TMI Blog2009 (12) TMI 670X X X X Extracts X X X X X X X X Extracts X X X X ..... t under section 147, read with section 143(3) was completed on 25-2-2005 determining the total income at Rs. 2,19,58,310. Interest under section 234B was charged amounting to Rs. 61,45,483 on the amounts and for the periods specified below : Period No. of months Interest rate Amount Interest 1-10-1999 to 31-5-2001 20 1.50% 75,17,409 22,55,223 1-6-2001 to 31-8-2003 27 1.25% 75,17,409 25,37,126 1-9-2003 to Feb. 2005 18 1% 75,17,409 13,53,134 Total 61,45,483 4. On the perusal of the assessment records, the learned CIT, while exercising his revisional power, noted that the interest was charged by the Assessing Officer for the shorter period, following the provisions of sub-section (3) of section 234B whereas it ought to have been charged with reference to sub-section (1) of section 234B read with Explanation (2) to section 234B(1). In this backdrop of facts, the assessee was called upon to explain as to why the interest be not charged with effect from 1-4-1998 being the first day of April of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny "assessment" as it refers to "Intimation". He relied on the judgment of the Hon ble Allahabad High Court in Pradeep Kumar Har Saran Lal v. Assessing Officer [1998] 229 ITR 46 for contending that the provision of sub-section (1) as taken note of by the ld. CIT, for charging interest under section 234B, were appropriate. 7. We have heard the rival submissions and perused the relevant material available on record. Before we proceed to appreciate the rival contentions, it will be appropriate to set out the relevant portion of section 234B as under : "(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 one and one-fourth 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 determination of total income under sub-section (1) of section 143 and where a regular assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the first day of the assessment year 1998-99, the assessee is contending that it should start from the date of Intimation under section 143(1)( a ). However, the ld. AR candidly accepted that there was some mistake on the part of the Assessing Officer in charging interest from 1-10-1999, whereas it should have been actually charged from 1-8-1999, being the beginning of the month in which order was passed under section 143(1). 9. A bare perusal of sub-section (1) of section 234B reveals that the starting date for the charging of interest under section 234B is first April next falling the financial year, that is, 1st April of the relevant assessment year extending up to the date of regular assessment, where such regular assessment is made. If, however, there is only the determination of total income under sub-section (1) of section 143 , then up to the date of the determination of such total income. Thus, in both the cases the charging of interest shall run from 1st April of the relevant assessment year. Regular assessment has been defined under section 2( 40 ) to mean "the assessment made in sub-section (3) of section 143 or section 144". From here it turns out that where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and subsequently there is reassessment as per section 147, then the interest under section 234B in case of such reassessment shall start following the date of such regular assessment. In case no regular assessment was made earlier, but the return was simply processed under section 143(1), then in the case of reassessment under section 147, the interest shall be charged from the day following the date of determination of total income under sub-section (1) of section 143. 11. However, in any case, it needs to be ensured that if interest has already been charged under section 234B in Intimation under section 143(1)( a ) from the 1st day of April of the assessment year to the date of such Intimation, and thereafter regular assessment is made, then such interest charged in the Intimation should be adjusted against the interest liability created by way of regular assessment made. In other words, where regular assessment is made then the interest should be charged from the 1st April of the assessment year only once, that is, in the regular assess-ment. To put if straight, where the assessee furnished his return with total income of Rs. 100 and after making adjustments under section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dence in support of the return filed by him and thereafter frame an assessment under sub-section (3) of section 143. Hence, it was necessary to pass an assessment order either under sub-section (1) or (3) of section 143. However, in the period posterior to the amendment such procedure has been dispensed with. Now it is mandated to process the return by making the prescribed adjustments. Sub-section (1) provides that after making adjustments, an intimation shall be prepared or generated and sent to the assessee specifying the sum determined to be payable by, or the amount of refund due to the assessee . It is further provided that an Intimation shall also be sent to the assessee in a case where the loss declared in the return by the assessee is adjusted but no tax or interest is payable by, or no refund its due to him. Second proviso to sub-section (1) of section 143 states that no intimation under this sub-section shall be sent after the expiry of one year from the end of the financial year in which the return is made. As per the amended law, now the Assessing Officer processes the return under section 143(1)( a ) and determines the amount payable or refundable on that basis. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not underpaid the tax in any manner while furnishing his return of income.... . Thus, it is manifest that in the period prior to 1-4-1989 assessment could have been made either under section 143(1) or 143(3). But after amendment, all the returns are first processed under section 143(1) and only some returns are assessed under section 143(3). The issuance of "Intimation" (as aptly described in sub-section (1) of section 143 itself) cannot be equated with the regular assessment. The Hon ble Delhi High Court in MTNL v. Chairman, CBDT [2000] 246 ITR 173 has held that : "The intimation under section 143(1)( a ) cannot be treated to be an order of assessment. The distinction is also well brought out by the statutory provisions as they stood at different points of time. The intima-tion under section 143(1)( a ) was deemed to be a notice of demand under section 156, for the apparent purpose of making machinery provisions relating to recovery of tax applicable. By such application only recovery of the amount indicated to be payable in the intimation became permissible. And nothing more can be inferred from the deeming provision." Almost similar view has been reiterated in Shree Somes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the making of assessment for the first time, the reassessment pre-supposes the existence of an earlier assessment. This position is further clarified by the Explanation 2 to section 147. Clause ( a ) of this Explanation deems income escaping assessment even when no return has been filed by the assessee. Clause ( b ) covers within its ambit the cases where a return of income has been filed but no assessment is made. Clause ( c ) extends to the cases where an assessment has been made but still income chargeable to tax has been under assessed or such income has been assessed at too low a rate, etc. Section 234B extends to both the cases under section 147, viz., where it is assessment (that is, assessment for the first time) and reassessment (that is, where it is not the first assessment). There is a clear cut line of demarcation. The cases of assessment under section 147 are covered under sub-section (1) of section 234B, by way of Explanation 2, the cases of reassessment under section 147 are covered under sub-section (3). The further submission made on behalf of the assessee that the Heading or Marginal note of section 143 is Assessment and, hence, the processing of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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