Section 94 - Insertion of new sections 234A, 234B and 234C - Direct Tax Laws (Amendment) Act, 1987

94. Insertion of new sections 234A, 234B and 234C. In Chapter XVII of the Income-tax Act, after section 234, the following heading and sections shall be inserted, namely :- F .- Interest chargeable in certain cases 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 of the assessment under section 144, on the amount of the tax on the total income as determined on re- gular assessment as reduced by the advance tax, if any, paid and any tax deducted at source. Explanation 1 .- In this section, due date means the date specified in sub-section (1) of section 139 as applicable in the case of the assessee. Explanation 2 .- In this sub-section and sub-section (3), tax on the total income as determined on regular assessment shall not include the additional income-tax, if any, payable under section 158B. Explanation 3 .- Where, in relation to an assessment year, an assessment is made for the first time under section 147, the assessment so made shall be regarded as a regular assessment for the purposes of this section. (2) The interest payable under sub-section (1) shall be reduced by the interest, if any, paid under section 140A towards the interest chargeable under this section. (3) Where the return of income for any assessment year, required by a notice under section 148 issued after the completion of an assessment under sub-section (3) of section 143 or section 144 or section 147, is furnished after the expiry of the time allowed under such notice, 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 day immediately following the expiry of the time allowed as aforesaid, and,- (a) where the return is furnished after the expiry of the time aforesaid, ending on the date of furnishing the return; or (b) where no return has been furnished, ending on the date of completion of the re-assessment or re-computation under section 147, on the amount by which the tax on the total income determined on the basis of such re-assessment or re-computation exceeds the tax on the total income determined on the basis of the earlier assessment aforesaid. Explanation .- In this sub-section, tax on the total income determined on the basis of the re-assessment or re-computation under section 147 shall not include the additional income-tax, if any, payable under section 158B. (4) Where, as a result of an order under section 154 or section 155 or section 250 or section 254 or section 260 or section 262 or section 263 or section 264 or an order of the Settlement Commission under sub-section (4) of section 245D, the amount of tax on which interest was payable under sub-section (1) or sub-section (3) of this section has been increased or reduced, as the case may be, the interest shall be increased or reduced accordingly, and- (i) in a case where the interest is increased, the Assessing Officer shall serve on the assessee a notice of demand in the prescribed form specifying the sum payable, and such notice of demand shall be deemed to be a notice under section 156 and the provisions of this Act shall apply accordingly; (ii) in a case where the interest is reduced, the excess interest paid, if any, shall be refunded. (5) The provisions of this section shall apply in respect of assessments for the assessment year commencing on the 1st day of April, 1989 and subsequent assessment years. 234B. Interest for defaults in payment of advance tax. (1) Subject to the other provisions of this section, where, in any financial year, an assessee who is liable to pay advance tax under section 208 has failed to pay such tax or, where the advance tax paid by such assessee under the provisions of section 210 is less than ninety per cent. of the assessed tax, 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 from the 1st day of April next following such financial year to the date of the regular assessment, on an amount equal to the assessed tax or, as the case may be, on the amount by which the advance tax paid as aforesaid falls short of the assessed tax. Explanation 1 .- In this section, assessed tax means the tax on the total income determined on the basis of the regular assessment, as reduced by the amount of tax deducted at source in accordance with the provisions of Chapter XVIIB on any income which is subject to such deduction and which is taken into account in computing such total income. Explanation 2 .- Where in relation to an assessment year, an assessment is made for the first time under section 147, the assessment so made shall be regarded as a regular assessment for the purposes of this section. Explanation 3 .- In Explanation 1 and in sub-section (3), tax on the total income determined on the basis of the regular assessment shall not include the additional income-tax, if any, payable under section 158B. (2) Where, before the date of completion of a regular assessment, tax is paid by the assessee under section 140A or otherwise,- (i) interest shall be calculated in accordance with the foregoing provisions of this section up to the date on which the tax is so paid, and reduced by the interest, if any, paid under section 140A towards the interest chargeable under this section; (ii) thereafter, interest shall be calculated at the rate aforesaid on the amount by which the tax so paid together with the advance tax paid falls short of the assessed tax. (3) Where, as a result of an order of re-assessment or re-computation under section 147, the amount on which interest was payable under sub-section (1) is increased, 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 day following the date of the regular assessment referred to in sub- section (1) and ending on the date of the re-assessment or re-computation under section 147, on the amount by which the tax on the total income determined on the basis of the re-assessment or re-computation exceeds the tax on the total income determined on the basis of the regular assessment aforesaid. Explanation .- In this sub-section tax on the total income determined on the basis of the re-assessment or re-computation under section 147 shall not include the additional income-tax, if any, pay- able under section 158B. (4) Where, as a result of an order under section 154 or section 155 or section 250 or section 254 or section 260 or section 262 or section 263 or section 264 or an order of the Settlement Commission under sub-section (4) of section 245D, the amount on which interest was payable under sub-section (1) or sub-section (3) has been increased or reduced, as the case may be, the interest shall be increased or reduced accordingly, and - (i) in a case where the interest is increased, the Assessing Officer shall serve on the assessee a notice of demand in the prescribed form specifying the nim payable and such notice of demand shall be deemed to be a notice under section 150 and the provisions of this Act shall apply accordingly; (ii) in a case where the interest is reduced, the excess interest paid, if any, shall be refunded. (5) The provisions of this section shall apply in respect of assessments for the assessment year commencing on the 1st day of April, 1989 and subsequent assessment years. 234C. Interest for deferment of advance tax. (1) Where in any financial year, the advance tax paid by the assessee on his current income on or before the 15th day of September is less than twenty per cent. of the tax due on the re- turned income or the amount of such advance tax paid on or before the 15th day of December is less than fifty per cent. of the tax due on the returned income, then, the assessee shall be liable to pay simple interest at the rate of one and one-half per cent. per month of the shortfall from for a period of three months on the amount of the shortfall from twenty per cent. or, as the case may be, fifty per cent, of the tax due on the returned income. Explanation .- In this section, tax due on the returned income . means the tax chargeable on the total income declared in the return of income furnished by the assessee for the assessment year commencing on the 1st day of April immediately following the financial year in which the advance tax is paid, as reduced by the amount of tax deductible at source in accordance with the provisions of Chapter XVIIB on any income which is subject to such deduction and which is taken into account in computing such total income. (2) The provisions of this section shall apply in respect of assessments for the assessment year commencing on the 1st day of April, 1989 and subsequent assessment years. .