TMI Blog2023 (2) TMI 274X X X X Extracts X X X X X X X X Extracts X X X X ..... epaid tax and only on the balance additional tax payable, interest under Section 234B(2A) ought to have been charged. This Court in case of Bharatbhai B. Shah [ 2013 (10) TMI 1025 - GUJARAT HIGH COURT ] has extensively dealt with the decision of Dr. Pranay Roy [ 2001 (12) TMI 68 - DELHI HIGH COURT ] which had been confirmed by the Apex Court in case of CIT vs. Pranay Roy [ 2008 (9) TMI 150 - SUPREME COURT ] had taken note of the various other decisions of the Apex Court as well to eventually hold that the double levy of interest is not permissible and that principle is applicable when the interest is chargeable more than once for the same set of infractions. It also has pointed out as to how the provisions of the Act operate in different fields and there is no statutory bar on the levying of the interest as the levy is separately for different infractions. Section 234B would apply when there is a defect in payment of advance tax. Under Section 245D(2C), the interest liability arises when within the time specified under sub-section (2A) the additional amount of income tax is not paid, whereas the interest needs to be paid under Section 245D(6A) when the tax payable in pursuanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther. The final report under Rule 9 was called for from the Principal Commissioner of the Income Tax and respondent No.1 finally passed an order under Section 245D(4) on 29.01.2021, providing the terms of settlement including the interest under Section 234B(2A) of the Act, inter alia with other aspects of the matter. The petitioner is aggrieved by the order only to the extent of the computation of interest under Section 234B(2A) of the Act. 4. According to the petitioner, the interest is to be levied only on the additional amount of income tax after reducing the taxes already paid by the petitioner, thus, this controversy. The respondent authority has calculated the interest on the entire additional income offered without providing the set off of the prepaid taxes already paid. Thus, according to the petitioner, it would amount to charging double interest on the same amount. 5. The reply affidavit has been filed by respondent No.2 urging that under Section 234B(2A)(a), where the application under Section 245C(1) is made, the petitioner is liable to pay interest at the rate of 1% for every month or part thereof for the period commencing on 1st April of the assessment y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be, the interest shall be increased or reduced accordingly; 8. For an additional amount of income tax referred to in Section 245C(1), the assessee has been made 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 1st day of April of such assessment year and ending on the date of making such application. What has been emphasised is that the simple interest at the rate of one per cent, the assessee is obligated to pay for every month or part of a month on the additional amount of income tax as referred to under Section 245C(1). Section 245C provides for settlement of cases which the assessee may, at any stage of a case, can do. He can make an application in such form and in such manner as prescribed, and containing a full and true disclosure of his income which has not been disclosed before the Assessing Officer, the manner in which such income has been derived, the additional amount of income tax payable on such income and such other particulars as may be prescribed, to the Settlement Commission to have the case settled. The manner of disposing of such application is also provided under this. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he settlement proceedings arose by virtue of amended Section 245D of the Act. The amount of Rs. 1,60,000/- lying with the department had to be adjusted towards such liability. 10. In yet another matter in case of Bharatbhai B. Shah versus Income Tax Officer [2013] 355 ITR 373 (Guj.) , the question was with regard to the charging of interest from an assessee for the late filing of return though the tax was already considered. The Court held that the provision is penal in nature which the Statute does not provide. It further held that the assessee must be held liable to pay interest under Section 234A of the Income Tax Act on the difference of amount between the tax assessed and the amount which he had paid before the due date. The sole controversy between the parties before this Court was in respect of charging of interest on residue of tax short assessed and tax paid and not on the entire sum of the tax assessed. The Revenue s contention was that infraction referred to in Section 234A of the Act of not having filed the return within the due date complete and since none of the exclusionary clauses provided in sub-section (1) of Section 234A applied, the charging of interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id before the due date of filing of return, would render the provisions of section 234A penal in nature which was frowned upon by the Delhi High Court and on that basis, the decision was upheld by the Apex Court. It is undoubtedly true that the Gujarat High Court, when showed the decision of the Delhi High Court in the case of Dr.Prannoy Roy (supra), took a different view in the case of Roshanlal Jain (supra). It is also true that this Court in the case of Roshanlal Jain (supra) had given detailed reasons for coming to such conclusion. The Court was of the opinion that the provisions contained in section 234A and B are not only valid, but they operate in different fields. By a conscious decision, giving detailed reasons, this Court differed from the view expressed by the Delhi High Court in the case of Dr.Prannoy Roy (supra). We may, however, notice that unfortunately, the decision of the Apex Court in the case of CIT v. Pranoy Roy (supra) confirming the view of the Delhi High Court was not brought to the notice of the Gujarat High Court when the decision in the case of Roshanlal Jain was rendered. We may record that the Apex Court rendered its decision in the case of CIT v. Pranoy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conclusion but in regard to its ratio and the principles, laid down therein'. Any declaration or conclusion arrived without application of mind or preceded without any reason cannot be deemed to be declaration of law or authority of a general nature binding as a precedent. Restraint in dissenting or overruling is for sake of stability and uniformity but rigidity beyond reasonable limits is inimical to the growth of law. In the present case, however, we do not find that the Delhi High Court while rendering the decision in the case of Dr.Prannoy Roy (supra) ignored any of the earlier binding decisions of the same or superior court. The decision in the case of Anjum M.H.Ghaswala (supra) rendered by the Apex Court laid down that charging of interest under section 234A, B and C, etc. is mandatory in nature. However, the question which the Delhi High Court was considering in the case of Dr.Prannoy Roy (supra) did not arise before the Apex Court in the case of Anjum M.H.Ghaswala (supra). Similarly, in the case of Damani Brothers (supra) the Apex Court did not have the occasion to consider the chargeability of interest for late filing of return under section 234A of the Act thou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , of course, true that there is minor difference between the case of Dr.Prannoy Roy (supra) and the case of the present assessee on hand. In the case of Dr.Prannoy Roy (supra), the assessee had paid up the entire tax before the due date. In the present case, the assessee deposited a sum of Rs.10 lacs under section 140A of the Act. In addition thereto, the assessee had also suffered tax deduction at source to the tune of Rs.25,533/-. Eventually, the Assessing Officer, assessed the tax liability of the assessee at total of Rs.15,08,474/-. Thus the assessee had short-paid tax to the tune of Rs.4,82,941/-. To our mind, however, when we look at the ratio of the decision of the Delhi High Court in the case of Dr.Prannoy Roy (supra), such distinction would not be material. What was held by the Delhi High Court was that charging of interest from an assessee for late filing of return though the tax was already paid, would render the provision penal in nature, which the statute did not provide. If we apply the same ratio in the present case, the only modification we need to adopt is that the assessee must be held to be liable to pay interest under section 234A of the Act on the difference of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble under the provisions of the Act the contention that the second terminus (the first being already provided in the Act and there being no dispute as to the same) would not be the terminus normally provided by the provisions of the Act but the order of the Commission which deals with that component of income which came up for assessment / settlement before the Commission for the first time. In this context the following observations of the Apex Court may be usefully reproduced: Sub-section (1) of section 245C makes it clear that at any stage of a case relating him an assessee may make an application to the Commission disclosing fully and truly his income which has not been disclosed before the Assessing Officer. To put it differently, an assessee cannot approach the Commission for settlement of his case in respect of an income which has already been disclosed before the Assessing Officer. The income disclosed as contemplated is in the nature of voluntary disclosure of concealed income.[Emphasised supplied] Section 245F dealing with powers and procedure of the Settlement Commission provides that in addition to the powers conferred on the Settlement Commission under Cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Commission. By analogy and harmony, the period has to be till the date of the Commission's order. To put it differently, the interests charged in terms of sections 234A, 234B and 234C become payable on the income already disclosed in the returns filed, together with the income disclosed before the Commission. The concerned interest as aforesaid shall be on the consolidated amount of income, i.e. both disclosed and undisclosed. As indicated above, such interests shall be charged till the Commission acts in terms of section 245D. Thereafter, the prescription relating to charging of interests, etc., becomes operative, after the Commission allows the application for settlement to be proceeded with. In such event, there is no further charge of interest in terms of sections 234A, 234B and 234C. The interest charged in terms of section 245D is a separate levy and not in terms of interest chargeable under sections 234A, 234B and 234C. Therefore, the apprehension that there is scope for charging of interest on interest is without any basis. To sum up, the inevitable conclusion is that interest has to be charged for the period beginning from the first day of April next following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Sections 234A, 234B or 234C of the Act, when arises for settlement before the Settlement Commission, answers that the interest for default in furnishing return of income, in payment of advance tax and interest for deferment of advance tax are mandatory in nature. Para 30 is reproduced as under : 30. It is then contended that if it is to be construed that the Commission has no power of waiver or reduction of interest then the entire purpose of Chapter XIX-A would be defeated since a person making an application to the Commission would not be in any way better off than pursuing his remedy otherwise provided in the Act. We are unable to accept this argument advanced on behalf of the respondents because the persons who approach the Commission under Chapter XIX-B are admittedly the persons who had not declared their true incomes to the income-tax authorities as required under the Act. In spite of this default, Section 245C comes to the aid of such assessees by providing a way out of the statutory implications of their default. The object of the Legislature in introducing this Section is to see that the protracted proceedings before the authorities or in Courts are avoided by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est was rejected by the respondent for calculating the interest only on the additional income offered without providing the set off on the prepaid taxes. 15. In case of M/s. Shiv Shipping Services and in case of M/s. Shiv Shipping Logistics, taxes paid and additional income disclosed before the Commission with interest to be paid has been given by the petitioner in two separate charts as under: 16. The moot point is as to whether the interest needs to be paid on the entire amount or the additional amount of taxes paid by the petitioner and we find that the interest shall need to be calculated only on the additional taxes offered after providing the set off of the prepaid taxes already paid by the petitioner. 17. The plea on the part of the petitioner is that it has required to pay the interest at a specific rate on the additional amount of Income Tax offered before the Settlement Commission was not executed. It had been emphasized that such additional amount of income tax would mean the additional income tax after reducing the tax already paid by the petitioner. In other words, the credit of prepaid taxes was requested to be allowed and only on the balance additiona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20. In the matter before this Court, the assessee had deposited a sum of Rs. 10,00,000/- under Section 140A of the Act and eventually, the assessing officer assessed the tax liability of the assessee at total Rs. 15,08,474/-. Thus, the tax short paid was Rs. 4,82,941/-. Therefore, the Court permitted to pay interest under Section 234A on the difference of amount between tax assessed and the amount which had already been paid before the due date and accordingly, on a sum of Rs. 4,82,941/- the interest under Section 234A was permitted for the entire period i.e. from 01.09.1996 till 27.03.1998 (after due date of filing of return till the date on which the return was filed). 21. Applying the very analogy and ratio and as the case of the petitioner is covered by the decision of Bharatbhai B. Shah (supra), the amount already paid by the petitioner at the time of filing of return shall need to be excluded at the time of levying of interest under Section 234A. On the additional amount paid by the petitioner, as that becomes the tax short paid, and therefore, on that additional amount for the entire period i.e. after the due date of filing of return till the date on which the return w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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