2010 (3) TMI 924 - AT - Income Tax

Summary

Issues involved: Charging of interest u/s 234A and 234B of the Income-tax Act, 1961.

Charging of Interest u/s 234A:
The case involved a dispute regarding the charging of interest under sections 234A and 234B of the Income-tax Act, 1961. The appellant contended that proper credit for taxes paid was not given before calculating the interest. The Assessing Officer had charged interest under sections 234A, 234B, and 234C of the Act. The Commissioner of Income-tax (Appeals) upheld the levy of interest u/s 234A, stating that interest would be payable if tax had not been deposited prior to the date of filing the income-tax return. The Commissioner emphasized that the provisions of section 234A are unambiguous and must be followed mandatorily. The appellant argued that interest under section 234A should only be charged until the date taxes were paid, not beyond that. The Income-tax Appellate Tribunal held that interest under section 234A would be chargeable on the amount of tax retained by the assessee during the period when the return of income was not filed. The Tribunal directed the Assessing Officer to compute the tax payable under section 234A accordingly.

Charging of Interest u/s 234B:
Regarding the charging of interest under section 234B, the Commissioner of Income-tax (Appeals) observed that no specific reasons were raised against it during the proceedings. The interest under section 234B was deemed mandatory and consequential in nature, and therefore, rightly charged by the Assessing Officer. The Tribunal found no infirmity in the order confirming the charging of interest under section 234B of the Act.

In conclusion, the appeal by the assessee was partly allowed, with the Tribunal providing directions on the computation of interest under section 234A.