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TMI Blog2004 (3) TMI 321X X X X Extracts X X X X X X X X Extracts X X X X ..... income tax return, in the course of processing of income-tax return under section 143(1)(a) of the Act. Both the parties agree that it is this core issue which is required to be adjudicated upon, in order to resolve the dispute before us. 3. Parties are heard and records perused. 4. We find that Hon'ble Delhi High Court, in the case of Dr. Prannoy Roy v. CIT [2002] 254 ITR 755, held that interest under section 234A is not leviable in a case where the assessee has paid the tax, even though return is not filed. Their Lordships have held that "interest (under section 234A) would be payable in a case where tax has not been deposited prior to the due date of filing of income-tax return" which admittedly is not the case here. 5. Hon'ble Bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assessing Officer has no option but to charge the interest under section 234A when conditions laid down under the statutory provisions are satisfied, and, that, for this reason, action of the Assessing Officer was within the framework of law. Learned Departmental Representative contends that we cannot wish away the scheme of the Act. On this aspect, we can do no better than to point out that, in the hierarchical judicial system that we have in this country, we are to respectfully follow the judgments of higher tiers of judiciary, and to reproduce following observations of Hon'ble Supreme Court in the case of Asstt. CCE v. Dunlop India Ltd. [1985] 154 ITR 172 in this regard:- "We desire to add and as was said in Cassell Co. Ltd. v. Bro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), all that could have been rectified by the Assessing Officer was something which was free from debate or controversy. According to the learned Departmental Representative, levy of interest under section 234A, on the facts of this case, was entirely free from any doubt but assuming that it can be said to be debatable, such a highly debatable and contentious issue could not have been subject-matter of rectification of mistake under section 154 of the Act. This plea, however, is devoid of legally sustainable merits. First of all, on merits we have held following Hon'ble Delhi High Court's judgment in Dr. Prannoy Roy's case, that levy of interest under section 234A and on the facts of this case, is unsustainable in law. In case, however, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter. The levy of interest under section 234A cannot held to be compensatory in nature in the sense that if this argument of the revenue is to be accepted, it cannot then be made in a case where tax is already deposited by the assessee and only the return is delayed. What will it compensate for when the taxes are already paid by the assessee and there are no taxes due and payable by the assessee? On the other hand, if it is to be viewed as penal in nature, it is difficult to comprehend as to how an action, which is penal in effect, can be taken without giving an opportunity of hearing to the person who is being de facto penalized. Such an action cannot but be patently in violation of well settled principles of natural justice, aptly summed u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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