TMI Blog1996 (7) TMI 126X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to a larger Bench for an authoritative decision. While section 234A deals with levy of interest for default in furnishing return of income ; under section 234B interest has to be levied for defaults in payment of advance tax and under section 234C interest is payable for deferment of advance tax. Since the aforesaid decision of this court in Ranchi Club Ltd. v. CIT [1996] 217 ITR 72 really interpreted the provisions of section 234A, we may set out the relevant part of this section as under : 234A. Interest for defaults in furnishing return of income. --- (1) Where the return of income for any assessment year under sub-section (1) or sub-section (4) of section 139, or in response to a notice under sub-section (1) of section 142, is furnished after the due date, or is not furnished, the assessee shall be liable to pay simple interest at the rate of two 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 234A and 234B was liable to be charged on the tax payable on the returned income or the assessed income ? (ii) Whether interest was chargeable under these sections only on the tax payable on such returned income which the assessee bona fide and in good faith believed to be the income liable to tax ? (iii) Whether interest could be levied merely through a notice of demand under section 156 of the Act where there was no specific order in the assessment order that interest was leviable and for charging such interest ? (iv) Whether mere insertion of the words in the assessment order charge interest, if any or charge interest as per rules was sufficient for charging interest through the notice of demand ? (v) Whether appeal lay against the order for charging interest under sections 234A and 234B of the Act ? Mr. Moitra did not challenge the vires of sections 234A and 234B as the validity had been upheld in the earlier Bench decision of this court in the case of Ranchi Club [1996] 217 ITR 72. Mr. Moitra strongly relied on the aforesaid decision in support of his first two submissions. To understand the rival contentions better it will be advantageous to refer to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellate order interest charged under sections 234A and 234B was levied in the sum of ₹ 15,980 and ₹ 55,930, respectively. Out of the remaining five cases which are of Ranchi Club in the cases for the assessment year 1992-93 (C. W. J. C. No. 3494 of 1995(R)), the assessment year 1993-94 (C. W. J. C. No. 3527 of 1995(R)) and the assessment year 1994-95 (C. W. J. C. No. 3609 of 1995(R)), the operative portions of the orders read as under : Assessed under section 143(3) of the Income-tax Act, 1961, on total income of (as determined in each case). Issue demand notice, challan and copy of order and charge interest, if any. In the demand notices interest has been charged under sections 234A, 234B and 234C. In C. W. J. C. No. 3562 of 1995(R), the assessment year is 1990-91. After arriving at the total income, the operative portion of the order reads as under : Penalty proceedings under section 271(1)(c) is initiated. Charge interest as per rules. Assessed under section 143(3). Issue D.N., etc., tax as per ITNS-150 enclosed. In the notice of demand, interest has been charged under sections 234A, 234B and 234C, In the 5th case of Ranchi Club, C.W.J. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lay in furnishing 51 the return of income [Sections 139(8) and 139(9)] and also under the various sections for default in payment of advance tax (sections 215, 216, 217, 234B and 234C). A notice of demand is somewhat like a decree in a civil suit which must follow the order. When a judgment does not specify any amount to be charged under any particular section, the decree cannot contain any such amount. Similarly when the assessment order is silent if any interest is leviable, the notice of demand under section 156 of the Act cannot go beyond the assessment order and the assessee cannot be served with any such notice demanding interest. We, therefore, do not feel any difficulty in coming to the conclusion that the notices of demand in C.W.J.C. Nos. 3609 of 1995(R), 3287 of 1995(R), 3562 of 1995(R), 3494(R) of 1995 and 3527 of 1995(R), have to be quashed so far these relate to charging of interest under section 234A, 234B or 234C of the Act. We get support for the view which we have taken from the decisions of the Calcutta High Court in Monohar Gidwany v. CIT [1983] 139 ITR 498 and CIT v. Wiliard India Ltd. [1993] 202 ITR 423 and that of the Gauhati High Court in CIT v. Namdang Tea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax liability of the year exceeds ₹ 1,500, the assessee has to pay tax in advance as per various provisions contained in sections 208 to 210 of the Act. Under section 140A, the assessee will make his own assessment and pay the remaining tax (as reduced by the advance tax already paid, if any) and also interest payable under section 234A ; 234B or 234C. Under section 234A, it may be noticed, that if the assessee is caught within the mischief of this provision, then the interest on the prescribed rate has to be paid on the amount of tax on the total income as determined under sub-section (1) of section 143 or the regular assessment under sub-section (3) of section 143 as reduced by the advance tax, if any, paid and any tax deducted or collected at source. The question which arises for consideration is as to how the assessee would pay interest under section 234A when he had not even filed a return of income. It will appear that in a case like this there would be no question of determination of the amount of tax on the total income as determined under section 143(1) or on regular assessment, because the event of determination of income either under section 143(1) or on regular a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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