TMI Blog1999 (10) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... y of interest cannot be made under sections 234A and 234B without affording an opportunity of being heard to the assessee ? (2) Whether, on the facts and in the circumstances of the case, is not levy of interest under section 234A and 234B (and under the earlier provisions) automatic and axiomatic ?" As the questions referred are purely of law, detailed reference to factual position is unnecessary. Stated in brief, the same is as follows : The assessee is a partnership firm carrying on business in paper, paper products, office stationery, etc. For the assessment year 1991-92, it filed a return of income on August 31, 1992, declaring a total income of Rs. 8,23,510. The return was processed under section 143(1)(a) of the Act and the total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est for late filing or non-filing of return of income. There were several provisions which gave assessing authorities power to charge interest and also to levy penalties for default. Along with section 139(8), section 215 related to levy of interest for under-payment of advance tax ; section 216 related to levy of interest for deferment of instalments of advance tax and section 217 related to levy of interest for non-payment of advance tax. Similarly, sections 271(1)(a), 273 and 140A(3) related to levy of penalties for failure to file return of income or to file it in time, or failure to file statement/estimate, or filing an untrue statement/estimate of advance tax payable or failure to pay tax on self-assessment. It appears that with a vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d payment of interest by the assessee under section 140A at the time of filing of its return. Section 234A makes a provision for charging of interest for delay in filing and non-filing of return of income. Charge of interest under this section is mandatory in nature. The same is the position under section 234B. In the aforesaid background, it is to be seen whether any notice is required to be given before the levy. Corresponding rules relating to sections 139(8) and 215 are rules 117A and 40 of the Income-tax Rules, 1962 (in short, "the Rules"). Considering the nature of levy, the Rajasthan High Court in Golecha Properties (P.) Ltd. v. CIT [1988] 171 ITR 47, observed that a plain reading of the aforesaid provisions and their harmonious cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay in the matter does not arise. As observed by the apex court in J. K. Synthetics Ltd. v. CTO [1994] 94 STC 422, it is well known that when a statute levies a tax, it does so by inserting a charging section by which a liability is created or fixed and then proceeds to provide the machinery to make the liability effective. It, therefore, provides the machinery for the assessment of liability already fixed by the charging section and then provides the mode for the recovery and collection of tax including penal provisions meant to deal with defaulters. Provision is also made for charging interest on delayed payments, etc. Ordinarily the charging section which fixes the liability is strictly construed but that rule of strict construction is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re is no discretion left in the assessing authority by statute itself, there is no question of exercise of discretion and no notice before the exercise of discretion. The automatic nature of the levy is further apparent from section 140A of the Act, which reads as follows : "140A.(1) Where any tax is payable on the basis of any return required to be furnished under section 139 or section 142 or, as the case may be, section 148, after taking into account the amount of tax, if any, already paid under any provision of this Act, the assessee shall be liable to pay such tax, together with interest payable under any provision of this Act for any delay in furnishing the return or any default or delay in payment of advance tax, before furnishin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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