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Facts
The assessee filed its original return for AY 2017-18 after the due date. Subsequently, an assessment under section 153C was completed based on incriminating documents found during a search. The AO, via a rectification order under section 154, charged interest of Rs. 92,153/- under section 234A for the delay in filing the *original* return. The CIT(A) dismissed the assessee's appeal against this levy.
Held
The Tribunal upheld the levy of interest under section 234A, affirming that there was a four-month delay in filing the original return. It clarified that an assessment completed under section 153C, read with Explanation 3 to section 234A and section 153A, constitutes a regular assessment, thereby making interest under section 234A leviable on the determined tax. The AO's action was deemed in accordance with the law.
Key Issues
Whether interest u/s 234A for delay in filing the original return is chargeable when the assessment is completed under section 153C, even if the return in response to the 153C notice was filed on time.
Sections Cited
154, 234A, 153C, 153A, 139, 142, 144, 143, 140B, 89, 90, 90A, 91, 115JAA, 115JD, 147
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Income Tax Appellate Tribunal, “C” BENCH, AHMEDABAD
Before: MS SUCHITRA KAMBLE & SHRI NARENDRA PRASAD SINHA
PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER:
This appeal is filed by the assessee against the order of National Faceless Appeal Centre(NFAC), Delhi [hereinafter referred to as ‘CIT(A)’], dated 25.09.2025 for the Assessment Year (A.Y) 2017-18 in the proceedings u/s 154 of the Income Tax Act.
The brief facts of the case are that the assessee had filed his return of income for A.Y. 2017-18 on 29.11.2017 declaring total income of Rs.27,35,910/-. A search & seizure action was conducted in the case of Avani Group of Vadodara on 23.01.2020 in the course of which certain incriminating documents pertaining to the assessee were found Hasmukhbhai Mohanlal Shah Vs. DCIT AY- 2017-18 2 and seized. The Assessing Officer had initiated proceeding u/s 153C of the Act on 29.04.2021 on the basis of those incriminating documents and the assessee had filed his return of income u/s 153C on 08.05.2021 showing total income of Rs.27,35,910/-. The assessment was completed assessment u/s 153C of the Act on 26.03.2022 at total income of Rs.58,93,410/-. The Assessing Officer, while completing the assessment had charged interest u/s 234A, 234B, 234C and 234D of the Act. Subsequently, the A.O had passed an order u/s 154 of the Act on 19.06.2024, levying interest of Rs.92,153/- u/s 234A of the Act, for the reason that Nil interest was levied while completing the assessment u/s 153C of the Act.
Aggrieved with the order of the A.O. charging interest u/s 234A of the Act, the assessee had filed an appeal before the First Appellate Authority, which was decided by the Ld. CIT(A) vide the impugned order and the appeal of the assessee was dismissed.
Now the assessee is in second appeal before us. The following grounds have been taken in this appeal:
1. The Learned Commissioner of Income Tax (Appeals), has erred in confirming the action of the Assessing Officer in passing an order u/s. 154 of the I.T Act, 1961 for charging interest of Rs. 92,153/- u/s 234A of the I.T. Act, 1961.
2. The Learned Commissioner of Income Tax (Appeals), has erred in confirming the interest of Rs. 92,153/- charged u/s 234A of the Act by the Assessing Officer without considering fact that the return of income in compliance to notice u/s 153C o the Act has been filed in time and that on account of refund no interest was Hasmukhbhai Mohanlal Shah Vs. DCIT AY- 2017-18 3 chargeable u/s 234A of the Act at the time of filing of original return of income.
3. The appellant craves leave to add, alter, amend or modify any of the grounds of appeal on or before the date of hearing of appeal.
Shri Aseem Thakkar, the Ld. A.R of the assessee submitted that the interest u/s 234A of the Act is leviable for delay in filing of return of income. He explained that the A.O. had issued notice u/s 153C of the Act on 29.04.2021 allowing 30 days’ time to the assessee to file the return. The assessee had filed his return u/s 153C on 08.05.2021, which was well within 30 days’ time period as allowed to him. Under the circumstances, there was no delay in filing the return u/s 153C of the Act and, therefore, no interest u/s 234A of the Act was chargeable.
Per contra, Shri. Ashok Kumar Suthar, Ld. Sr. D. R. supported the order of the lower authorities.
We have considered the rival submissions. In the present case the interest u/s 234A of the Act was levied for delay in filing the original return and not the return in response to notice u/s 153C of the Act. The A.O has given a finding that the due date of filing of return for A.Y. 2017- 18 was 05.08.2017, whereas the original return of income was filed on 29.11.2017. Therefore, there was delay of 4 months in filing the return. Accordingly, interest u/s 234A of the Act was levied at the rate of 1% per month, on the assessed tax (as per order u/s 153C) reduced by TDS/advance tax/self-assessment tax and interest of Rs.92,153/- was worked out u/s 234A of the Act. It is thus found that the A.O. had Hasmukhbhai Mohanlal Shah Vs. DCIT AY- 2017-18 4 considered the tax as determined in the assessment order u/s 153C of the Act dated 26.03.2022, to compute the interest leviable u/s 234A of the Act. In order to examine the correctness of this interest, it will be relevant to refer to provision of Section 234A of the Act, which is as under:
234A. (1) Where the return of income for any assessment year under sub-section (1) or sub-section (4) or sub-section (8A) of section 139, or in response to a notice under sub-section (1) of section 142, is furnished after the due date, or is not furnished, the assessee shall be liable to pay simple interest at the rate of one per cent for every month or part of a month comprised in the period commencing on the date immediately following the due date, and,— (a) where the return is furnished after the due date, ending on the date of furnishing of the return; or— (b) where no return has been furnished, ending on the date of completion of the assessment under section 144, on the amount of the tax on the total income as determined under sub-section (1) of section 143, and where a regular assessment is made, on the amount of the tax on the total income determined under regular assessment, as reduced by the amount of,— (i) advance tax, if any, paid; (ii) any tax deducted or collected at source; (iia) any relief of tax allowed under section 89; (iii) any relief of tax allowed under section 90 on account of tax paid in a country outside India; (iv) any relief of tax allowed under section 90A on account of tax paid in a specified territory outside India referred to in that section; (v) any deduction, from the Indian income-tax payable, allowed under section 91, on account of tax paid in a country outside India; and (vi) any tax credit allowed to be set off in accordance with the provisions of section 115JAA or section 115JD. Explanation 1.—In this section, "due date" means the date specified in sub-section (1) of section 139 as applicable in the case of the assessee. Explanation 2.—In this sub-section,— (i) "tax on total income as determined under sub-section (1) of section 143" shall not include the additional income-tax, if any, payable under section 140B or section 143; and (ii) tax on the total income determined under regular assessment shall not include the Hasmukhbhai Mohanlal Shah Vs. DCIT AY- 2017-18 5 additional income-tax payable under section 140B. Explanation 3.—Where, in relation to an assessment year, an assessment is made for the first time under section 147 or section 153A, the assessment so made shall be regarded as a regular assessment for the purposes of this section.
As per provision of section 234A(1) of the Act, the interest is leviable where there is delay in filing the original return and interest is computed on the amount of tax on total income as determined u/s 143(1) or where a regular assessment is made, on the amount of tax on the total income determined under regular assessment. There is no dispute to the fact that there was a delay of four months in filing the original return. In the present case no regular assessment u/s 143(3)/144 was made. However, the Explanation-3 to section 234A stipulates that where assessment is made for the first time u/s 147 or u/s 153A of the Act, the assessment so made shall be regarded as regular assessment for the purpose of this section. In the present case, the assessment was made for the first time u/s 153C of the Act. As per provision of section 153C of the Act, the AO after recording the satisfaction u/s 153C of the Act is required to assess or reassess the income of the ‘other person’ in accordance with the provisions of section 153A of the Act. Therefore, the assessment in pursuance to notice u/s 153C of the Act will be deemed to be completed u/s 153A of the Act. This being the legal position, the assessment in the present case was made for the first time u/s 153A of the Act and the Explanation-3 to section 234A of the Act is found attracted to the facts of the present case. Therefore, the assessment completed pursuant to notice u/s 153C of the Act was a regular assessment and the AO had rightly worked out the interest u/s234A of the Act in the present case, on the basis of tax on total income as determined in the regular assessment made for the first Hasmukhbhai Mohanlal Shah Vs. DCIT AY- 2017-18 6 time u/s 153C of the Act. In view of this legal position, the interest of Rs. 92,153/- charged by the A.O u/s 234A of the Act is found to be in accordance with the provisions of the Act. Accordingly, the order u/s 154 of the Act dated 19.06.2024 levying interest u/s 234A of the Act is upheld. The grounds taken by the assessee are dismissed.
In the result, the appeal of the assessee is dismissed.
Order pronounced in the Court on 15 /01/2026 at Ahmedabad.
Sd/- Sd/- (SUCHITRA KAMBLE) (NARENDRA PRASAD SINHA) Judicial Member Accountant Member True Copy Dated – 15th January, 2026 Neelesh आदेश आदेश क� आदेश आदेश क� क� �ितिलिप क� �ितिलिप �ितिलिप अ�ेिषत �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order forwarded to : अ�ेिषत 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबंिधत आयकर आयु� / Concerned CIT 4. आयकर आयु�(अपील) / The CIT(A) 5. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण / DR, ITAT, 6. गाड� फाईल /Guard file.