M/S VINUTHNA SECURITIES PVT LTD ,MUMBAI vs. INCOME TAX OFFICER WARD, 1(3)(4), MUMBAI

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

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.