TMI Blog2006 (6) TMI 184X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 234B of the Act since there was no liability to pay advance tax in accordance with section 208. The Assessing Officer dismissed the petition under section 154 holding that there is no mistake apparent on record vide order dated 22-9-2004. Aggrieved the assessee went in appeal before the CIT(A) who confirmed the order of the Assessing Officer. 3. Further aggrieved the assessee is in appeal before us. The contention on behalf of the assessee was that as per return of income, the assessee's total tax liability is below Rs. 5,000 and that interest under section 234B was not charged while processing return under section 143(1)(a). The income was enhanced because of addition on account of difference in cost of construction. Before the addition, the income was Rs. 69,536 and after the addition of Rs. 1,43,837 towards cost of construction the income raised to Rs. 2,13,373 and accordingly tax was increased. If there was no addition the net tax effect would be less than Rs. 5,000. Further, the learned counsel for the assessee relied on the order of the Tribunal in the case of Sri Renukeswara Rice Mills v. ITO [2005] 93 ITD 263 (Bang.) wherein it is held that tax payable on the retur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amendment of section 208 by the Finance Act (No.2), 1996 the threshold tax limit has been raised from Rs. 1,500 to Rs. 5,000 with effect from 1-10-1996. He strongly relied on the orders of the lower authorities and submitted rectification under section 154 sought by the assessee is not possible as it is a debatable issue. 6. We have given our careful thoughts to the facts and circumstances of the case and perused the materials to which our attention was invited. It would be appropriate to record some of the applicable provisions of the Act. Section 207 as substituted with effect from 1-4-1988 lays down that tax shall be payable in advance during any financial year in accordance with the provisions of sections 208 to 219 of the Income-tax Act in respect of total income of the assessee which would be chargeable to tax for assessment year immediately following that financial year. Such income on which advance tax is payable is to be called as 'current income'. Section 208 was amended during financial year 1996-97 and is applicable from 1-10-1996. This section lays down the conditions of liability to pay advance tax. Advance tax shall be payable during the financial year in every ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x payable on current income is likely to be higher than the advance tax demanded by the Assessing Officer under subsection (3) or (4) or intimated by him under sub-section (5). 8. Section 209 of the Act, after amendment by the Amending Act, 1987 lays down the method of computing advance tax payable during a financial year as follows :- "(a) Where the calculation is made by the assessee for paying the advance tax, either of his own accord or on the basis of the estimate of his current income after the assessee is served with a notice by the Assessing Officer under section 210(3) or (4) for payment of advance tax, income-tax on the current income shall be calculated at the rates in force in that financial year. (b) Where calculation is made by the Assessing Officer for making an order under section 210(3) requiring the assessee to pay advance tax, he shall adopt the total income assessed by way of regular assessment of the latest previous year or the total income returned by the assessee for any subsequent previous year, whichever is higher, and calculate income-tax thereon at the rates in force in that financial year. (c) Where calculation is made by the Assessing Officer fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee is under obligation to pay advance tax. 10. The important aspects that emerge from the provisions referred to above, insofar as they are relevant to the issue before us, can be succinctly culled out as under :- (a) Advance tax is payable by an assessee during any financial year in respect of his total income which would be chargeable to tax in the relevant assessment year. (b) The liability to pay advance tax arises in the context of the current income of the assessee which would be chargeable to tax for the assessment year immediately following the relevant financial year, if the tax payable is Rs. 1,500 or more. (c) If a person is liable to pay advance tax, he shall suo motu compute the advance tax payable on his current income. (d) If an assessee who had earlier been assessed to income-tax, has not voluntarily paid the advance tax during the relevant financial year, the Assessing Officer can pass an order requiring him to pay advance tax and for this purpose, the total income assessed by way of regular assessment of the latest previous year or the total income returned by the assessee for any subsequent previous year, whichever is higher, it to be adopted. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er rule prescribed in this regard. The new section does not have any such provision." 12. The interest under section 234B is not penal in nature but one is compensatory and the same is leviable because assessee utilised the public money and payment of interest is for utilization of public money and section 234B is mandatory in nature. Further, if the assessee has hardship on account of this mandatory provision of section 234B, the assessee can avail of the benefit of CBDT Circular No. F. No. 400/234/95-IT(B), dated 23-5-1996 by which it authorized the Chief Commissioner/Director General (Investigation) to waive penalty in certain cases. Section 234B is mandatory. Hence, the CBDT issued this notification to waive interest in specified circumstances. From the above, one can draw conclusion that the interest under section 234B is mandatory and it gives no room to the Assessing Officer to entertain any explanation offered by the assessee for non-payment advance tax. 13. Further, the Finance Act, 2001 wherein new Explanation was inserted with retrospective effect from 1-4-1989 which lays down that in section 234B 'assessed income' means the tax on total income determined under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the Assessing Officer required various material to examine, which were not made available either at the time of assessment or further at the time of entertaining petition filed by the assessee under section 154. The record of income-tax assessment of the assessee for the assessment year under consideration does not contain the details whether assessee was liable to pay advance tax in earlier assessment year or not. The assessee also failed to show that all the materials required for entertaining its petition filed under section 154 was available with the Assessing Officer or not along with assessment record for this assessment year. From this point of view also, we are of the opinion that at the time of completion of assessment, it could not be said that the required material were available on record to say that assessee is not liable to levy of interest under section 234B. In our opinion, the claim of assessee is very much debatable and cannot be entertained under section 154 and there is no material apparent on record to enable rectification. 16. The other question before us now is whether the Assessing Officer committed any mistake in rejecting the petition filed by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
