244A, under the same Chapter, w.e.f. AY 1989-90. Further, the following proviso was added to s. 240, w.e.f. 01.04.1989: Provided that where, by the order aforesaid, (a) an assessment is set aside or cancelled and an order of fresh assessment is directed to be made, the refund, if any, shall become due only on the making of such fresh assessment; (b) the assessment is annulled, the refund shall become due only of the amount, if any, of the tax paid in excess of the tax chargeable on the total income returned by the assessee. (emphasis, ours) Is it then indicative of the demand b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ingency, that may not by itself imply that the ensuing assessment is barred by time. Reference in this context be made to CIT v. National Traders [1980] 121 ITR 535 (SC). The impugned assessments are thus valid in law, and the only issue that therefore survives is the period of interest u/ss. 234A/B. In Sum: 4.10 The issue in the instant case pertains to the termini point for reckoning the period of interest u/ss. 234A and 234B, where the original assessment stands set aside in the appellate proceedings for fresh assessment. The original demand surviving no longer, the Revenue claims the subsequent assessment as the regular assessment, while the assessee claims it to be the first one. The issue stands considered by the Tribunal in Santhimadom Herbal City Trust (supra). The said decision, however, does not consider and, accordingly, issues no finding qua the legal effect of a set aside , while the same is the basis of the Revenue s objection, found valid on the basis of settled jurisprudence in the matter. True, the Tribunal in Santhimadom Herbal City Trust (supra) does speak of no obliteration of demand consequent to an assessment being set aside, but the question of the status of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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