SHRI KRISHNA BOTHRA 302, VINAYAK APARTMENT PRITHVIRAJ ROAD, C-SCHEME, JAIPUR,JAIPUR vs. ITO WARD-6 (2), JAIPUR, WARD-6(2), JAIPUR

ORDER PER: SANDEEP GOSAIN, J.M. This appeal has been filed by the assessee against the order of the ld. CIT(A)-2, Jaipur dated 21/05/2019 for the A.Y. 2010-11 wherein sole effective ground of appeal

2. The hearing of the appeal was concluded through video conference in view of the prevailing situation of Covid-19 Pandemic.

2 ITA 967/JP/2019_ Krishna Bothra Vs ITO 3. The only ground raised by the assessee relates to challenging the order of the ld. CIT(A) in confirming the addition of Rs. 9,41,283/- of interest U/s 234A(1) of the Income Tax Act, 1961 (in short, the Act). The ld. AR appearing on behalf of the assessee has reiterated the same arguments as were raised before the ld. CIT(A) and also relied on the written submissions filed before the Bench which is reproduced below:

“That the assessee did not file the return of income u/s 139(1) but filed her return of income for the first time in compliance to notice u/s 148 dated 20-06-2014 on dated 11-02-2016 declaring income of rupees 2,97,250 /- and paid the tax and interest A/ s 234 A, B, C. Thus, there is a delay in filing of return for 19 months i.e from Aug. 2014 to Feb. 2016.

In original ITNS 150 the AO charged interest u/s 234A(3) of Rs. 266950/- for the period from 01/08/2014 to 11/02/2016 i.e. 19 months on the tax of Rs. 1404981/ -The AO rectified the same u/s 154 increasing the interest charged u/s 234A from Rs. 266950/- to 941983/-u/s 234A(1) instead of interest u/s 234A(3). The result thereof was increase of interest from Rs. 266950/- to Rs. 941983/- .

The question now arises whether the interest u/s 234A should be charged for a period of 19 months as per the provisions contained in Sec. 234A(3 or it. should be charged from the period from 01/08/2010 to 01/02/2016 i.e. for the period of 67 months.

It is a settled proposition of law qua rectification that a mistake apparent on record must be obvious and patent mistake and not something which can be established by long drawn process of reasoning on points on which there may be conceivably two opinions.

3 ITA 967/JP/2019_ Krishna Bothra Vs ITO Since the matter in dispute is debatable as there are two sub sections (1) & (3) for charging of interest u/s 234A, hence rectification order passed is bad in law in view of Hon'able Supreme Court judgement in the case of TS Balaram, ITO Vs. Volkart brothers (82 ITR 50,53,54) wherein it has been held that " a decision on debatable point of law is not the mistake apparent from records" and same has been followed by the number of High Courts and ITAT benches of India.

Now for the sake of your convenience we are reproducing the sub section (1) and (3). 234A. (1) Where the return of income for any assessment year under sub- section (1) or sub-section (4) of section 139, or in response to a notice under sub-section (1) of section 142, is furnished after the due date, 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 date immediately following the due date, and,— (a) where the return is furnished after the due date, ending on the date of furnishing of the 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; 98[(iia) any relief of tax allowed under section 89;] (iii) any relief of tax allowed under section 90 on account of tax paid in a country outside India; (iv) any relief of tax allowed under section 90A on account of tax paid in a specified territory outside India referred to in that section; (v) any deduction, from the Indian income-tax payable, allowed under section 91, on account of tax paid in a country outside India; and (vi) any tax credit allowed to be set off in accordance with the provisions of section 115JAA or section 115JD. 234A (3) Where the return of income for any assessment year, required by a notice under section 148 or section 153A issued after the determination

4 ITA 967/JP/2019_ Krishna Bothra Vs ITO of income under sub-section (1) of section 143 or after the completion of an assessment under sub-section (3) of section 143 or section 144 or 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, ending on the date of completion of the reassessment or recomputation under section 147 or reassessment under section 153A, on the amount by which the tax on the total income determined on the basis of such reassessment or recomputation exceeds the tax on the total income determined under sub-section (1) of section 143 or on the basis of the earlier assessment aforesaid. From the reading of sub sec (3) the interest was rightly charged for 19 months and therefore the increase of interest u/s 234A by way of rectification is bad in law.

Further, Hon'ble Bombay ITAT in the case of Priti Pithawala v. ITO (Bombay)(See P.B. Pg. No. 19-23) in paragraph 8 and 9 has mentioned as under.:-

"8. Sec. 234A prescribes as under:

"234A(1) Where the return of income for any assessment year under subsection (1) or sub-section 139, or in response to a notice under sub- section (1) of section 142, is furnished after the due date, or is not furnished, the assessee shall be liable to pay simple interest at the rate of one and one-fourth percent for every month, or part of a month comprised in the period commencing on the date immediately following the due date, and:- a) where the return is furnished after the due date, ending on the date of furnishing of the return; or b) where no return has been furnished, ending on the date of completion of the assessment u/s 144, on the amount of the tax on the total income as determined under section (1) of section 143 or on regular assessment as 5 ITA 967/JP/2019_ Krishna Bothra Vs ITO reduced by the advance tax, if any, paid and tax deducted or collected at source. Explanation 1………………………………………………………………………………… Explanation 3. Where, in relation to an assessment year, an assessment is made for the first time under section 147, the assessment so made shall be regarded as a regular assessment for the purpose of this section."

6 ITA 967/JP/2019_ Krishna Bothra Vs ITO 5. We have considered the rival contentions and carefully perused the material available on record. From perusal of records, we noticed that the A.O. passed order U/s 154 of the Act for the year under consideration on the ground that the assessee was liable to pay interest U/s 234A(1) of the Act of Rs. 9,41,283/- instead of Rs. 2,66,950/- charged as per Section 234A(1) of the Act because in this case, scrutiny assessment U/s 147/143(3) of the Act was completed at a total income of Rs.48,71,356/-. However, later on, on verification of the record, it was found by the A.O. that interest U/s 234A(1) was charged at Rs. 2,66,950/- in ITNS 150 dated 31/03/2016 whereas it was to be charged at Rs. 9,41,283/- and thus considered the same to be mistake apparent from the record. The A.O. also issued notice to the assessee and provided opportunity of hearing but the assessee did not appear before the A.O.. Consequently, the order of rectification was passed by the A.O. thereby charging interest U/s 234A(1) of the Act at Rs. 9,41,283/- but at the same time, the total income of the assesse was kept same as was determined U/s 143(3)/147 of the Act. The ld. AR has vehemently opposed the passing of rectification order on the ground that there was no mistake apparent from the record and charging of interest is a debatable issue and relied upon the decision of Hon’ble Supreme Court in the case of TS Balaram, ITO Vs Volkart Brothers 82 ITR 50.

7 ITA 967/JP/2019_ Krishna Bothra Vs ITO 6. After perusal of the facts of the present case, we found that the ld. AR solely relied upon the provisions of Section 234A(3) of the Act whereas it has categorically been provided therein that for return filed U/s 148 “after the completion of an assessment U/s 143(3) or 144/147” interest is to be charged commencing on the date from the expiry of time allowed for filing of return of income. However, on perusal of the facts, we found that it is an admitted position that in the present case, the assesse had not filed any return of income either U/s 139(1) or U/s 139(4) of the Act and for the first time the return of income was filed by the assesse in response to notice U/s 148 of the Act on 11/02/2016. Since no return of income was earlier filed U/s 139(1) or U/s 139(4) of the Act, therefore there was no question of any assessment U/s 143(3)/144/147 of the Act. Therefore, for this reason alone, the assessee’s case do not fall U/s 234A(3) of the Act and it is plainly covered by the provisions of Section 234A(1) explanation (3) of the Act whereas where interest is to be charged from the due date of filing of return till the date of filing of return in response to notice U/s 147 of the Act. It has categorically been mentioned in sub-section (3) of Section 234A of the Act that provisions of said sub-section can only be invoked in the case where the completion of assessment U/s 143(3)/144 or 147 of the Act takes place, but admittedly in the present case, no return was filed. There 8 ITA 967/JP/2019_ Krishna Bothra Vs ITO was no occasion for completion of the assessment under the above provisions, therefore, the assesse cannot take benefit of sub-section (3) of Section 234A of the Act.