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Income Tax Appellate Tribunal, “A” BENCH: KOLKATA
Before: Shri A. T. Varkey, JM & Dr. A. L. Saini, AM]
1 ITA No. 226/Gau/2017 Smt. Saroj Devi Bawri., AY- 2011-12
आयकर अपील�य अधीकरण, �यायपीठ – “A” कोलकाता, IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH: KOLKATA (सम�) �ी ऐ. ट�. वक�, �यायीक सद�य एवं डॉ. अजु�न लाल सैनी, लेखा सद�य) [Before Shri A. T. Varkey, JM & Dr. A. L. Saini, AM]
I.T.A. No. 226/Gau/2017 Assessment Year: 2011-12
Smt. Saroj Devi Bawri, Nagaland Vs. Assistant Commissioner of Income-tax, (PAN: ACLPB0468J) Circle- Dimapur Appellant Respondent Date of Hearing 29.07.2019 Date of Pronouncement 04.09.2019 For the Appellant Shri Akkal Dudhwewala, FCA For the Respondent Shri Sanjit Kr. Das, Addl. CIT, Sr. DR
ORDER Per Shri A.T.Varkey, JM
This appeal preferred by the assessee is against the order of the Ld. CIT(A), Jorhat dated 21.02.2017 for AY 2011-12.
The sole issue involved in this appeal of assessee is against the order of Ld. CIT(A) in confirming the action of AO in levying interest u/s. 234B and 234C of the Income-tax Act, 1961 (hereinafter referred to as the “Act”).
Brief facts of the case are that the assessee is an individual who had filed her return of income on 27.03.2012 declaring total income of Rs.7,19,730/-. Thereafter, on 05.02.2014 assessee submitted a letter stating that she was holding 9,91,775 equity shares of M/s. Vinay Cement Limited which was purchased in previous years at a cost of Rs.99,17,750/-. The said shares were transferred to M/s. Calcom Cement India Ltd. and in exchange she got 37,68,745 equity shares on the basis of a sap ratio of 1:3.80. Since assessee did not receive any consideration in cash she filed her return without computing any capital gains. During the FY 2013-14 the assessee when made aware that the said
2 ITA No. 226/Gau/2017 Smt. Saroj Devi Bawri., AY- 2011-12
transaction may attract capital gain tax liability she voluntarily wrote to the AO to issue notice u/s. 148 of the Act so that taxes could be paid and since the time limit for filing revised return u/s. 139(5) had already expired. Thereafter, the assessee received notice u/s. 148 of the Act dated 16.01.2015 on 19.01.2015 and pursuant to the reassessment notice, return was filed in this respect and taxes were paid. The AO while completing the assessment u/s. 143(3)/147 of the Act has accepted the returned income. However, interest u/s. 234B at Rs.18,58,833/- and u/s. 234C at Rs.1,35,913/- have been levied. Aggrieved, assessee preferred an appeal before the Ld. CIT(A) who dismissed the appeal of the assessee by observing as under:
“The A/R of the appellant aggrieved with the calculation of charging of interest u/s. 234B and 234C. In his submission, it is stated that the Ld. Assessing Officer while completing the assessment u/s. 143(3)/147 of the Income Tax Act, 1961 has accepted the Returned Income. However, Interest u/s. 234B at Rs. 18,58,833/- and u/s. 234C at Rs.1,35,913/- of the Income Tax Act, 1961 have been levied in-spite of the fact that non-payment of Advance Taxes as due to bonafide belief and/or disputed views regarding taxability of the transaction in question. Without prejudice it is submitted that the Ld. Assessing officer wrongly calculated the interest u/s. 234C at Rs. 1,35,913/- instead of correct figure Rs.36,112/- even when the capital gain in question arose after 15th December, 2010. I have carefully gone through the submission of the A/R and also perused the order of the AO. The assessee appealed against the charging of interest u/s. 234B and 234C of the Income-Tax Act. Interest is charged for default in payment of tax. The assessee is required to pay advance tax in accordance with the provision of section 208 to 211 of the Income-Tax Act, Section 234B is for the default in payment of advance tax and section 234C is for deferment in payment of advance tax. Levy of interest under section 234B and 234C are mandatory and automatic. Assessee cannot avoid it. The assessee has to pay tax in advance in respect of total income which would be chargeable to tax for the assessment year immediately the following year. Ignorance of law cannot considered. Hence, I dismiss the assessee's appeal and decide the issue in favour of revenue.”
After having heard both the parties we note that the levy of interest u/s. 234B of the Act is compensatory in nature when the assessee for any reason did not deposit the advance tax as stipulated by law. By not remitting the tax at the stipulated time, the Revenue cannot be deprived of the taxes due as per law. It should be kept in mind that Equity and Tax Laws are strangers to each other and the assessee cannot be allowed any concession for her ignorance, since as we said earlier the interest levied u/s. 234B is compensatory in nature and it is automatic and we confirm this action of the ld CIT(A). However we find force in the argument of Ld AR that interest under section 234C is concerned, in terms of the first
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proviso to section 234C, the interest on the tax due on the amount of capital gains could have been levied in the remaining installments of advance tax which fall due subsequent to earning of such capital gain. The reason being that an assessee cannot be expected to estimate the tax on the capital gain which may or may not arise in future. The AO is accordingly directed to verify and re-compute the interest under section 234C as per the first proviso to section 234C of the Act. Therefore, the appeal of assessee is partly allowed.
In the result, the appeal of the assessee is partly allowed.
Order is pronounced in the open court on 4th September, 2019. Sd/- Sd/- (Dr. A. L. Saini) (Aby. T. Varkey) Accountant Member Judicial Member Dated : 4th September, 2019 Jd.(Sr.P.S.) Copy of the order forwarded to: 1. Appellant – Smt. Saroj Devi Bawri, 12C, Sunny Park, Ashray Apartment, Ballygunge, Kolkata-700 019.
2 Respondent – ACIT, Circle-Dimapur, Aayakar Bhawan, Dimapur, Nagaland 3. CIT(A), Jorhat CIT-, , Jorhat 4.
DR, ITAT, Kolkata. (sent through e-mail)
/True Copy, By order,
Assistant Registrar