TMI Blog1995 (11) TMI 82X X X X Extracts X X X X X X X X Extracts X X X X ..... ge to the vires of the provisions, for, as is evident from a plain reading of these provisions, they are not penal in nature and, therefore, no element of arbitrariness or violation of rules of natural justice, as alleged, can be attached to them. They merely provide for payment of interest by an assessee who commits default in furnishing the return either under section 139(1) or section 139(4), or in response to a notice under section 142(1) of the Act has either failed to pay the advance tax or the advance tax already paid is less than 90 per cent. of the tax assessed against him. No person can make a grievance as to any provision which enjoins upon him the obligation to submit the return in respect of his taxable income or to pay advance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the interest under sections 234A and 234B of the Act can be levied only on the tax payable on the returned income and not on the tax payable on the assessed income. Reliance is placed on the decision of the apex court in J. K. Synthetics Ltd. v. CTO AIR 1994 SC 2393 ; [1994] 94 STC 422 (SC). The petitioner has preferred an appeal against the assessment order. The argument of counsel, however, is that what has been challenged before the appellate authority is the inclusion of the amount of "entrance fee" and the computation of the taxable income, and not levy of interest which is not appealable and that being the position, the petitioner has had no option but to approach this court under articles 226 and 227 of the Constitution. The as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndment provides : " In this sub-section, 'tax on the total income as determined under sub-section (1) of section 143 or on regular assessment' shall, for the purposes of computing the interest payable under section 140A, be deemed to be tax on total income as declared in the return. " Section 140A lays down that where any tax is payable on the basis of a return required to be furnished under section 139 or section 148, after taking into consideration the amount of tax, if any, already paid under any provision of the Act, the assessee shall be liable to pay such tax, together with interest payable under any provision of the Act for any delay in furnishing the return or any default or delay in the payment of advance tax, before furnishing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t interfered with ? The levy of interest would obviously stand. This writ petition cannot, therefore, be dismissed merely because an appeal against the assessment order has been preferred and is pending. Now the question is whether interest on the amount of tax found payable on the assessed income can be levied at this stage. From the facts mentioned hereinabove it is clear that there was no default in filing the return and payment of self-assessed/advance tax. The notice under section 142(1) which is said to have been not complied with leading to the levy of interest, was sent after considering the show-cause filed by the petitioner pursuant to notice under section 147/148 in the course of scrutiny of the return under section 143(1)(a). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a different matter if the return is not approved by the authority but that is not the case here. It is difficult, on the plain language of the section to hold, that the law envisages the assessee to predict the final assessment and expect him to pay the tax on that basis to avoid the liability to pay interest. That would be asking him to do the near impossible. " Although as stated above, the context in which the observations were made was somewhat different but the principle laid down by their Lordships, in my opinion, would squarely cover cases of the present nature. The assessee is not supposed to pay interest on the amount of tax which may be assessed in a regular assessment under section 143(3) or best of judgment under section 144 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f notices. When section 234A refers to the notice under section 142(1) it obviously means notice to file the return of income in cases of non-filing. The object underlying section 234A is to create additional liability to pay interest for the default in furnishing the return of income, the object is not to penalise an assessee, who has already filed the return under section 139 for not producing accounts or documents and so on under clause (ii) or (iii) of section 142(1). In my considered opinion, therefore, the necessary conditions as required under section 234A are not made out in the instant case and, therefore, the levy of interest is not justified. In the result, this application is allowed. The notice of demand of interest of Rs. 78 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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