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Income Tax Appellate Tribunal, MUMBAI BENCH “H ”, MUMBAI
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “H ”, MUMBAI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER AND SHRI N.K.PRADHAN, ACCOUNTANT MEMBER ITA NO.6227/MUM/2018(A.Y. 1992-93) Dy.Commissioner of Income Tax, Central Circle-4(1),Cen.Range-4, Room Nom.1916, 19th Floor, Air India Bldg., Nariman Point, Mumbai 400 021 ...... Appellant Vs. Shri Harsad S. Mehta, 32, Madhuli, Dr.A.B.Road, Worli, Mumbai – 400 018 PAN:ABAPM 1848F ..... Respondent Appellant by : Dr. P.Daniel, Spl. Counsel Respondent by : Shri Dharmesh Shah Date of hearing : 09/10/2019 Date of pronouncement : 1710/2019
ORDER PER VIKAS AWASTHY, JM: This appeal by the Revenue is directed against the order of CIT(A) - 52, Mumbai dated 10/08/2018 for the assessment year 1992-93 in proceedings under section 154 of the Income Act 1961( in short “the Act”).
The brief facts as emanating from documents on record are; assessment order under section 254 r.w.s. 143(3) of the Act was passed for the impugned assessment year on 15/03/2016 determining total income of the assessee at Rs.23,46,32,06,080/-. Thereafter, the assessee
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filed rectification application under section 154 of the Act on 24/04/2016. Simultaneously, show cause notice dated 01/07/2016 was issued by the Assessing Officer to the assessee under section 154 of the Act . The assessee in rectification petition sought deletion of interest charged under section 220(2) of the Act. The Assessing Officer in show cause notice issued under section 154 sought levy of interest under section 234A, 234B and 234C of the Act and also interest provisions of section 234C of the Act. The Assessing Officer vide order dated 06/09/2016 passed under section 154 treating the assessment made under section 254 r.w.s. 143(3) of the Act as fresh assessment, levied interest under section 234A,234B& 234C and also under section 220(2) of the Act. Aggrieved against the order passed under section 154 of the Act, the assessee filed appeal before the CIT(A). The first appellate authority vide impugned order held that the interest under section 234A and 234B charged upto the date of assessment order passed under section 254 r.w.s. 143(3) of the Act is untenable. As regards charging of interest under section 234C, the same was upheld by the CIT(A).
Against the findings of the first appellate authority, the Revenue is in appeal before the Tribunal and raised the following Grounds of appeal:-
a. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in law in restricting the meaning of regular assessment without appreciating the fact that assessment order dated 15.O3.2016-was passed u/s 143(3) rws 254 of the Act is also regular assessment." b. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in holding that interest u/s 234A & 234-B is to be computed till the date of original assessment and not till the date of fresh assessment without appreciating that provisions of section 234A & 234B provides interest computation till the date of regular assessment u/s 143(3) under which the fresh assessment order was passed."
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c. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in holding that interest u/s 220(2) is to be computed from the date of fresh assessment order without appreciating the fact that the issues of addition made in original assessment order and fresh assessment order are same, as, assessee was in default from the date of original assessment order and no new material evidence has been furnished by assessee in fresh assessment proceedings so as to challenge its default." d. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in holding that for interest u/s 220(2) the date of fresh assessment order is to be considered, however, for interest u/s 234-A & 234-B, the fresh assessment would not be considered as regular assessment, thereby, bringing complete anomaly and arbitrariness in its order."
Shri Dharmesh Shah appearing on behalf of the assessee submitted that the issue relating to charging of interest under section 234A and 234B has already been considered by the Tribunal in appeal by the assessee in ITA No.5702/Mum/2017 decided on 14/01/2019 arising from assessment order dated 15/03/2016 passed under section 254 r.w.s. 143(3) of the Act. The Tribunal after considering the facts and the decision of Hon’ble Supreme Court of India in the case of Modi Industries Ltd. vs. CIT, reported as 216 ITR 759(SC) held that the charging of interest under section 234A, 234B and 234C is mandatory, however, the interest under section 234B can be charged upto the date of passing of original assessment order under sections 143(3)/144 of the Act. In other words, the interest cannot be charged upto the date of assessment order passed in consequence to the order of the appellate authorities under section 250/254 of the Act. The ld. Authorized Representative for the assessee further contended that the Co-ordinate Bench of Tribunal in the case of assessee’s brother Shri Ashwin S. Mehta in ITA No.3118/Mum/2018 for the assessment year 1992-93 decided on 16/07/2019 in similar set of facts on identical grounds of appeal by the Revenue has considered this issue and dismissed the appeal of Revenue.
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On the other hand, Dr.P.Daniel, Special Counsel for the Revenue vehemently defended the assessment order and prayed for reversing the finding of CIT(A).
We have heard the submissions made by representatives of rival sides and have perused the orders of authorities below. We observe that the Co-ordinate Bench in ITA No.5702/Mum/2017 in assessment year 1992-93 and Cross Appeal by the revenue in ITA No.6028/Mum/2017 vide order dated 14/01/2019 have considered the issue of charging of interest under section 234A, 234B & 234C and also the meaning of expression ‘regular assessment’. The Tribunal in the light of decision rendered by Hon’ble Apex Court in the case of Modi Industries Ltd. (supra) and the decision of Hon’ble Gujarat High Court in the case of PCIT vs. Applitech Solution Ltd. reported as 236 Taxman 602(Gujarat) held that ‘regular assessment’ does not include assessment made pursuant to the directions of the appellate authorities. Consequently, the interest under section 234B can be charged only till the passing of the assessment order under section 143(3) or 144 of the Act. For the sake of completeness the relevant extract of the finding of the Tribunal on this issue are reproduced herein below:-
“30.8. We heard the rival submissions and considered the same carefully. These grounds relate to the levy and computation of interest under section 234A, 234B and 234C of the Act. Levy of interest is mandatory. We, therefore, dismiss ground no 31 regarding levy of interest, but direct the AO in respect of ground no.32 and 33 that the interest levied under section 234A,234B and 234C be recomputed after excluding the income which is subject to TDS. So far as the issue relating to the levy of interest u/s 234B till the date of original assessment or upto the date of the assessment subsequently made after it being set aside by the appellate authorities is concerned, we have gone through the decision of the Hon’ble Supreme Court in the case of Modi Industries Ltd. vs CIT [1995] 216 ITR 759 (SC) as well as the provisions of s. 234B. Section 234B(1) clearly states that the assessee shall be liable to pay simple interest @
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2% for every month or part of the month comprised in the period from 1stApril next following such financial year to the date of determination of total income u/s 143(1) or regular assessment under section 143(3) or section 144 of the Act. Regular assessment has been defined u/s 2(40). According to this section, regular assessment means the assessment made u/s 143(3) or section 144 of the Act. In the case of the assessee, we noted that the first assessment was made u/s 144 on 27.3.1995 and therefore that was the regular assessment. The subsequent assessments have been framed in consequence of the order of the Tribunal passed u/s 254 and those cannot be regarded to be the regular assessments. Similar view, we noted has been taken by the Hon’ble Supreme Court in the case of Modi Industries Ltd. vs. CIT [1995] 128 CTR 361 (SC). Had there been any intention of the legislator that the interest u/s 234B be charged upto the date of the assessment order passed in consequence of the order of the appellate authorities passed u/s 250/254, this should have been specifically mentioned u/s 234B by inserting sub-section as has been mentioned of sub section (2A) of 234B in respect of order passed as a result of an order of settlement commission. No contrary decision was brought to our notice by the DR that the interest can be charged u/s 234B upto the date of passing the order in consequence of the order of the appellate authority. We, therefore, direct the AO to recompute the interest u/s 234B upto the date of original assessment passed u/s 144 dt 27.3.1995. 30.9. The next issue relates to the computation of interest u/s 234C. We noted that the CIT(A) has given the direction to the AO to compute the interest u/s 234C till the date of filing of the return. The revenue before us challenged this direction, but in view of the specific provision u/s 234C, we found that the interest u/s 234C has to be levied in case advance tax paid by the assessee on different dates is less than the specified percentage of returned income. The assessee has challenged the levy of the interest and its computation as such. The returned income will always mean the income which the assessee has shown in his income tax return filed u/s 139 or 142(1) or 148 of the Act. If the assessee has not filed any valid return, in our view levy of interest being a charging provision cannot be computed. Due to the incapability of computation of the interest u/s 234C in such a situation, the provision to levy the interest will fail and will become ineffective in view of the decision of Hon’ble SC in the case of CIT vs B.C. Srinivasa Setty (1981) [1981] 128 ITR 294 (SC). In this case it was held that the charging section and the computation provisions together constitute an integrated code. When there is a case to which the computation provisions cannot apply at all, it is evident that such a case was not intended to fall within the charging section. In this case before us, there is a failure of computation of interest provision due to non-filing of valid return by the assessee, interest u/s 234C cannot be levied and we accordingly direct the AO not to charge interest u/s 234C.” 6.1 The Co-ordinate Bench also considered the ground raised by the Revenue with regard to charging of interest under section 220(2) of the Act and concluded as under:-
“30.10. Now, coming to the various grounds taken by the Revenue being ground no. 9 to 12 regarding the levy of interest u/s 220(2) of the Act. We have heard the rival submissions and carefully considered the same. We noted that this Tribunal vide its
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order dt. 20.01.2017 in the case of M/s Orion Travels Pvt. Ltd. vs ACIT (ITA 939/MUM/2009) in which the Tribunal directed the AO to charge interest u/s 220(2) under Income Tax Act after 30 days of serving of demand notice from the fresh assessment order. We, therefore, noted that in the case of CIT vs. Chika Overseas Pvt. Ltd [2012] 247 CTR 134 (Bombay), has taken the similar view. The decision Hon’ble Delhi High court in the case of Girnar Investment Ltd. vs. CIT [2012] 340 ITR 529 (Delhi) dt. 5.01.2012 as relied by the Ld. DR and not of Bombay High Court. The Jurisdictional High Court decision is binding on us. We noted the CIT(A) while holding that the interest u/s 220(2) is to be levied only from the due date of issuance of fresh notice of demand, considered these binding case laws as well as CBDT circular no 334 (F no 400/3/81-ITCC) dated 3-4-1982 issued by CBDT, which we perused and in our view the case of the assessee falls within paragraph 2 (i) of the said circular. In view of this legal position, we do not find any illegality or infirmity in the order of the CIT(A) directing the AO to charge interest u/s 220(2) from the date of default of the fresh demand notice issued after the fresh assessment made in consequence of the order of the appellate authorities. Thus, the ground no 8 to 12 of the Revenue stands dismissed, while ground no 32 to 35 of the assessee are allowed to the extent stated above.”
Thus in view of the above findings of the Tribunal, the ground raised by the Revenue in the present appeal does not require any further adjudication. The issues have already been considered and decided by the Co-ordinate Bench in an appeal arising from the assessment order passed under section 254 r.w.s. 143(3) of the Act.
The ld. Authorized Representative of the assessee has also brought to our notice that the Revenue in the case of assessee’s brother Shri Ashwin S. Mehta in ITA No.3118/Mum/2018(supra) had raised identical grounds of appeal. The Tribunal, after considering the decision rendered in the case of ITA No.5702/Mum/2017 and 6028/Mum/2018 (supra) has dismissed the appeal of the Revenue.
Thus, in view of the facts of the case and decision of the Co- ordinate Bench in assessee’s own case, we do not find any merit in the
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grounds raised by the Revenue. The impugned order is upheld and the appeal of Revenue is dismissed sans merit.
In the result, appeal of the Revenue is dismissed.
Order pronounced in the open court on Thursday, the 17th day of October, 2019. Sd/- Sd/- (N.K.PRADHAN) (VIKAS AWASTHY) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated 17/10/2019 Vm, Sr. PS(O/S)
Copy of the Order forwarded to : 1. The Appellant , 2. The Respondent. 3. The CIT(A)- 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. BY ORDER, //True Copy// (Dy./Asstt. Registrar) ITAT, Mumbai