TMI Blog2012 (10) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... - - Dated:- 19-9-2012 - Mr. Deepak Gupta, And Mr. Rajiv Sharma, JJ. For the appellant: Mr. Vinay Kuthiala, Sr. Advocate with Ms. Vandana Kuthiala, Advocate. For the respondent: Mr. K.D.Sood, Senior Advocate with Mr. Abhishek Jhamba and Mr. Abhimanyu Jhamba, Advocates. Per Deepak Gupta, J. 1. This appeal was admitted on the following questions of law:- 1. Whether on the facts and in the circumstances of the case, the Hon ble Tribunal was correct in holding that interest under Sections 234A and 234B of the Incometax Act cannot be charged in an order of rectification under Section 154 in a case where no such interest was charged in the original assessment order, inspite of the law laid down by the Constitution Bench of the Hon ble Supreme Court in the case of Anjum M.H.Ghaswala and Others Vs. CIT (252 ITR 1)? 2. Whether on the facts and in the circumstances of the case, the Hon ble Tribunal was justified in holding that no interest under Sections 234A and 234B of the Act could be charged for the first time in the order passed under Section 154, even though such charging of interest was mandated by the specific provisions contained in Sections 234A(4) and 234B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this is the final assessment order. The order dated 31.12.2003 is also completely silent with regard to the payment of interest. However, the department while raising the demand directed that interest be also paid under Sections 234A and 234B. Application for rectification filed under Section 154 by the assessee praying that the interest could not be charged since in none of the assessment orders, whether original or on reassessment, there was any order of payment of interest, was rejected. Thereafter, the assessee filed an appeal before the Commissioner of Income-tax, who allowed the same. The Tribunal has rejected the appeal of the revenue and hence this appeal. 4. Sh. Vinay Kuthiala, learned senior counsel appearing for the revenue has placed reliance on the judgement of the Apex Court in Commissioner of Income-tax vs. Anjum M.H.Ghaswala and others (2001) 252 ITR 1, which has clearly laid down that the levy of interest is mandatory. The Constitution Bench of the Apex Court held as follows:- If the scheme of levy of interest is thus to be analysed on the anvil of the provisions referred to hereinabove, it shows that eh interest contemplated under Section 234A, 234B and 234 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the return of income either under section 139(1) or (4) or section 142(1), pursuant to the notice issued thereunder, or files the same after the due date, in terms of section 234A he is no doubt liable to pay interest. He is also liable to pay interest if he commits any default in payment of advance tax under the provisions of section 234B. Where, however, return is filed within time but a particular item of income is in dispute as being includible within taxable income or not, the mere issue of notice under section 142 will not confer jurisdiction upon the authority to levy interest. Section 234A no doubt also mentions about non-compliance with notice under Section 142(1). But it would appear that section 142(1), which refers to the stage of enquiry before assessment, envisages two types of notice. It provides for notice to those who have already submitted the return under section 139 to produce such accounts or documents as the Assessing Officer may require or to furnish information on such points or matters as the Assessing Officer may require. It also provides for notice to persons who have not filed the return within the time allowed under Section 139(1) to furnish the return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of the appellant, referred to above, has held that the return filed by the appellant was in consonance with law and there was only a formal defect and the moment that defect was cured, the return related back to the original date. In our opinion, when the Supreme Court in Ghaswala s case says that charging of interest under section 234B is mandatory, what it really means is that once the assessee is found liable to pay interest, then recovery of interest is mandatory and recovery of that interest cannot be waived for any reason. But for charging interest under that section, it has to be established that the assessee has committed default in payment of advance tax .. 15. Our attention has been drawn to the judgement of the High Court of Uttarakhand in Income-tax Appeal No. 15 of 2006 titled as Commissioner of Income-tax, Dehradun vs. M/s Dehradun Club Ltd. decided on 14th October, 2011, wherein the issue involved was identical to the present case. In that case the Assessing Officer had not issued any direction in respect of charging of interest under Section 234B of the Act. Pursuant to the assessment order a notice of demand was issued demanding interest. The questio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 3.8.2011 held as follows:- We do not find that the judgement in Ranchi Club Ltd. has either been expressly overruled or any different view has been taken in Anjum M.H.Ghaswala s case. We also do not find force in the argument advanced by Sh. Mahajan that even if assessment order or computation sheets do not provide for interest, since interest is mandatory, it can be charged in the demand notice, which according to Sh. Mahajan is signed by the Assessing Officer. Even if any provision of law is mandatory and provides for charging of tax or interest, the view taken in Ranchi Club Ltd. is that such charge by the assessing officer should be specific and clear and assessee must be made to know that the assessing officer has applied its mind and has ordered charging of interest. The mandatory nature of charging of interest and the actual charging of interest by application of mind and the mention of the proviso of law under which such interest is charged are two different things. 17. We are in respectful agreement with the judgement rendered by the Uttarakhand and Allahabad High Courts. No doubt, payment of interest under Sections 234A, 234B and 234C is mandatory but it is fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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