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Principal Commissioner of Income Tax, Faridabad Versus Shri Krishan Gopal (HUF)

2015 (12) TMI 1069 - PUNJAB AND HARYANA HIGH COURT

Interest u/s 234A, 234B and 234C - CIT(A)'s jurisdiction to entertain the first appeal under Section 246 against the chargeability of interest - ITAT upholding the order of CIT(A) in deleting interest u/s 234A and 234C and to restrict the levy of interest u/s 234B - Held that:- Apex Court in Central Provinces Manganese Ore Co. Ltd. v. CIT (1986 (5) TMI 3 - SUPREME Court) observed that the levy of interest is the part of the process of assessment. Although Sections 143 and 144 of the Act do not s .....

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agitated in appeal under Section 246 of the Act but more appropriately by resorting to revisional jurisdiction of the Commissioner. It was further observed that before the revisional jurisdiction of the Commissioner can be invoked for waiver or reduction, the assessee is required to demonstrate before the Assessing Officer that there is a case for waiving or reducing the levy of interest. Thus the appeal filed by the assessee laying challenge to the very levy of interest under Sections 234A, 23 .....

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ee. Further, interest under Section 234B of the Act was also restricted by directing the Assessing Officer to charge it only on the amount of capital gain worked out after taking sales consideration at the amount received by the assessee during the financial year 2006-07 and deducting proportionate indexed cost of acquisition and allowing exemption under Section 54EC of the Act for ₹ 50 lacs out of the capital gain so worked out. Still further, the liability to pay interest under Section 2 .....

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hort the Act ) against the order dated 24.12.2014 (Annexure A-III) passed by the Income Tax Appellate Tribunal, Delhi Bench G , New Delhi (hereinafter referred to as the Tribunal ) in ITA No. 3226/DEL/2010, for the assessment year 2007-08, claiming the following substantial questions of law:- 1. Whether on facts and in the circumstances, the Ld. ITAT was right in law in upholding the order of CIT(A) in deleting interest u/s 234A of the Income Tax Act and to restrict the levy of interest u/s 234B .....

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evy of interest u/s 234A and 234B is mandatory in nature? 2. Whether on facts and in the circumstances, the Ld. ITAT was right in law in upholding the order of CIT(A) who without prejudice to the above had no jurisdiction u/s 246 of the Income Tax Act, 1961 to entertain and decide an appeal against orders u/ss 234A, 234B and 234C; more so, when the returned income was accepted u/s 143(3) and there was no grievance against the order and the separate ITNS 150 was prepared to calculate tax and inte .....

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(A) wherein, having no regards to the expressions used in Section 45 and Section 48 for computation of long term capital gain arising for accruing on transfer of capital, the CIT(A) held that it was a conditional sale with sales considerations not fully received in the F.Y. 2006-07 and, therefore, liability u/s 234A, u/s 234B and u/s 234C did not arise. The order of the CIT(A) and that of ITAT upholding the order of CIT(A) are perverse inasmuch as Sections 45 and 48 do not recognize conditional .....

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hich the assessee had voluntarily paid interest to the tune of ₹ 5,24,261/-, ₹ 15,72,783/- and ₹ 2,62,130/- under Sections 234A, 234B and 234C of the Act respectively. The case of the assessee was selected for scrutiny and the Assessing Officer vide order dated 8.10.2009 (Annexure A-I) framed regular assessment under Section 143 (3) of the Act by accepting the returned income of the assessee. As a result thereof, ITNS 150 of the Act was prepared and a demand of ₹ 91,206/- .....

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dissatisfied with the order, Annexure A-II, the revenue filed an appeal before the Tribunal who vide order dated 24.12.2014 (Annexure A-III) upheld the order of the CIT(A) and dismissed the appeal. This gave rise to the revenue to approach this Court by way of instant appeal. 4. Learned counsel for the revenue submitted that the first appeal under Section 246 of the Act was not maintainable against the chargeability of interest under Sections 234A, 234B and 234C of the Act particularly when the .....

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ssues arise for consideration of this Court, namely, (i) Whether the CIT(A) was well within his jurisdiction to entertain the first appeal under Section 246 of the Act against the chargeability of interest by the Assessing Officer under Sections 234A, 234B and 234C of the Act; and (ii) Whether the CIT(A) and the Tribunal were justified in deleting the interest under Sections 234A and 234C of the Act and in restricting the interest charged under Section 234B of the Act. 7. Adverting to issue No. .....

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he process of assessing the tax liability of the assessee. The Supreme Court held that since levy of interest is a part of the process of assessment, it could be challenged in appeal provided the assessee disputes the chargeability of interest on the ground that he is not liable to the levy of interest at all. It was clarified that where the assessee claims waiver or reduction of the interest levied, that could not be agitated in appeal under Section 246 of the Act but more appropriately by reso .....

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, 234B and 234C of the Act before the CIT(A) was clearly maintainable. 9. Similar contention raised by the revenue before the Tribunal against maintainability of appeal before the CIT(A), against levy of interest under Sections 234A, 234B and 234C of the Act, was repelled with the following observations:- 12. We have occasion to go through the decision of Hon'ble Supreme Court in the case of Central Province Manganese Ore Co. Ltd. vs. CIT (1986) 160 ITR 961 (SC) on an identical issue. The is .....

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a part of the process of assessing the tax liability of the assessee. It was held that, in as much as, the levy of interest is the part of the process of assessment, it is open to an assessee to dispute levy in appeal provided he limits himself to the ground that he is not liable to the levy at all. The fact of that case before the Hon'ble Supreme Court is akin to the fact of the present case as in the present case as well the assessee in their first appeals had limited themselves to the gr .....

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appellate proceedings also raised an additional ground that the assessee company could be fastened with the levy of interest to the extent of 20% only, i.e. the amount received by the assessee in the relevant financial year. Obviously, it was an alternative ground. The main contention as discussed above of the assessee remained that it was not liable to the levy of interest under Sec. 234A, 234B and 234C of the Act. Thus, respectfully following the ratio laid down by the Hon'ble Supreme Cou .....

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come assessed or to the amount of tax determined or to the amount of loss computed or to the status under which he is assessed. Inasmuch as, the levy of interest is part of the process of assessment, it is open to an assessee to dispute the levy in appeal provided he limits himself to the ground that he is not liable to the levy of interest at all. The issue is thus decided in favour of the assessee. In result, ground No.2 involving the issue is rejected. 10. Learned counsel for the revenue was .....

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ich was to be completed only after the realization of the last cheque and thus considerations were beyond the control of the assessee. Further, interest under Section 234B of the Act was also restricted by directing the Assessing Officer to charge it only on the amount of capital gain worked out after taking sales consideration at the amount received by the assessee during the financial year 2006-07 and deducting proportionate indexed cost of acquisition and allowing exemption under Section 54EC .....

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