DILIP KUMAR AGARWAL,KOLKATA vs. DCIT, CENTRAL CIRCLE 3(3), , KOLKATA

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ITA 569/KOL/2025Status: DisposedITAT Kolkata16 July 2026AY 2015-167 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the order passed under Section 154 and its confirmation by the CIT(A) were bad in law as there was no mistake apparent from the order dated 9.5.2018. It was also held that the chargeability of interest under Section 234C was a debatable issue in this case.

What were the facts?

The assessee disclosed a large sum of income after the financial year ended, making advance tax payment impossible. The AO later sought to rectify an order under Section 154 to charge interest under Sections 234B and 234C, which was confirmed by the CIT(A). The assessee argued that the rectification was bad in law as there was no apparent mistake in the original order.

What were the issues?

Whether the AO could rectify an order under Section 154 when there was no apparent mistake, and whether interest under Section 234C was chargeable in the given circumstances.

Which sections of the Income-tax Act were involved?

Section 154,Section 234B,Section 234C,Section 143(3),Section 251

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH: KOLKATA

Before: Shri Rajesh Kumar & Shri Pradip Kumar Choubey]

आयकर अपील�य अ�धकरण, कोलकाता पीठ “ए’’, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH: KOLKATA �ी राजेश कुमार, लेखा सट�य एवं �ी �द�प कुमार चौबे, �या�यक सद�य के सम� [Before Shri Rajesh Kumar, Accountant Member & Shri Pradip Kumar Choubey, Judicial Member] I.T.A. No. 569/Kol/2025 Assessment Year: 2015-16 Dilip Kumar Agarwal Vs. DCIT, Central Circle-3(3), Kolkata

(PAN: ACRPA 9343 D) ( अपीलाथ� ) Respondent / ��यथ� Appellant / Date of Hearing / सुनवाई 09.07.2026 क� �त�थ Date of Pronouncement/ 16.07.2026 आदेश उ�घोषणा क� �त�थ For the Appellant/ Shri Sunil Surana, Advocate �नधा�रती क� ओर से For the Respondent/ Shri Sallong Yaden, Addl. CIT Sr. DR राज�व क� ओर से

ORDER / आदेश Per Rajesh Kumar, AM: This is an appeal preferred by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals)-27, Kolkata (hereinafter referred to as the “Ld. CIT(A)”] dated 06.12.2023 for the AY 2015-16. 2. At the outset the ld. counsel submitted that the assessee has raised two additional grounds which are purely legal issues and may kindly be admitted. The said grounds are extracted below for the sake of ready reference:-

2 I.T.A. No.569/Kol/2025 Assessment Year: 2015-16 Dilip Kumar Agarwal "1. That the order passed u/s 154 by the Ld AO and confirmed by Ld CIT(A) was bad in law, since there was no mistake apparent from the order passed u/s 251/143(3) dated 9.5.2018."

2.

For that the chargeability of interest u/s 234C was otherwise debatable issue in view of the fact that such interest was not chargeable in view of proviso (c) to sec 234C(1)(b)."

After hearing the rival contentions and perusing the material on record, we find that the assessee has raised the above additional grounds of appeal. In our opinion the issued raised in the additional ground is a purely a legal issue qua which all the facts are available in the appeal folder and no further verification of facts are required from any quarter whatsoever. In our considered view the assessee is at liberty to raise any legal issue before any appellate authority for the first time even when the same has not been raised before the lower authorities. The case of the assessee is squarely covered by the decisions of the Apex court in the case of i) Jute Corporation of India Ltd. Vs CIT in 187 ITR 688 , ii) National Thermal Power Co. Ltd v. CIT [1998] 229 ITR 383 and also by the decision of Hon’ble Calcutta High Court in PCIT vs. Britannia Industries Ltd. [2017] 396 ITR 677 (Cal). Therefore, we are inclined to admit the same for adjudication.

3.

The appeal is directed against the order of the order of ld. CIT(A) setting aside the issue of levy of interest u/s 234B and 234C of the Act to the AO for recalculation which has levied by Ld AO in the order passed u/s 154 u/s interest u/s 234B and interest u/s 234C of the Act.

4.

The facts in brief are that in this case a survey was conducted in the office of the assessee on 12.3.2015. The assessee disclosed a sum of Rs 11,99,50,000/- as income from share speculation, dabba, rice bran trading etc in his statement given on 15.5.2016 (after close of the year) even when there was no papers supporting the said disclosure. The income disclosed was from such sources which were stated for the first time in the life of the assessee. Since by that time the financial year for

3 I.T.A. No.569/Kol/2025 Assessment Year: 2015-16 Dilip Kumar Agarwal assessment year 2015-16 was duly over and ended , there was no way to pay advance tax. However, tax on this sum was paid within the month of May 2016.The assessee filed its return of income on 21.8.2015 after payment of advance tax, adjustment of amount seized u/s 132 and tax paid u/s 140A.The assessment was thereafter completed u/s 143(3) on 16.12.2016. In the said order as per computation sheet attached, no interest u/s 234C was charged.

5.

In fact interest was also not chargeable in the circumstances that discloser was made on the income which arose for the first time and that too the disclosure was made after closer of the financial year. Thus interest was not chargeable under clause of proviso to sec 234C(1)(b). Interest was however charged u/s 234A and 234B.

6.

The assessee filed appeal against the interest charged u/s 234A and 234B.The Ld CIT(A) passed order u/s 250, deleted the interest charged u/s 234A and gave specific direction with regard to the interest charged u/s 234B setting aside the said issue to the file of AO. (The relevant part of the said order is reproduced in the CIT(A) order dated 25.1.2025 in para 5.2.1 under appeal)

7.

The Ld. AO gave effect to the said order u/s 251/143(3).The Ld AO did not charge interest u/s 234B in the said order. Further since there was no interest charged u/s 234C in the original order u/s 143(3) dated 16.12.2016, no interest was charged u/s 234C in the order u/s 251/143(3) dated 9.5.2018.

8.

The Ld. AO thereafter issued notice u/s 154 and proposed to rectify the order passed u/s 251/143(3) dated 9.5.2018. The Ld. AO in the said notice observed that the assessee has offered interest u/s 234B Rs. 8,83,902/- and u/s 234C Rs. 13,99,418/- in the return filed u/s 139(4) which was not considered. The Ld AO concluded that non charging of interest u/s 234B and 234C after the appellate order dated 19.3.2018 in consequential order passed on 9.5.2018 was mistake apparent from record which was proposed to be rectified u/s 154.

4 I.T.A. No.569/Kol/2025 Assessment Year: 2015-16 Dilip Kumar Agarwal 9. The assessee objected to the said notice. The Ld. AO passed order u/s 154 charging interest of Rs 9,27,503/-u/s 2343 and interest of Rs. 15,19,408/- u/s 234C.

10.

The Ld. CIT(A), in his order dated 25.1.2025 for interest u/s 234B directed the Ld AO to follow direction of the order of Ld CIT(A) vide order dated 19.3.2018 and for interest u/s 234C directed to calculate the as per law. This appeal against the said order of Ld CIT(A)disputing the order u/s 154.

11.

We have heard the rival submissions and perused the materials on records. It is clear from the show cause notice issued u/s 154 dated 1/10/2020 that the Ld AO wanted to rectify the order u/s 251/143(3) dated 9.5.2018. There was no mistake in the said order. In fact, an order u/s 251/143(3) was only to give effect to specific issues taken before the Ld. CIT(A). The Ld CIT(A) in his order. directed the Ld AO to charge interest u/s 234B in a particular manner which was not charged in the said order. But the said mistake was not specified nor communicated in the notice u/s 154 which shows that the Ld AO was not considering rectification of such mistake if any in the notice issued u/s 154. The Ld wanted to rectify the alleged mistake of not considering the interest u/s 234B and 234C in the return filed u/s 139(4). Thus, the Ld AO cannot go beyond the reasons communicated in the notice u/s 154. Moreover, mistake should come out from the order and not from the return. Further the particular issue of charging interest u/s 234B was subject matter of appeal before the Ld. CIT(A) and cannot be the rectified u/s 154. (issue which was subject matter of appeal cannot be rectified since the order merged with the order of Ld CIT(A) Kindly refer to Amrit Lal Bhogilal & Co. 34 ITR page 130.

12.

As far as the mistake in not charging interest u/s 234B as per direction of Ld. CIT(A) in order u/s 251/143(3) dated 9.5.2018 was not stated in the notice u/s 154. Therefore, when the said issue was not subject matter of notice u/s 154, the same cannot be rectified in the impugned order. The order of Ld. CIT(A) directing to charge interest u/s 234B asper direction of the Ld CIT(A) in the order dated 9.5.2018 therefore was bad in law since the same was not the subject matter of notice u/s 154 or

5 I.T.A. No.569/Kol/2025 Assessment Year: 2015-16 Dilip Kumar Agarwal even order u/s 154. It is open to the Ld AO to give effect to the order of Ld. CIT(A) by virtue of section 251.

13.

As far as the interest u/s 234C is concerned, the same did not arise out of the order u/s 251/143(3) dated 9.5.2018. This is because order u/s 251/143(3) is not an order of the AO but only giving effect to the specific issues as directed in the order.

In fact, the mistake, if any, occurred in the original order passed u/s 143(3) on 16.12.2016 wherein no interest u/s 234C was charged. The said order in so far as the charging or not charging of interest u/s 234C was not the subject matter of appeal order therefore remained unaffected. In the said original order no mistake was found or pointed out by the Ld. AO. The Ld. AO has found mistake in the order u/s 251/143(3) dated 9.5.2018 when there was no mistake in the said order. No mistake has been pointed out either in the notice u/s 154 or in the order u/s 154 in order dated 16.12.2016. There was no mistake in the order u/s 251/143(3). It has been held by the jurisdictional High Court that when the issue was not subject matter of appeal before the appellate authority, there was no decision of appellate authority on the particular issue, the mistake remains in the original order and not in the order giving effect to the order of Ld CIT(A) on different issues. Kindly refer to the judgement in the case of Shaw Wallace & Co Ltd. reported in 199 ITR page 105 as well as the judgment of Hon'ble Gujrat High Corut in Poonjabhai Vanmalidas. 114 ITR 38.

14.

Moreover, in the notice u/s 154 the Ld AO never communicated that he wanted to rectify the original order. The Ld AO cannot go beyond the terms of notice u/s 154. It has been held that the authorities being quasi-judicial authorities has to give proper hearing before deciding a case and that charging of interest for non-payment of tax can be rectified by saying that the same is automatic. Kindly refer to the judgement of Hon'ble Supreme Court in M. Chockalingam and Another Vs Commissioner of Income Tax, Madras and Another reported in 48 ITR 34:

15.

It may also be noted that in this case in view of proviso (c) to sec 234C(1)(b) the issue was debatable on the facts and in the circumstances of the case.Thus, the

6 I.T.A. No.569/Kol/2025 Assessment Year: 2015-16 Dilip Kumar Agarwal rectification order directing charge of interest u/s 234C in the order u/s 251/143(3) dated 9.5.2018 is bad in law.It may also be noted that in the notice u/s 154 the Ld. AO wanted to charge interest u/s 234B at Rs 6,83,902/-and 234C at Rs 13,99,418/- but in the order u/s 154 he has charged interest at Rs 9,27,503/- and Rs 15,19,408. Consequently we hold that order passed u/s 154 by the AO and its confirmation by ld. CIT(A) are bad in law as there is no mistake apparent from the order of passed u/s 251/143(3) dated 9.5.2018. We also hold that in view of proviso (c) to section 234C(1)(b) of the Act the , issue of chargeability of interest u/s 234C of the Act is a debatable issue in the present case. Considering the facts of the case in the light of legal position as discussed above and the ratio laid in the above decision , we are inclined to allow both the additional grounds raised by the assessee. In the result, the appeal of the assessee is allowed. 7. Order is pronounced in the open court on 16th July, 2026

Sd/- Sd/- (Pradip Kumar Choubey /�द�प कुमार चौबे) (Rajesh Kumar/राजेश कुमार) Judicial Member/�या�यक सद�य Accountant Member/लेखा सद�य Dated: 16th July, 2026 SM, Sr. PS

7 I.T.A. No.569/Kol/2025 Assessment Year: 2015-16 Dilip Kumar Agarwal Copy of the order forwarded to: 1. Appellant- Dilip Kumar Agarwal, 3C, Hansa Apartment, 20A/1A Broad Street, Ballygunge, Kolkata-700019. 2. Respondent – DCIT, Central Circle-3(3), Kolkata 3. Ld. CIT(A)- 27, Kolkata 4. Ld. Pr. CIT- , Kolkata 5. DR, Kolkata Benches, Kolkata (sent through e-mail)

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