TMI Blog2009 (4) TMI 111X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 of 2007 JUDGMENT Ramachandran Nair, J. - These connected appeals filed by the assessee arise from the common order of the Income Tax Appellate Tribunal disposing of assessee's appeals for the assessment years 1991-92 to 1998-99. The assessee is a renowned Homoeo doctor engaged in medical practice at Kottayam. Besides income from profession, the assessee is engaged in sale of medicines and books. Admittedly assessee was not maintaining books of accounts for his professional income and income was returned on estimation basis. Search was conducted in the professional-cum-residential premises of the assessee on 30.12.1994. During the course of search substantial amount of cash, Indira Vikas Patras (IVP) valued at substantial amount and promissory notes were recovered. From the locker maintained by the assessee in the State Bank of India, Jawahar Nagar, Baroda, the Department seized IVPs of face value Rs. 67.60 lakhs out of which IVPs of Rs. 90,000/- was found to be purchased by the assessee's son and balance Rs. 66.70 lakhs was found to be the investment of the assessee. Based on the recovered cash, IVPs. and promissory notes and other recovered documents, the assessing offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ything about chargeability of interest under Section 234B in the body of the order, and for other years he has worked out interest in the last portion of the assessment order. Therefore the demand of interest is unauthorised, is the case of the assessee. However, all the authorities, including the Tribunal, upheld in principle the assessee's liability for interest for default in payment of advance tax under Section 234B of the Act. However, on the quantum of interest, Tribunal took note of the assessee's argument that Post Offices have not deducted tax at source and remanded the matter to determine the quantum of interest. It is against these findings of the Tribunal, that the assessee has filed these appeals under Section 260A of the Act raising the following common questions: 1. Whether on the facts and circumstances o the case, the Appellate Tribunal being the final authority on questions of fact was justified in law in disallowing the claim of expense of salaries to doctors, staff and depreciation of car in computing the professional income by not entertaining the ground, treating the issue as factual and without dealing with the judgment of the Supreme Court in (1992) 84 ST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unting followed is not acceptable, since the sheets as per KPA1 is not book maintained without dealing with the judgment in 110 STC 59. 10. Whether on the facts and circumstances of the case the Appellate Tribunal was justified in confirming the levy of interest under Section 234B after admitting that no order is made in the assessment order for charging interest and there is no question of ITNS 150 without following the Supreme Court judgment in 247 ITR 209 and 278 ITR 1 and also the Tribunal decision in ITA 355/Coch/1999 and the judgment in 183 CTR 473. 11. Whether on the facts and circumstances of the case the Appellate Tribunal was justified in law in holding that there is no deficiency in the assessment order in respect of chargeability of interest under Section 234B when bona fide dispute was pending as to income estimated and levy was without hearing and reasons. 12. Whether on the facts and circumstances of the case is not the order of the Tribunal perverse in as much as the Tribunal has decided the issues not on the basis of law laid down by the Apex Court/High Court but on the basis of what the Tribunal decided by holding that the principles arising out of the prece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal receipts. If assessee has regular employees we see no reason why the assessee could not maintain proper accounts showing the payments made to them and to claim eligible deductions, such as remuneration paid to staff, depreciation earned, etc and return the actual income for assessment. On the other hand, assessee himself returned only estimation of income from gross receipts and therefore he cannot at the second stage of appeal before the Tribunal come forward with claims of deductions towards remuneration paid to employees, including doctors, depreciation for furniture, fixtures, etc. In fact, the officer himself allowed 20% of earnings towards expenditure without any evidence at all and over and above this, the first appellate authority estimated additional expenditure of Rs. 60,000/- per year, which was increased by the Tribunal on a percentage basis of the turnover, thereby granting substantial deduction. Therefore this is not a question of law as projected by the assessee, but only a question of fact, that is, whether this Court will be justified in interfering with the order of the Tribunal refixing the income of the assessee on estimation basis after granting furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... VP amounts to depositing a specific amount in Post Office for a specific period at specified rate of interest. On maturity the holder can encash the same from the very same post office. The rate of interest for IVPs purchased before 31.3.1987 was 14.97 per cent per annum compounded on the initial sale value. For certificates purchased after 1.4.1987 the rate of interest was reduced to 13.43% per annum. Government while framing IVP Rules of 1986 has provided for treatment of tax liability for the interest earnings. Rule 8(3) of the IVP Rules 1986 is as follows: 8(3). In the case of certificate purchased on or before 31 st March, 1987, interest at the rate of 14.97 per cent per annum compounded on the initial sale value of the certificate shall be deemed to have accrued at the end of each year, calculated from the date of initial purchase of the certificate from the Post Office up to the end of the fifth year for the purpose of tax payable by a holder in the relevant assessment year under any law for the time being in force. Under sub-rule (4) the above scheme is retained for deposits made after 1.4.1987 but with reduced rate of interest at 13.43 per cent per annum. Even thoug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... VP on maturity. We have extracted above Rule 8(3) of the IVP Rules, 1986 which provides for treatment of interest accrued on IVP on yearly basis at the rate prescribed in the Rules. However, assessee's contention before the Tribunal and before us is that there is no incorporation of the IVP Rules in the IT Act and Rules and therefore IVP Rule has no application. The only question to be considered is whether in the absence of incorporation of Rule 8(3) of the IVP Rules in the Income Tax Act and Rules the assessment of interest annually on accrual basis is permissible. In the first place, assessee has not paid any tax on interest received on IVP on receipt basis. On the other hand, entire investment in IVPs and interest earned thereon were kept out of income tax return filed and only after search the assessee offered interest for assessment while filing return and revised return for the year 1995-96. We are of the view that the assessee who does not even maintain books of accounts can canvass for assessment of interest income on cash basis which applies only to assessees who maintain books of accounts. Charging Section under the Income Tax Act, namely, Section 4, Section 2(24), whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cision of the Supreme Court in CIT V. RANCHI CLUB LTD., 247 I.T.R. 209 and decision of the Delhi High Court in CIT v. INCHCAPE INDIA (P) LTD ., 179 I.T.R. 212 (Del.) and the decision of this Court in CIT V. TRAVANCORE TITANIUM PRODUCTS, 183 CTR 473 and contended that interest cannot be levied under Section 234B. However, Tribunal relying on the special Bench decision of the Tribunal in MOTOROLA V. DY. CIT , 95 ITD 269 (Del.) upheld the levy in principle though remanded the matter for recomputation of the actual interest liability. Standing counsel for the department has contended that Sections 234A, 234B and 234C are mandatory in nature and they relied on the decision of the Supreme Court in CIT V. ANJUM M.H. GHASWALA , 252 I.T.R. 1 and that of this Court in CIT v R. RAMALINGAIR , 241 I.T.R. 753. The main contention raised by the assessee is that except for the assessment years 1996-97 and 1998-99, there is no statement in the assessment order about interest charged under Section 234B of the Act. However, assessee admits that in the computation portion, the assessing officer has worked out the interest due under Section 234B in all the assessment orders . We do not think th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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