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Facts
The assessee did not file its return of income, leading to an assessment under Section 147 r.w.s. 143(3) for AY 2008-09. Later, the AO noticed an incorrect levy of interest under Section 234A and passed a rectification order under Section 154. The CIT(A) dismissed the assessee's appeal against this rectification.
Held
The Tribunal allowed the assessee's request to dispose of the appeal. Since the charging of interest under Section 234A is mandatory and its amount depends on a pending quantum appeal, the Tribunal directed the AO to recompute the interest after the quantum appeal is decided.
Key Issues
Whether rectification under Section 154 is permissible for issues involving complex reasoning rather than apparent mistakes, and the validity of charging interest under Section 234A in relation to a pending quantum appeal.
Sections Cited
250, 1961, 234A, 147, 148, 143(3), 154
AI-generated summary — verify with the full judgment below
Before: SMT. BEENA PILLAI & SMT. RENU JAUHRI
PER RENU JAUHRI [A.M.] :- This appeal is filed by the assessee against the order of the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “CIT(A)”] dated 25/10/2017 passed u/s. 250 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] for Assessment Year [A.Y.] 2008-09. 2. The assessee has raised the following grounds of appeal: “On facts, in the circumstance of the case and in law: Wrong juri iction under section 154
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The Commissioner of Income Tax (Appeals) NFAC (Henceforth the "CIT (A)") andthe Income Tax Officer, Ward 1(3)(4), Mumbai (Henceforth the "ITO") ((collectively referred to as the "Authorities Below" erredin holding that rectification proceedings under section 154 of the Income Tax Act, 1961 ("The Act") could be invoked in respect of matter entailing long drawn process reasoning as distinguished from mistakes apparent from the record viz levy of interest u/s 234A in reopened assessment in respect of period prior to filing of return of income u/s 147 of the Act.
The learned CIT (A) erred in passing the appeal order upholding the order by the ITO without providing effective opportunity to the appellant, of being heard and explains the case.
Without prejudice to the above, the "Authorities Below" erred in levying interest u/s 234A of the Act amountingto Rs 47, 44,783 in respect of period prior to filing of return of income tax.
The Appellant craves the leave to add, alter, modify or delete any one or more or all of the above grounds of appeal.”
Brief facts of the case are that, the assessee had not filed its return of income and therefore, a notice u/s. 148 was issued on 28/03/2015. Assessment was completed u/s. 147 r.w.s. 143(3) of the Act, vide order dated 31/03/2016 at an income of Rs. 77,67,080/-. Aggrieved with the order, assessee preferred an appeal before Ld. CIT(A) which is still pending as on date. Subsequently, Ld. AO noticed that interest u/s. 234A had not been correctly levied and therefore, he issued a notice u/s. 154 and later passed an order charging interest u/s. 234A of the Act. The assessee preferred an appeal against this rectification order dated 25/10/2017 before Ld. CIT(A). Ld. CIT(A), vide order dated 20/03/2024, has dismissed the appeal stating that the charging of interest u/s. 234A is mandatory and same will be increased and reduced when the income is finally
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determined. Aggrieved with the order of Ld. CIT(A), the assessee has filed an appeal before the ITAT.
At the outset, Ld. AR submitted that vide letter dated 06/02/2025, the assessee has made a request to either keep the appeal in abeyance till the disposal of the quantum appeal or to dispose of the appeal and grant leave to raise the issue as and when the quantum appeal is decided.
We have considered the rival submissions and perused the assessee’s application and other material on record. Since the charging of interest u/s. 234A is mandatory and the amount depends on the decision in the assessee’s quantum appeal which is pending before Ld. CIT(A), we allow the assessee’s request to dispose off the appeal made vide letter dated 06/02/2025. Accordingly, the appeal is dismissed with the directions to Ld. AO to recompute the interest u/s. 234A after the quantum appeal is decided.
In the result, appeal is dismissed.
Order pronounced in the open court on 07.04.2025. BEENA PILLAI RENU JAUHRI (न्यधनयक सदस्य/JUDICIAL MEMBER) (लेखधकधर सदस्य/ACCOUNTANT MEMBER) Place: म ुंबई/Mumbai दिन ुंक /Date 07.04.2025 दिव्य रमेश न ुंिग वकर/ स्टेनो
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आदेश की प्रनतनलनि अग्रेनित/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आयुक्त / CIT 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file.
सत्यानित प्रनत //// आदेशािुसार/ BY ORDER,
सहायक िंजीकार (Asstt.