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TMI Blog2019 (1) TMI 203X X X X Extracts X X X X X X X X Extracts X X X X ..... ct amounting to Rs. 92,937/- for non payment of advance tax was charged vide the assessment order dated 27.3.2006. The assessee filed a petition before the A.O. u/s 154 of the Act against the charging of interest u/s 234B of the Act, which was dismissed by the A.O. vide order dated 30.7.2009. Aggrieved by the same the assessee went in appeal before the CIT (A) who upheld the order of the Assessing Officer stating that the interest has been charged correctly as per the provisions of law. The findings of the CIT (A) at para 6 of his order are as under: "6. I have gone through the order of the AO, the grounds of appeal and the submission. The appeal has been filed against the order passed by the AO u/s 154 for the A.Y. 2000-01. Assessee's contention is that the AO has wrongly charged the interest u/s 234B of the Income Tax Act at the time of assessment order framed u/s 143(3)/147 vide order dated 27.03.2006 and therefore no interest is chargeable u/s 234B in reassessment proceedings as no interest was charged in the assessment framed u/s 143(1) for the said year. Section 234B says as under; (1) Subject to the other provisions of this section where, in any financial year, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 aforesaid." A plain reading of this section clearly shows that interest u/s 234B has to be charged on the increased tax liability to the dated of reassessment. Assessee's contention that if no' interest has been charged u/s 143(1) or regular assessment, than interest cannot be charged u/s 234B is not correct and hence rejected. Explanation 2 to section 234B(1J clearly says that "where in relation to an assessment year, an assessment is made for the 1st time under section 147, the assessment so made shall be reported as regular assessment for the purpose of this section" The case law quoted by the assessee is not applicable as facts are different in this case, so the AO has rightly rejected it." 5. Aggrieved by the same, the assessee has come up in appeal before us raising following grounds: "1. The order of the learned ClT (A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions of section 234B were clear and even as per section 234B(3) interest had to be charged on the increased tax liability upto the date of re-assessment. 9. We have heard the rival contentions and perused the orders of authorities below and also gone through the case law cited before us. The issue before us relates to levy of interest for default/shortfall in payment of advance tax as per the provisions of section 234B of the Act. The facts necessary for adjudicating the issue and which are not disputed also are that initially an intimation under section 143(1) had been made in the present case, accepting the returned income of the assessee of Rs. 1,48,150/- and charging no interest under section 234B of the Act. Later on assessment under section 147/148 of the Act was made making addition to the income of the assessee of Rs. 4 lacs on account of unexplained investment as partner in M/s Trilok Singh & Company. As a consequence thereof, there resulted a liability for payment of advance tax, which having not been paid, interest under section 234B was levied in the order passed under section 148. There is no dispute regarding the above facts. 10. For adjudicating the issue it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 143.] (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 under 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 subsection (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 aforesaid." 11. On going through the above, we find that as per the provisions of section 234B(1) read with Explanation-2, where an assessee who is liable to pay advance tax but has not paid the same or the amount so paid is less than 90% of the assessed tax, he shall be liable to pay interest o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me is payable on the shortfall of the advance tax for the period as beginning from the end of the financial year to the date of intimation u/s 143(1) or regular assessment .And in case of reassessment ,under sub section 3,on the excess advance tax payable on account of reassessment, from the date of intimation us 143(1) or regular assessment to the date of order passed u/s 147. The words used in sub section 3 to section 234B "the amount on which interest was payable in respect of shortfall in payment of advance is increased" cannot be read to mean that only if initially there was a liability to pay advance tax, there shall be treated to be an "increase" on account of addition made on reassessment u/s 147. There need not be an initial liability to pay of interest under section 234B of the Act, for there to be an increase in the said liability and the interest liability can be said to have increased even if initially there is no liability to pay interest as per determination of income under section 143(1) and on regular assessment and the liability arose on account of the determination of income in the re assessment proceedings. At the cost of repetition it is stated that the charge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is clarified later on by the Legislature which the assessee could not have anticipated and on account of which the addition is made to his income on reopening, it is difficult to hold such an assessee as a defaulter. The I.T.A.T. held that if the assessee takes due diligence and care and makes the payment and the same is accepted by the Revenue such an assessee cannot be held as a defaulter only because subsequently the assessee's income has been enhanced and the imposition of interest under such circumstances was held not justified The relevant findings of the I.T.A.T. in this regard are as under: "47. In the case of CIT v. K.K. Marketing, the Hon'ble Delhi High Court held that in a case where the Revenue accepted the return filed by the assessee and in fact it was found that they were entitled to a refund, which was more than the amount of cash that was seized, there is no justification in charging interest under Sections 234B and 234C and it would be appropriate not to charge interest from the assessee. This was a case, wherein there was a search and seizure action in the premises of the assessee and during the search action huge amount of cash was recovered and so, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the revised returns had also been paid within time and thus no delay could be attributed to the assessee. The Chief CIT should have waived the entire interest that was levied by the AO. The order of the single Judge affirming that of the Chief CIT could not be sustained. Thus, the interest levied on the assessee under Section 234B was waived. 50. Coming to the instant case, there is no default on the part of the assessee in paying the advance tax. For the first time the dispute arose consequent to the reassessment done under Section 143(3) r/w Section 147. The stand of the Revenue is that charging of interest under Section 234B is mandatory. Mandatory does not mean that it is mandatory under all circumstances,. It is mandatory when the conditions are fulfilled. The condition is that the assessee should have defaulted. If the assessee has not anticipated reopening or the assessee has not anticipated a superior Court decision, which goes against the assessee, it is difficult to hold that such an assessee is a defaulter. If the assessee takes due diligence and care and makes the payment and if it is accepted by the Revenue, such an assessee cannot be held as a defaulter only becau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 Subsection (1) of Section 143 or on regular assessment as reduced by the amount of 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. Explanation 2 : 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 purposes of this section. (2)... (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 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 Subsection (1) of Section 143 and where a regular ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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