TMI Blog2000 (1) TMI 149X X X X Extracts X X X X X X X X Extracts X X X X ..... late Tribunal. In ground No. 1 the assessee had objected to the CIT(A)'s order in setting aside the issue and vide ground No. 2 the assessee had prayed that even if certain addition was warranted the same can be considered in the hands of the partners only and not in the hands of the assessee firm. In addition the following additional ground was also admitted by the Tribunal: "That under the facts and circumstances of the case the Ld. Assessing Officer grossly erred in law as well as on facts in charging interest under sections 234A and 234B." 3. The appeal filed by the assessee was adjudicated by the Tribunal and vide its order dated29-1-1999the Tribunal upheld the order of the CIT(A) in setting aside the issue. However, no finding was given regarding ground No. 2. On the issue of charging interest under sections 234A 234B he directed the Assessing Officer to allow consequential relief. As the assessee felt that there were certain apparent mistakes in the order of the Tribunal, a Miscellaneous Application was moved. Vide this application a request was made that the Tribunal may give its finding on ground No. 2 which involved the interpretation of law. Regarding charge of int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 84 (Delhi); India Rice Mills v. CIT [1996] 218 ITR 508/ 85 Taxman 227 (All.); Jivanlal Joitaram Patel v. ITO [1997] 92 Taxman 282 (Ahd. - Trib.); Deecee Nylons v. Asstt. CIT [1998] 97 Taxman 110 (Ahd. - Trib.); Vinay Cloth Stores v. ITO[1998] 96 Taxman 20 (Ahd. - Trib.) and Maganbhai Becharbhai Patel Co. v. ITO [1994] 77 Taxman 355 (Ahd. - Trib.). 6. It was claimed that the issue was covered in favour of the assessee by the decision of the jurisdictional High Court in Precision Metal Works case and therefore, no addition could be made in the hands of the assessee firm in respect of capital credited to the accounts of the partners. 7. On the other hand, the learned DR stated that the decisions relied on by the learned counsel are distinguishable on facts. It was argued that in the case of Precision Metal Works the Hon'ble Delhi High Court had observed that the income could be either the income of the firm or the income of the individual partner. It could not be income of both. The Hon'ble Court held that the assessment of the partners had resulted in the sum being charged to tax in their hands as the same was surrendered by them as their income, the same could not be brought t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as an undisclosed income of the partner alone." Hon'ble Madhya Pradesh High Court in the case of Shiv Shakti Timbers has considered a similar issue. The issue referred for the consideration of theHon'ble Courtwas as under: "1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law to hold that if a firm's books showed a cash credit in the name of a partner, it is section 69 and not section 68 which Could be attracted in the case of partner only ? 2. Whether, the Tribunal was correct in law to hold that the provisions of section 68 did not apply in the case of firm if the cash credit, even though unexplained or not satisfactorily explained, stood recorded in the name of a partner ?" After analysing various case laws on the issue theHon'ble Courtheld as under :--- "Therefore, from the series of decisions of various High Courts, it is well established that in such a situation where there is a credit entry in the books of account of the assessee and there is no satisfactory explanation, then it will be deemed to be the income of the firm and will be added to the income of the firm and can be accordingly taxed." 9. We have also perused th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the capital account of the partners in the books of account of the firm are credited. As we have been asked upon to adjudicate only the legal issue raised by the assessee, we are not going into the question of onus and sufficiency of the explanation. Accordingly, this ground of appeal raised by the assessee is dismissed. 12. Regarding levy of interest under sections 234A 234B of the Act, the learned counsel stated that such levy was illegal unless the specific section under which it has been charged has been mentioned by the Assessing Officer. It was also stated that no interest under these sections could be levied by making the mention "charge interest as per rules" or "charge interest if any". For this purpose the learned counsel relied on the decision of the Hon'ble Patna High Court in the case of Uday Mistanna Bhandar's case. It was stated that as this was the only decision on the issue, the same has to be followed. On the other hand, the learned DR stated that by not mentioning the specific section the Assessing Officer has committed the procedural irregularity which is curable under section 292B of the Act. While relying on the decisions in Joseph Kuruvila v. CIT [1989] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment order and the assessee cannot be served with any such notice demanding interest." 14. There is no dispute that direction for charge of interest under a specific section has to be given by the Assessing Officer. If he fails to do so, no interest could be charged, Thus one thing is clear that direction for charging interest has to be mentioned in the assessment order. Whether the direction for charging interest has to be specific has been considered by the Patna High Court in the case mentioned above. Considering ratio laid down by Hon'ble Patna High Court we have perused the assessment order also. In his order the Assessing Officer has mentioned as under :--- "Charge interest as per rules." As held by Hon'ble Patna High Court that such direction was not valid for charging interest under section 234A/234B of the Act because the same was not specifically mentioned in the assessment order. This is the only decision available on this issue. Respectfully following the same, we hold that the Assessing Officer was not justified in charging interest under section 234A/234B of the Act in absence of specific directions of charging interest under the above sections. Accordingly ..... X X X X Extracts X X X X X X X X Extracts X X X X
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