TMI Blog2014 (1) TMI 1355X X X X Extracts X X X X X X X X Extracts X X X X ..... r restoration of the issue(s) to the AO for fresh adjudication, naturally, the earlier Bench was left with no other alternative, but, to accede to their requests - when the DR agreed that the issues raised by both the assessee and the Revenue be restored to the Assessing Officer for fresh adjudication and the Tribunal order having attained finality, the Tribunal's direction cannot be circumvented – The authorities below have not properly understood the directions of the earlier Bench in a better perception for which it was intended to – the issue remitted back to the AO for fresh adjudication. Levy of Interest u/s 234B(3) of the Act – Held that:- The omission of the officer to levy interest u/s 234 B(3) in the reassessment completed u/s 147 which could have been rectified u/s 154 did not desist the officer from levying interest under the very same provision, when the reassessment was revised a second time u/s 147 - The levy of interest u/s 234B was valid - in the present case when the original assessment was concluded on a total income of Rs.65.76 lakhs, interest u/s 234B of the Act was charged at Rs.17.28 lakhs and finally when the re-assessment was concluded u/s 143(3) r.w.s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... strative expenses cannot be allowed as deduction. Thus, the interest income was treated as income from 'Other Sources' and, accordingly, concluded the assessment. Aggrieved, the assessee took up the issues with the then CIT (A)-II who in his order dated 29.3.1996 set-aside the assessment with a direction to the AO to redo the assessment after affording an opportunity to the assessee. The AO vide his order u/s 143(3) r.w. s. 250 of the Act dated 25.3.1999 concluded the assessment, determining the income of the assessee at R.65,76,980/-. Aggrieved, the assessee yet again took up the case with the CIT (A)-II. The CIT (A)-II in his order dated 17.8.1999 granted partial relief. Simultaneously, the AO [JCIT, S.R.4, Bangalore] vide his order u/s 143(3) r.w.s. 250 dated 30.11.2000 again concluded the assessment on the basis of the directions of the CIT (A)-II, dated 29.3.1996 and dated 17.8.1999, determining the assessee's income at Rs.64,79,980/-. The assessee had again approached the CIT (A)-III vide its Appeal Memo dated 8.2.2001. After taking into account the assessee's submission, the CIT (A)-III had, vide her order dated 13.9.2002, ordered that - "3.4 According to me, there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er while allowing expenses of Rs.1182039/ was not correct. In the circumstances, this ground is dismissed " While giving effect to the CIT (A)'s order dated 18.3.2003, the AO charged interest u/s 234B of the Act up-to 31.3.1995. 3.1.4. Against the CIT (A)'s order, both the parties filed their appeals before the Tribunal. The solitary issue raised by the Revenue was with regard to the levy of interest u/s 234B of the Act whereas the cross objections of the assessee was that - "1. On the facts and in the circumstances of the case, the learned CIT (A) ought to have directed the assessing authority to locate Rs.11,82,039/- being the pre-operative expenses towards the capital asset as claimed by the respondent; ii. The learned CIT (A) ought to have directed the assessing authority o follow the order of the CIT (A) in ITA 167/DCIT 8(1)/00-01 dated 13.9.2002 in the respondent's own case for the purpose of allocation of the above expenditure towards capital asset.' 3.1.5. The assessee had also sought the permission of the Tribunal to raise an additional ground which reads as under: "The learned CIT (A) ought to have appreciated that the business of the resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was chargeable on the demand so raised. The ITAT decision in Travancore Titanium Products Pvt Ltd v. DCIT 52 TTJ 601 (Kochi) relied on by the assessee was in the context of intimation u/s 143 (1)(a) and order u/s 143(3) and is not relevant to the assessee's case. On the facts and in the circumstances of the case, the interest u/s 234B is charged up-to 25.3.1999." 3.1.8. Aggrieved, the assessee again took up the issue before the CIT (A)-III. After due consideration of the assessee's submission, the CIT (A) had recorded his findings as under: "4.1.1 It is critical to note that the ld. ITAT did not examine the issue on merits at all, but, only advised a re-look by the AO. In referring to and agreeing with the earlier findings on the substantive issues, the AO, in my view, has exercised his mind sufficiently on the issues before him. In case, the appellant felt that the ITAT's directions were not being acceded to, the correct course for him would have been to file a miscellaneous petition before the Ld. ITAT seeking specific redressal. This was obviously not done since it is abundantly clear that the ITAT only sought the AO to have a re-look at the issues, and did not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding with regard to commencement of business though the issue was before it which would not mean a finding in this regard was not given by the Tribunal when it directed the AO to consider the issues afresh to adjudicate in the set aside proceedings. It was, further, submitted that the CIT (A) failed to appreciate the commencement of business was not the commencement of commercial production when the assessee was carrying on various activities and that the assessee having commenced the consultancy business w. e. f 1.10.1991, he ought to have held that the business has been commenced in the relevant year w. e. f 1.10.1991 and ought to have directed the AO to allow the expenditure post-commencement of business under the head 'business' and to arrive at the business loss, if any, to be set off against the income from 'Other Sources'. It was also contended that the CIT (A) erred in upholding the levy of interest u/s 234B of the Act until the date of present assessment without appreciating that the interest levy was to be pegged to the date of first regular assessment i.e., 31.3.1995 or in the alternative upto 25.3.1999. It was, further, argued that the CIT (A) ought to have appreciated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should be set-aside to AO for fresh adjudication. After taking cognizance of the unanimous submissions of both the parties, the Bench set aside the matter to the file of the AO for fresh adjudication. When both the parties pleaded for restoration of the entire matter (issues) for fresh adjudication at the level of the AO, in our view, the CIT (A) was not justified in taking a stand that (at the cost of repetition) "4.1 .From the sequence of events relating to the case, it becomes clear that the only issue surviving for adjudication as per the order of the ITAT setting aside the same, concerns the charging of interest under section 234B. I have to agree with the AO that with respect to the amortization of expenditure vis- -vis the claim of commercial production having begun on 1 October 1991, the issue had already reached finality in the assessment order of 30 November 2000, and no longer survive for consideration. In fact, this matter appears to have become final at the first appellate stage itself. Hence, I find no reason to adjudicate on these grounds which are not found to be available for adjudication since due effect has been given to the directions of the ITAT, Bangalore a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ming to a conclusion that the only issue of charging of interest u/s 234B of the Act survives for adjudication. If that were to be so, the earlier Bench would have given a specific direction to the AO to address only issue of charging of interest u/s 234B of the Act as ascribed by the CIT (A). Moreover, when the assessee had sought to raise an additional ground in its cross objection, there was no trace of any objection from the then learned DR for admitting such an additional ground by the Bench. This clearly vindicates that the learned DR was in agreement for setting aside the issues raised by the Revenue and the assessee in toto and restore the same to the file of the AO for fresh adjudication. Thus, it is explicit that after having duly considered the rival submissions and also the facts of the issue, the earlier Bench thought it fit to accede to the request of both the parties. Another glaring contradictory stand of the AO and the CIT (A) were observed in respect of commercial production, namely, the AO had stated in his re-assessment proceedings [assessment order dated 19.7.2007] u/s 143(3) r.w. s. 254(1) of the Act that "3 .In the said orders a clear cut finding was recorded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal does not arise out of CIT (A)'s order, it was for the Revenue to have come up before the Tribunal with a Miscellaneous Petition. In other words, when the DR agreed that the issues raised by both the assessee and the Revenue be restored to the Assessing Officer for fresh adjudication and the Tribunal order having attained finality, the Tribunal's direction cannot be circumvented. Therefore, the observation of the CIT (A) on the issue, in our opinion, was, , out of context. 3.3.5 Taking into account all the facts and circumstances of the issue as discussed exhaustively in the fore-going paragraphs, we are of the view that the authorities below have not properly understood the directions of the earlier Bench in a better perception for which it was intended to. 3.3.6. In view of the above, we are of the considered opinion that the issue requires fresh adjudication at the level of the AO, for which, the matter is yet again restored on the file of the AO with a specific direction to address to the issues raised by the assessee in its cross objection as well as the additional ground which was duly admitted by the earlier Bench and to take appropriate action in accordance with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 assessment is made, to the date of such 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 under sub-section (1) of section 143 and where a regular assessment is made, the tax on the total income determined under such regular assessment as reduced by the amount - (i) ." 5.1.2. In the instant case, even though the regular assessment made u/s 143(3) of the Act made on 31.3.1995 was set-aside by the then CIT (A)-III vide his appellate order dated 29.3.1996 to redo the assessment afresh, the assessment order passed u/s 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .61,79,980/- which was obviously less than the income determined earlier at Rs,65,76,980/-, interest u/s 234B of the Act was calculated at Rs.33,12,790/- on a tax demand of Rs.19,71,949/-. When the income of the assessee has, of late, been determined at a lesser amount u/s 143(3) r.w.s. 254(1) of the Act dated 19.7.2007 than what has been determined earlier at Rs.64,79,980/-, obviously, the interest charged u/s 234B of the Act should have been lesser in view of s. 234B(4) of the Act. The AO is, therefore, directed to charge interest u/s 234B of the Act on the taxable income arrived at in the original order passed on 31.3.1995. It is ordered accordingly. 5.1.5. Before parting with, we would like to point out that the case law [South Indian Bank Ltd v. CIT - (2010) 325 ITR 517 (Ker)] cited by the CIT (A) has no relevance to the issue under consideration, in the sense that in that case the loss shown in the original return was accepted u/s 143(1)(a) of the Act and as such no interest u/s 234B of the Act was payable. Subsequently, the assessment was re-opened u/s 147 of the Act and, accordingly, assessed on a net income of over Rs.16 crores for which also no interest u/s 234B of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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