2001 (2) TMI 317 - AT - Income Tax

Summary

Issues:
Levy of interest under sections 234B and 234C - Appeal against levy of interest under the Income Tax Act - Interpretation of legal provisions regarding interest charges.

Analysis:

1. The appellant contested the confirmation of interest levied under sections 234B and 234C by the CIT(A), arguing that the appeal against such interest charges should be allowed. The appellant's return of income for the assessment year disclosed a total income, but due to a retrospective amendment in the Finance Act, an additional amount was added to the income, leading to increased tax liability and subsequent interest charges under sections 234B and 234C.

2. The CIT(A) upheld the levy of interest, emphasizing that the charging of interest is mandatory upon default, regardless of the reason for the default. The appellant's argument regarding the appealability of interest charges under sections 234B and 234C was dismissed by the CIT(A) based on the absence of specific provisions for such appeals in the Income Tax Act.

3. The appellant's counsel contended that the interest was imposed solely due to the retrospective amendment, which was unforeseeable at the time of advance tax payment. Reference was made to relevant legal precedents to support the appeal against the interest charges, highlighting the distinction between the present case and previous judgments concerning interest under different sections of the Act.

4. The Departmental Representative supported the lower authorities' decisions, asserting that no appeal lies against the levy of interest under sections 234B and 234C, as the charging of interest is deemed mandatory upon default occurrence.

5. The Tribunal analyzed the submissions and legal framework, concluding that the interest charges were a direct result of the retrospective amendment and were not anticipated by the appellant during advance tax payment. Drawing parallels to previous Supreme Court judgments, the Tribunal held that an appeal does lie against the levy of interest under sections 234B and 234C, as it is part of the assessment process.

6. Considering the appellant's inability to foresee the retrospective amendment and relying on legal precedents, the Tribunal reversed the lower authorities' decisions and deleted the interest charges imposed under sections 234B and 234C for the relevant assessment year. The appeal was allowed in favor of the appellant.