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Mahabeer Prasad Jain Versus Commissioner of Income Tax

2017 (11) TMI 742 - ALLAHABAD HIGH COURT

Demand of interest u/s 234-A and 234-B - failure to pay advance tax and file the return in time - Held that:- In the present case, the assessee admittedly failed to furnish the return as also not deposited the advance tax as required under the law, therefore, the appellant/assessee is liable to pay interest under Sections 234A and section 234B. - Both the appellate authorities after considering the judgments which are relied upon by the learned counsel for the assessee correctly arrived at t .....

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s is an appeal arises from a decision of the Income Tax Appellate Tribunal dated 28.11.2008 passed by the Tribunal in ITA No.18/Agra/2007 . 2. The following questions of law have been framed by the assessee. (i) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in confirming the demand of interest u/s 234-A and 234-B of the Income Tax Act ? (ii) Whether, interest of ₹ 16,398/- under Section 234A is liable to be deleted as the amount of ₹ 4,90,899/ .....

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er the Act' has been correctly interpreted and applied in the facts and circumstance existing in the present case ? 3. We have heard Sri Amit Mahajan, learned counsel for the appellant and Sri Piyush Agarwal, learned Senior Standing Counsel for the Department. 4. The brief facts of the case are that search and seizure operation under Section 132(1) has held on the office premises of Chief General Manager, Dispatch and Coordination, Central Coal Field Ltd., Ranchi on 30.07.1990. During the co .....

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r Section 132(5), the authority has found undisclosed income of the appellant and it has been estimated at ₹ 5,40,889/-. 6. Section 132(5) of the Act provides the procedure for search and seizure. Sub-Section 5 of Section 132 of the Act provides as follows: "(5) Where any money, bullion, jewellery or other valuable article or thing (hereafter in this section and in sections 132A and 132B referred to as the assets) is seized under sub-section (1) or sub-section (1A), as a result of a s .....

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f such materials as are available with him; ii. calculating the amount of tax on the income so estimated in accordance with the provisions of the Indian Income-tax Act, 1922 (11 of 1922), or this Act; (iia) determining the amount of interest payable and the amount of penalty imposable in accordance with the provisions of the Indian Income-tax Act, 1922 (11 of 1922), or this Act, as if the order had been the order of regular assessment; (iii) specifying the amount that will be required to satisfy .....

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vided that if, after taking into account the materials available with him, the Income-tax Officer is of the view that it is not possible to ascertain to which particular previous year or years such income or any part thereof relates, he may calculate the tax on such income or part, as the case may be, as if such income or part were the total income chargeable to tax at the rates in force in the financial year in which the assets were seized and may also determine the interest or penalty, if any, .....

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s been issued and in pursuance thereto the appellant-assessee appeared and after considering the submission of the assessee, the assessing authority has passed an order dated 02.03.1993 under section 143(3) of the Act by which the assessing authority has treated the recovered cash as undisclosed investment and accordingly the assessing authority has determined the taxable income at ₹ 5,34,120/-. A demand notice has been issued under Section 156 wherein a demand of ₹ 4,20,914/- was ra .....

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n contended by the appellant that the interest under Section 234A and under Section 234B of the Act cannot be levied. The appellant has challenged the demand itself by praying that the tax stands be adjusted against the amount which has been recovered and retained by the department during the course of search. 9. Before the CIT(A) the appellant has contended that since in the order of the demand there is no specific mention of the charging of the interest hence the same cannot be realised. The C .....

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d judgment and order dated 28.11.2008. 11. The present appeal, therefore, arises from the order of the ITAT dated 28.11.2008. 12. The sole issue which has been raised by means of present appeal is confined to confirmation of demand of interest under Sections 234A and 234B of the Act, therefore, it would be relevant to place the provision of Section 234A and Section 234B of the Act, which are as follow; "234A. Interest for defaults in furnishing return of income.-(1) Where the return of inco .....

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return; or (b) where no return has been furnished, ending on the date of completion of the assessment under section 144, on the amount of the tax on the total income as determined under sub-section (1) of section 143, and where a regular assessment is made, on the amount of the tax on the total income determined under regular assessment, as reduced by the amount of,- (i) advance tax, if any, paid; (ii) any tax deducted or collected at source; (iii) any relief of tax allowed under section 90 on .....

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ate specified in sub-section (1) of Section 139 as applicable in the case of the assessee. Explanation 2.-In this sub-section, "tax on the total income as determined under sub-section (1) of section 143" shall not include the additional income-tax, if any, payable under section 143. Explanation 3.-Where, in relation to an assessment year, an assessment is made for the first time under section 147 or section 153A, the assessment so made shall be regarded as a regular assessment for the .....

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section 147, is furnished after the expiry of the time allowed under such notice, or is not furnished, 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 immediately following the expiry of the time allowed as aforesaid, and,- (a) where the return is furnished after the expiry of the time aforesaid, ending on the date of furnishing the return; or (b) where no return has been furnished, .....

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on 260 or section 260 or section 263 or section 264 or an order of the Settlement Commission under sub-section (4) of section 245D, the amount of tax on which interest was payable under sub-section (1) or sub-section (3) of this section has been increased or reduced, as the case may be, the interest shall be increased or reduced accordingly, and- (i) in a case where the interest is increased, the Assessing Officer shall serve on the assessee a notice of demand in the prescribed form specifying t .....

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ovisions 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 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 deter .....

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e determined under such regular assessment as reduced by the amount of,- (i) any tax deducted or collected at source in accordance with the provisions of Chapter XVII on any income which is subject to such deduction or collection and which is taken into account in computing such total income; (ii) any relief of tax allowed under section 90 on account of tax paid in a country outside India; (iii) any relief of tax allowed under section 90A on account of tax paid in a specified territory outside I .....

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this section. Explanation 3.-In Explanation 1 and in sub-section (3) "tax on the total income determined under sub-section (1) of section 143" shall not include the additional income-tax, if any, payable under section 143. (2) Where, before the date of determination of total income under sub-section (1) of section 143 or completion of a regular assessment, tax is paid by the assessee under section 140A or otherwise,- (i) interest shall be calculated in accordance with the foregoing pro .....

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imple interest at the rate of one per cent for every month or part of a month comprised in the period commencing on the 1st day of April of such assessment year and ending on the date of making such application, on the additional amount of income-tax referred to in that sub-section; (b) where as a result of an order of the Settlement Commission under sub-section (4) of section 245D for any assessment year, the amount of total income disclosed in the application under sub-section (1) of section 2 .....

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ction (6B) of section 245D, the amount on which interest was payable under clause (b) has been increased or reduced, as the case may be, the interest shall be increased or reduced accordingly; (3) where, as a result of an order of reassessment or recomputation under section 147 or section 153A, the amount on which interest was payable in respect of shortfall in payment of advance tax for any financial year under sub-section (1) is increased, the assessee shall be liable to pay simple interest at .....

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to in sub-section (1), as the case may be;] (4) where, as a result of an order under section 154 or section 155 or section 250 or section 254 or section 260 or section 262 or section 263 or section 264, the amount on which interest was payable under sub-section (1) or sub-section (3) has been increased or reduced, as the case may be, the interest shall be increased or reduced accordingly, and (i) in a case where the interest is increased, the Assessing Officer shall serve on the assessee a notic .....

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unsel for the parties and after perusal of the orders passed by the authorities below as well as the impugned judgment and order of the Tribunal, we have noticed that while deciding the appeal, the CIT(A) has recorded categorical finding that the appellant-assessee has purchased 5 bank drafts towards amounting of ₹ 4,90,899/- on 31.05.1990. The said drafts were purchased for lifting coal by road from the collieries of CCL, Ranchi. These five drafts were deposited along with an application .....

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ned that he did not know who had made the said investment in the bank. In fact, he had denied the transaction. 14. This stand of the authorised person was challenged and thereafter a fresh explanation has been given that the appellant has not clearly given any authority to the said authorised person namely Mahesh Chandra Bansal. The assessing authority has noticed the contradiction in the statement of the authorised authority in the changed stand by the appellant. The assessing authority had not .....

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he name of the appellant and the same was made by the appellant himself which was nothing but clearly the undisclosed source and accordingly the addition under Section 69 of the Act has been made. 15. During the course of the appellate proceeding before the CIT(A), the CIT(A) has referred the matter to the assessing authority for his comments. The assessing authority vide his letter dated 26.10.2005 has submitted his comments as under; "Regarding pt. No.5 to 7 of assessee's contention t .....

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stage but he did not do so. Only he has tried from 5.2.03 by merely writing a letter. The assessee has earnestly not tried to obtain information from the Bank. He could not have collect the information from Bank personally but he failed to do so. After a lapse of 12 years simply writing a letter in the bank in get the information is only to press his claim that he has written several letters. But the onus was on the assessee to prove the investment in aforesaid drafts. Everybody knows that the .....

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f cash is explained), therefore, evidence regarding purchase of drafts will not throw any new light on the facts. The CIT(A) further mentioned that moreover onus was on the appellant to submit any additional evidence with regard to his explanation, which he failed. The CIT(A) has further mentioned that the five drafts were purchased in the name of the appellant and same were deposited by the appellant with affidavit and application with own signature is itself a sufficient proof that the appella .....

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upon several decisions of the High Court as well as of the Hon'ble Supreme Court which are discussed in detail in the order of the CIT(A) dated 30.03.1993. The CIT(A) has held by following the decisions that levy of interest is mandatory in the facts and circumstances of the present case. He has held that the moment it is found that the legitimate tax has not been paid by specified date interest become payable. He has further held that there is subjectivity or discretion in the matter of lev .....

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