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PER PAWAN SINGH, JUDICIAL MEMBER; 1. This appeal by assessee is directed against the order of ld. Commissioner of Income Tax (Appeals)-20 [the ld. CIT(A)], Mumbai dated 25.02.2019 for Assessment Year 2010-11. The assessee has raised the following grounds of appeal:
1. The order of ld. CIT(A) is bad-in-law.
2. The order of ld. CIT(A) is bad-in-law and against the principle of natural justice. 3. The ld. CIT(A) erred in holding the excess interest levied u/s 234A by the Assessing Officer without appreciating that interest under section 234A could have been charged only till the time tax liability was outstanding. 4. The ld. CIT(A) erred in upholding the levy of excess interest under section 234B.
Mum 2019-M/s Gulick Network Distribution Pvt. Ltd.
Brief facts of the case are that the assessee is a Private Limited Company engaged in the business of Multi Level Marketing. No return of income was filed by the assessee within the time prescribed under section 139 or 139(5).
The Assessing Officer received information in Individual Transaction Statement (ITS) that assessee-company was in receipt of credit of Rs. 16,49,960/- and that assessee failed to disclose the said income for relevant Assessment Year. On the basis of information, the assessee’s case was selected for scrutiny and consequent upon notice under section 148 dated 30.03.2017 was served. In response to the notice under section 148, the assessee filed its return of income on 23.06.2017. The assessee filed return of income manually on 07.05.2014 declaring total income of Rs. 16,49,960/- under the normal provision and Rs. 1,39,326/- under section 115JB as per MAT Provisions. The assessment was completed on 13.10.2017 under section 143(3) r.w.s. 147 and no addition was made in the assessed income..
The Assessing Officer while passing the assessment order raised a demand of Rs. 581470/- on account of interest under section 234A and 234B. The assessee filed an application under section 154 dated 22.12.2017 for seeking rectification of working of the interest. The assessing officer partially rectified the mistake vide order dated 09.01.2018. On appeal before the ld. CIT(A), the order of assessing officer dated 09.01.2018 on application under section 154 was confirmed. The ld CIT(A) passed ex-party order. Aggrieved Mum 2019-M/s Gulick Network Distribution Pvt. Ltd. by the order of ld. CIT(A), the assessee has filed the present appeal before this Tribunal.
We have heard the submission of ld. Authorized Representative (AR) of the assessee and ld. Departmental Representative (DR) for the revenue and perused the material available on record. At the outset of hearing, the ld. AR of the assessee submits that he is not pressing the Ground No.1 & 2 of the appeal. Considering the submissions of assessee, the ld. AR of the assessee, the Ground No.1 & 2 of the appeal are dismissed as not pressed.
Ground no.3 relates to levy of interest under section 234A. The ld. AR of the assessee submits that due date of filing return of income for relevant Assessment Year was 15.10.2010. The assessee has paid tax on 24.03.2014, therefore, the assessee was liable to pay interest for 42 months only under section 234A. No interest under section 234A can be levied, if there was no outstanding tax due. The Assessing Officer charged the excess interest of Rs. 1,33,614/-, which is not in accordance with section 234A. The ld. AR of the assessee furnished the following computation of interest under section 234A along with the comparison of calculation/computation made by the Assessing Officer in the following manner:
As per Assessing Officer As per provisions of law Total Tax Payable (A) 3,42,603 3,42,603 1st October, 2010 to 30th 1st October, 2010 to 31st Period June 2017 March 2014 (B) 81 months 42 months Rate of Interest © 1% 1% Interest Leviable (A*B*C) 2,77,508 1,43,893 Mum 2019-M/s Gulick Network Distribution Pvt. Ltd.
The ld. AR of the assessee further submits that in subsequent Assessment Year on similar fact, no such interest was charged from the assessee. The ld. AR of the assessee also relied on the decision of Mumbai Tribunal in Ms.
Priti Prithwala vs. ITO [2003] 129 TAXMAN 79(Mum). 6. On the other hand, the ld. Departmental Representative (DR) for the revenue relied upon the order of lower authorities. 7. We have considered the submission of both the parties and perused the material available on record. We have noted that the Assessing Officer has computed the interest from 01.10.2010 to 30.06.2017 i.e. for 81 months.
Though, the assessee was liable to pay interest only till March 2014 i.e. for 42 months only. In principle we are in agreement with the calculation of interest furnished by the assessee, which we have referred in para 4 above. .
We have further noted that the ld. AR for the assessee submitted before us that on similar set of facts no such interest was charged by assessing officer for subsequent assessment year. This fact is not disputed by the ld. DR for the revenue. The co-ordinate bench of Tribunal in Priti Prithwala vs. ITO (supra) on similar ground of appeal
held that in section 234A, the word “regular assessment” are used in the context of computation. It does not show that the order passed under section 143(3)/144 shall be substituted by section 147. In term of section 234A(1)(a)(b), the period for which interest liability is calculated is the period between the date on which return was due to be filed and the ending on the date, the same is actually furnished and when no return
4. Mum 2019-M/s Gulick Network Distribution Pvt. Ltd. is furnished, ending on the completion of assessment under section 144.
Section 234A(1)(b) contemplates the situation where no return has been furnished, in such a case, the period prescribed is ending on the date of completion of the assessment. Once the assessee conceded his liability to pay interest under section 234A, there was no point in going further into the matter and exemption whether interest was not liable to pay.
Therefore, in view of the above finding of co-ordinate bench of Tribunal and the fact that the contention of ld. AR of the assessee that assessee submits that the assessee could not be made liable to pay interest for the period during which it was not possible on their part to file the return. Therefore, we direct the Assessing Officer to re-compute the interest up to the date of filing of return. Hence, Ground No. 3 of the appeal is allowed.
Ground No.4 relates to interest under section 234B. We find the interest u/s 234B is chargeable from the first day of assessment year till the date of assessment year on the amount of assessed tax due ( i.e. tax payable – TDS) from time to time. We direct the Assessing Officer to compute the interest under section 234B as under:-
From 1.4.2010 till Marcfh 2014 on the assessed tax due which is considered as X Tax payable – TDS (+) X = Y Then calculate interest from 1.4.2014 till the date of completion of assessment on the amount of Y.
Therefore, we direct the assessing officer to recompute the interest as stated above. Mum 2019-M/s Gulick Network Distribution Pvt. Ltd.
In the result, appeal of the assessee is allowed.
Order pronounced in the open court on 21/06/2019.