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2016 (8) TMI 82 - ITAT HYDERABAD

2016 (8) TMI 82 - ITAT HYDERABAD - [2016] 50 ITR (Trib) 129 - Interest levied u/s. 234B(1)- rectification u/s. 154 of the Income Tax Act [Act] for recalculation of interest u/s. 234B - whether the 143(1) order passed earlier is to be considered as an assessment? - Held that:- For the purpose of levy of interest u/s. 234B where it is very clearly mentioned that even processing u/s. 143(1) is also to be considered as an assessment by specifically mentioning in the Section the periods therein then, .....

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fact modifies the then existing provisions which are applicable for the impugned assessment years. In fact under the new Sub- Section (3), it was provided that interest will be calculated on the enhanced amount from the period commencing on 1st April next following the relevant financial year for which advance tax was payable and ending on that date of the re-assessment or re computation u/s. 147/153A. Thus, where in a case interest u/s. 234B(1) was levied on regular assessment u/s. 234B(1), enh .....

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153A r.w.s. 245D(4) ie on 03-12- 2013. - We are not sure whether the AO is correct about the levy of interest in the orders u/s. 154, as the period and calculations were not provided for our examination. In fact there is reduction of demand in AYs 2005-06 and 2009-10. In view of this, we, while allowing the appeals of assessee, direct the AO to modify the interest levied as per the provisions of the Act. - Decided in favour of assessee for statistical purposes. - 1321/Hyd/2015, 1322/Hyd/201 .....

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ilar, we are adjudicating all the appeals by this common order. 2. Assessee was a firm in all these impugned years known as M/s. Maheswari Brothers. The firm was converted into a Company in August 2012 under the name of M/s. MBG Commodities (P) Ltd. The company in its name, pursued the appeals before the CIT(Appeals) for these three years. 3. A tabular statement was filed in the course of the appeal hearing for the AYs. 2005-06, 2008-09 & 2009-10 giving the dates of filing the returns, incom .....

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all of the advance tax paid, the AO charged an amount of ₹ 50,132/- as interest u/s. 234B of the Act. No scrutiny was taken up for this year. There was a search and seizure operation in the premises of the assessee and its sister concerns on 08-09-2010, consequent to which, a notice u/s. 153A was issued on 06-01-2011 to the erstwhile firm of M/s. Maheswari Brothers. The return was filed on 21-08-2012 in response to such Notice, declaring a total income of ₹ 2,07,10,115/-. Assessment .....

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Subsequently, the AO issued a notice u/s. 154 for charge of interest u/s. 234B from 01-04-2005 ie. from the beginning of assessment year. In response to that notice, assessee filed a reply on 17-12-2014 objecting to the same relying on the provisions of the Act. However, rejecting the contentions of assessee, the AO passed an order u/s. 154 charging interest u/s. 234B from 01-04-2005. Against the same, assessee filed an appeal before the CIT(A). 5. During the course of appellate proceedings, Ld .....

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it should be a mistake simpliciter, and apparent from the record. It should appear to be so exfacie, and should be incapable of debate or argument. 08.1 Undisputed facts of the case are that neither the charge of tax nor the levy of interest u/s 234B is disputed, only the quantification of interest levied is assailed. The Assessing Officer noticed from the record that the assessment order dt. 03.12.2013 was the first order of assessment, and therefore, not an order of reassessment. Since sec 23 .....

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visions of section 147 or section 153A, it would nevertheless have to be reckoned as a regular assessment. On the facts of the present case, the issue for determination is simple enough to be answered in yes/no terms. Was the assessee subjected to a regular assessment before issuance of notice u/s 153A? No. Is the order dt.03.12.2013 u/s 143(3) r.w.s 153A the first instance of scrutiny, with due process in terms of sec 143(2), etc ? Yes. In terms of the aforesaid Explanation 2, therefore, it is .....

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an hardly be construed as an act of interpretation, much less elaborate argument. On the contrary, not to do so would be perverse. The Assessing Officer also relied on a decision of the Madras High Court [Textile Dye-Chern Corporation vs ACIT(2013-TIOL- 487-HC-MAD-IT)]. This was plainly unnecessary. No principle of interpretation or construing statutes has it that a section be read de hors the Explanation appended immediately there-under. The matter being self evident on a plain reading of the s .....

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ssessee is not contesting the details of levy of interest such as period, amount, etc. Rather, the assessee is denying it's liability to the levy of interest altogether, in contrast to the Assessing Officer's stand that interest u/s 234B is mandatory. It was contended that since it had a net refund position at the point of the Intimation u/s 143(1)(a), the threshold requirement for charge of interest u/s 234B viz, Advance Tax paid falling short of 90% of 'Assessed Tax' as defined .....

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t issue being 'controversial', or needing elaborate elucidation, did not permit assumption of jurisdiction u/s 154 - which has to confine itself to any matter apparent from the record. It has been noticed hereinabove, that a plain reading of the relevant provisions, in their factual context, permitted no other view. An issue does not become argumentative or contentious merely because it is so claimed. It has to be decided whether any other view is possible on a plain reading of the secti .....

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ear to be noticed, because of the light they shed on the jurisdictional scope of sec 154. When a statutory provision was lost sight of, the matter was an error apparent from the record, liable to be rectified, as held in the case of India Woollen Textile Mills Pvt Ltd vs CIT, 111 ITR 205[P&H]. In the case of CIT vs Mc Leod & Co, 134 ITR 674[Cal] it was held that where misreading a section resulted in a wrong view being taken and a wrong calculation being made, the provisions of section 1 .....

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246, had to decide whether in the circumstances of the case, provisions of sec 115JB were applicable or not, and whether the matter could have been decided u/s 154. Relying on Northern Air Products vs CIT 274 ITR 225[MP], it was held that granting a benefit to assessee in ignorance of a statutory requirement is a mistake attracting the rigours of section 154 of the Act. In the case of CIT vs Kesaria Tea Co Ltd 233 ITR 700 [Ker], facts related to a wrong application of sec 356, corrected by the .....

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154 of a deduction that was earlier allowed u/s 436, was valid. It was held that in view of the clear and unambiguous language employed, no scope for interpretation existed and it could not be said that two views were possible. Hence, jurisdiction was validly assumed u/s 154. 08.6 It was urged by the Ld AR during the hearing, that an Intimation u/s 143(1) was an order too. Hence, the order under sec 143 r.w.s 153A was a subsequent order of assessment insofar as the assessee was concerned. Const .....

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re vastly different in their scope and process of determination employed. So much so, that while the former is an "Intimation", the latter is an "Order". The former is summary while the latter is an elaboration, in writing. The intimation u/s 143(1), even where adjustments are made u/s. 143(1)(a), can never be considered as an assessment. This is a distinction judicially noticed in several cases, in varying contexts - Hilltop Holdings India Pvt Ltd vs CIT & Ors, 278 ITR 5 .....

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fore us, Ld. Counsel for assessee submitted that, the CIT(A) felt that the scheme of the Act for charge of Interest U/s. 234B is clear and no case law is required to understand these provisions. No doubt the scheme of the Act in this regard is clear but the CIT(A) has misconstrued the provisions relating to the calculation of Interest U/s.234B as envisaged in the section. It was felt that Explanation-2 under sub-section(1) of the section will be redundant if the contention raised by the appellan .....

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e date of scrutiny assessment. Subsequently, if there is a reassessment either U/s.147 or U/s.153A, interest will be recalculated on the shortfall either from the date of Intimation U/s.143(1) or from the date of regular assessment in case of a regular assessment. The CIT(A) has given a narrow meaning to the word 'assessment' in the Explanation-2. Explanation-2 reads as under: "Explanation 2. - Where, in relation to an assessment year, an assessment is made for the first time under .....

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omputed in the processing U/s.143(1) and an Intimation is made thereafter to the assessee, this also should be understood as an assessment for purposes of Explanation-2. Only when understood thus, the provisions of subsection( 3) in total will be operative. If the view adopted by the CIT(A) that the assessment made, as in the case of the assessee U/s.143(3) r.w.s.153 and r.w.s.245D(4), is the assessment made for the first time and interest is to be computed U/s.234B from 1st of April'05 (for .....

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der sub-section(1) of section 143 [and where a regular assessment is made as is referred to in sub-section(1) following the date of such regular assessment]] and ending on the date of the reassessment or recomputation under section 147 [or section 153A], on the amount by which the tax on the total income determined on the basis of the reassessment or recomputation exceeds the tax on the total income determined [under sub-section(1) of section 143 or on the basis of the regular assessment aforesa .....

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auses in subsection (3) of Section 234B will be inoperative, if the Commissioner of Income Tax(Appeals)'s version will be accepted. 6.1. It was submitted that to understand the correct position, as to the scheme of calculation of Interest U/s.234B, a chart showing 3 hypothetical cases was submitted as under: Case-1 Case-2 Case-3 Return of income filed in the normal course: Return of income filed in the normal course Belated Return of income/No Return of Income/Return of Income filed in respo .....

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/s.234B is calculated for the shortfall from the date of scrutiny assessment. In case-2, the Return is filed in the normal course and it is processed U/s.143(1). Interest U/s.234B is calculated for the shortfall from 1 st of April of the relevant assessment year in the Intimation U/s.143(1). In the reassessment U/s.147/153A, the Interest U/s.234B is calculated from the date of Intimation U/s.143(1) upto the date of such reassessment on the shortfall. In case-3, there is no Return in the normal c .....

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n-2 and the underlined portions contained in subsection( 3) will be operative and there is no redundancy if the Section 234B is interpreted in this manner. This is the scheme of calculation of Interest U/s. 234B as understood by assessee. 7. Ld. Counsel also referred to the amendments made by the Finance Act, 2015, where sub-section(3) has undergone a change, in so far as Interest U/s.234B for any shortfall of advance tax in a reassessment U/s.147/153A is to be calculated from 1st of April of th .....

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s contained in sub-section(3) of the said section provides that where the total income is increased on reassessment under section 147 or section 153A, the assessee shall be liable for interest at the rate of one per cent on the amount of the increase in total income for the period commencing from the date of determination of total income under sub-section(1) of section 143 or on regular assessment and ending on the date of reassessment under section 147 or section 153A. It is proposed to amend s .....

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ement commission in the order passed. 9. Ld. DR supported the action of AO/ CIT(A). Ld. DR also reiterated the decision of Hon'ble Madras High Court in the case of Textile Dye-Chem Corporation [35 taxmann.com 467 (Mad)]. He submitted that assessment used in the Income Tax Act cannot extend to the intimation u/s. 143(1) and reliance was placed on the decision of the Hon'ble Supreme Court in the case of Rajesh Jhaveri Stock Brokers Pvt. Ltd., [291 ITR 500]. His submissions are that process .....

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sed the material available on record. The undisputed facts in this case are that the returns were accepted u/s. 143(1) and there is no assessment u/s. 143(3) initially. In the intimations issued when assessee has filed returns, the intimations indicate that the following interests were levied u/s. 234B: AY. Date of intimation u/s. 143(1) Amount of interest (Rs) 2005-06 24-03-2006 50,132 2008-09 19-02-2010 8,41,533 2009-10 28-03-2011 6,67,766 10.1. Consequent to the search and seizure operations, .....

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b-section (1) of Section 234B, he modified the levy of interest u/s. 234B considering the order passed on 03-12-2013, as first assessment order and levied the following amounts in the impugned orders u/s. 154. He levied the interest from the first day of the assessment year till the date of the order ie upto 03-12- 2013. The modified interest so levied is as under: AY. (Rs) 2005-06 42,12,903 2008-09 1,35,28,878 2009-10 16,55,520 10.2. It seems there are no appeals on the consequential orders dt. .....

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s it may, assessee s contention is that interests are to be considered u/s. 234B(3) rather than u/s 234B(1) as was done by the AO in the orders u/s. 154. The entire submissions made by assessee are on the notion that interest u/s. 231B(1) and interest u/s. 234B(3) are mutually exclusive. This is not correct. As per the scheme of Act, interest u/s. 234B(1) is leviable from the period 1st April of the assessment year following the closure of the financial year till the date of intimation u/s. 143( .....

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ovided for levy of interest for shortfall of advance tax and the interest is calculated from the first day of the assessment year till assessee discharges its liability u/s. 140A or if there is a further shortfall, till the completion of assessment for the first time either under 143(3) or 147 or 153A or processing u/s. 143(1). The AO accordingly levied interest u/s. 234B(1) in the intimations given in respective assessment years (as stated above in para 10). 11.1. In case of re-assessment and r .....

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/s 234B(1) and a further enhancement of interest u/s. 234B(3) on the additional tax determined in the reassessment proceedings for the later period.. Thus, there are two separate calculations of interest u/s. 234B(1) and 234B(3). Since interest was already demanded in earlier proceedings only fresh demand is raised u/s 234B(3). Thus the levy of interest are complimentary and not exclusive. 12. This mechanism of levy of interest was elaborately explained in the Co-ordinate Bench decision in the c .....

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assessment order passed under section 143(3)/147 and in the computation sheet accompanying therewith. if the Assessing Officer had not followed the aforesaid course of action, the total income originally determined under section 143(1) or 143(3) or 144 and tax, interest, etc., thereon would have escaped taxation. The assessee did not challenge the levy of interest under section 234B(1) as per the intimation originally issued under section 143(1). The Assessing Officer was, therefore, justified i .....

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he amount of tax on the total income determined on the basis of reassessment or re-computation under section 147 exceeds the tax on the total income originally determined under sub-section (I) of section 143. It was not in dispute that the Assessing Officer had originally determined the income under section 143(1) and charged interest under section 234B(1) thereon. Provisions of section 234B(1) were relevant till that stage, i.e., the stage of determination of total income under section 143(1). .....

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and ending on the day of reassessment or re-computation under section 147. 1t is not permissible under section 234B(3) to charge interest from the first day of the assessment year till the date of reassessment or re-computation under section 147 where the income has been determined under section 143(1) and allowed to become final. Therefore, the Assessing Officer was directed to modify the order under section 154 as : (a) The figure of interest originally charged under section 234B(1) as per the .....

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essment under section 143(3)/147 on the amount by which the tax on the total income determined on the basis of the reassessment exceeded the tax on the total income determined under section 143(1) . 13. The Hon'ble High Court of Karnataka in the case of Sri Vijay Kumar Saboo (HUF) Vs. ACIT, Bangalore [201 Taxman 366 (Karnataka)] has held that interest u/s. 234B(3) is attracted in the case of re assessment completed and AO is bound to give a finding whether it is an order made for the first t .....

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3(3). The Hon'ble High Court in the above referred case Vijay Kumar Saboo (HUF) Vs. ACIT, Bangalore [201 Taxmann 366 (Karnataka)](supra) has held as under: A harmonious reading of entire section 234B makes it clear that if no advance tax is paid or what is paid is less than 90 per cent of the assessed tax, the assessee is liable to pay interest on the difference in the tax. For the purpose of levying tax, it is computed from first day of April next following, till the date of determination o .....

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ere there is determination of tax under sub-section (1) of section 143 or where a regular assessment order is passed under sub-section (3) of section 143, then the order passed under section 147 is treated as an order of reassessment or recomputation. In the case of order of reassessment or recomputation, the interest is leviable not from the first day of April next following, but from the date of determination of tax under subsection (1) of section 143 or order of regular assessment under secti .....

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f section 143 or regular assessment under section 143(3). In the instant case, there was a determination of tax under section 143(1)(a) and return filed by the assessee was accepted by the department by its order dated 24-6-1991. It was thereafter, proceedings were initiated under section 147. In pursuance of the notice issued, revised return was filed on 30-12-1993. It was on that return that the order came to be passed under section 143(3) on 28-1-1994. Therefore, it was not a case of assessme .....

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milar case as that of assessee where proceedings u/s. 153A were initiated, it was held that: There was no substance in the contention raised by the revenue that in a reassessment completed under section 153A interest for nonpayment or short payment of advance tax was payable under section 2348(3) merely because the said reassessment under section 153A was completed by accepting the return filed under section 143(1). Interest for non-payment or short-payment of advance tax is payable under sectio .....

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2348(1). However, when an original assessment completed under section 143 is revised either under section 147 or under section 153A, then interest for non-payment or short- payment of advance tax is payable only for period mentioned in section 2348(3), which provides for interest from the date of completion of the regular assessment under section 143 (1) till date of completion of reassessment or recomputation under section 147 or section 153A. For the purpose of levy of interest under section .....

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provision is a regular assessment or original assessment. On the other hand, whatever be the procedure adopted for assessing escaped income or undisclosed income pursuant to search or requisition, such an assessment will always be a reassessment or recomputation under section 153A, and unless it is a first assessment, that can be treated as the regular assessment in terms of the Explanation (2) to section 234B(1), interest can be charged only under section 234B(3). In the instant case, the orig .....

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4(B)(3) as held by the Tribunal . 15. The principle laid down by the Hon ble Madras High Court in the case of Textile Dye-chem Corpn. (supra) also support the above. Infact, there was a finding that the assessment made on assessee was for the first time under Section 147 and on that fact the Hon ble High Court held that interest was leviable under 234B(1). Thus, the provisions of the Act and various case law support the view that where intimation u/s. 143(1) was issued levying interest u/s 234B( .....

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r passed earlier is to be considered as an assessment? Ld. CIT(A) was of the opinion that 143(1) is not an assessment and is only an intimation. This view can be accepted in the context of re-opening of assessment as held by the Hon'ble Supreme Court in the case of Rajesh Jhaveri Stock Brokers Pvt. Ltd., [291 ITR 500] or for any other provisions on assessment. For the purpose of levy of interest u/s. 234B where it is very clearly mentioned that even processing u/s. 143(1) is also to be consi .....

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under sub-section (1) is increased, 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 commencing on the day following [the date of determination of total income under sub-section (1) of section 143 [and where a regular assessment is made as is referred to in subsection (1) following the date of such regular assessment]] and ending on the date of the reassessment or recomputation under section 147 [or sect .....

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