2025 (7) TMI 871 - AT - Income Tax

Levy of interest u/s 234A and wrong calculation of interest u/s 234B - assessee has submitted that the AO has levied the interest u/s 234A on the premises that the assessee has not filed the return of income however the assessee has duly filed the return of income which is also certified by AO - HELD THAT - From the record we find that the assessee has filed the return of income for the year under consideration which is also duly certified by the assessee. Further in the return of income the assessee has claimed the adjustment of cash seized during the search seizure operation of Rs. 23, 55, 000/- against the tax liability. Therefore all these facts are required to be verified and if found correct then the claim of the assessee is required to be considered while computing the interest u/s 234A. The assessee has also pointed out that the AO has not calculated the correct amount of the interest u/s 234B while passing the giving effect to the order of the CIT(A). This aspect is also required to be verified at the level of the AO. Accordingly we set aside this matter to the record of the Assessing Officer with the direction that the claim of the assessee regarding the correct amount of interest u/s 234A as well as u/s 234B to be verified and examined as per the facts of the case after giving an appropriate opportunity of hearing to the assessee. Appeal filed by the assessee is allowed for statistical purposes

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Tribunal in this appeal are:

(a) Whether the learned CIT(A) erred in disbelieving the Return of Income (ROI) filed by the assessee for the Assessment Year (AY) 2012-13 on the ground of correction of assessment year on the acknowledgment of the ROI.

(b) Whether the learned CIT(A) erred in disbelieving the assessee's statement that no notice under section 148 of the Income Tax Act was received, despite the absence of documentary proof from the assessee.

(c) Whether the learned CIT(A) erred in dismissing the assessee's ground regarding the levy of interest under section 234A on the premise that the return of income was not filed for AY 2012-13.

(d) Whether the learned CIT(A) erred in setting aside the fact of seizure of cash amounting to Rs. 22,50,000/- during search, which was recorded by the department and the Assessing Officer (AO), and whether this seized cash should be adjusted against the demand for AY 2012-13.

(e) Whether the Assessing Officer correctly calculated interest under sections 234A and 234B of the Income Tax Act, 1961, particularly in light of the return filed and the seized cash claimed to be adjusted against tax liability.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (a) and (c): Validity and Recognition of Return of Income (ROI) Filed for AY 2012-13 and Levy of Interest u/s 234A

The legal framework governing the filing of ROI and levy of interest under section 234A is that interest under this section is chargeable if the return is not filed within the prescribed time. The AO's premise for levying interest was that no ROI was filed for AY 2012-13.

The Court noted that the assessee had indeed filed the ROI for AY 2012-13, which was certified by the AO himself, as evidenced by the acknowledgment placed on record. The assessee also claimed adjustment of self-assessment tax against seized cash in the ROI.

The Tribunal observed that the CIT(A) disbelieved the ROI based on a correction in the assessment year on the acknowledgment, but the Tribunal found that the ROI was filed and certified by the AO, which establishes the filing of the ROI. Therefore, the premise for levy of interest under section 234A-that no ROI was filed-was incorrect.

The Tribunal directed that the claim of the assessee regarding filing of ROI must be verified and considered while computing interest under section 234A.

Issue (b): Non-Receipt of Notice under Section 148

The assessee contended non-receipt of notice under section 148, which was denied by the CIT(A) due to absence of documentary evidence. The Tribunal noted the difficulty faced by the assessee in proving non-receipt of a notice that was sent by the AO.

While the Tribunal did not delve deeply into this issue, it implicitly recognized the challenge of requiring documentary proof for non-receipt and suggested that the assessee should not be unduly burdened to prove a negative. However, since this issue was not the primary grievance and was not elaborated upon in the orders, the Tribunal did not pass any conclusive finding but focused on other substantive issues.

Issue (d): Adjustment of Seized Cash Against Tax Liability

The assessee claimed adjustment of cash seized during the search and seizure operation amounting to Rs. 23,55,000/- against the tax liability for AY 2012-13. The AO and departmental records recognized the seizure of cash of Rs. 22,50,000/-.

The Tribunal noted that the CIT(A) had set aside the fact of seizure, and the learned DR objected to the adjustment of seized cash in the absence of any request made by the assessee at the lower authorities.

The Tribunal found that since the assessee had claimed adjustment of the seized cash in the ROI, and this fact was supported by departmental records, the claim deserved verification. The Tribunal directed the AO to verify and consider the adjustment of seized cash against the tax liability if found correct.

Issue (e): Correct Calculation of Interest under Sections 234A and 234B

The assessee contended that the AO erred in calculating interest under section 234B while giving effect to the CIT(A)'s order, as the AO did not compute the correct tax amount for the purpose of interest calculation.

The Tribunal observed that the AO had not calculated the correct amount of interest under section 234B in the giving effect order and directed that this aspect be verified and corrected by the AO in accordance with the facts and the outcome of the CIT(A)'s order.

The Tribunal emphasized that the AO must consider the ROI filed, the advance tax reflected in Form 26AS, and the seized cash adjustment while computing interest under both sections 234A and 234B.

3. SIGNIFICANT HOLDINGS

The Tribunal held that:

"The assessee has filed the return of income for the year under consideration which is also duly certified by the assessee. Further, in the return of income, the assessee has claimed the adjustment of cash seized during the search & seizure operation of Rs. 23,55,000/- against the tax liability. Therefore, all these facts are required to be verified and if found correct, then the claim of the assessee is required to be considered while computing the interest u/s 234A of the Act."

It further held:

"The Assessing Officer has not calculated the correct amount of the interest u/s 234B while passing the giving effect to the order of the learned CIT(A). This aspect is also required to be verified at the level of the Assessing Officer."

Core principles established include:

• The filing of ROI, once certified by the AO, must be accepted as valid for the purpose of levy of interest under section 234A.
• The AO is duty-bound to verify and consider claims made in the ROI, including adjustments of seized cash, before levying interest or making demand.
• Interest under sections 234A and 234B must be computed correctly based on verified facts including ROI, advance tax payments, and any adjustments claimed.
• The burden on the assessee to prove non-receipt of statutory notices cannot be unduly onerous, particularly in absence of documentary evidence, and should be considered with due caution.

Final determinations on each issue were that the matter was remanded back to the AO for verification and reconsideration of the claims of the assessee regarding ROI filing, seized cash adjustment, and correct calculation of interest under sections 234A and 234B, after providing the assessee an opportunity of hearing.

The appeal was allowed for statistical purposes, indicating that the Tribunal did not decide the substantive tax liability but directed fresh consideration consistent with the findings above.