GNANASEKARAN,CUDDALORE vs. ACIT, CENTRAL CIRCLE-1(1), CHENNAI

आदेश आदेश आदेश /O R D E R आदेश PER BENCH:

Both these appeals by the assessee are arising out of separate orders passed by the Commissioner of Income Tax (Appeals), CIT(A), Chennai-18, in Order No.ITBA/APL/S/250/2024-25/1065679544(1) / ITBA/APL/S/250/2024-25/1065679637(1) both dated 14.06.2024. The assessments were framed by the Asst. Commissioner of Income Tax, Central Circle-1(1), Chennai for the assessment years 2015-16 & 2016- 17 u/s. 153A of the Income Tax Act, 1961 (hereinafter the ‘Act’) vide separate orders both dated 31.03.2022. Since facts and issues involved in these appeals are common, both these appeals are heard together

- 2 - ITA Nos.1807 & 1808Chny/2024 and being disposed off by this common order for the sake of

convenience.

assessment years 2015-16 and 2016-17 is as regards to order of the

Ld.CIT(A) upholding levy of interest u/s.234A of the Act by the

Assessing Officer. For this, the assessee has raised the following

ground :-

“The CIT(A) erred in upholding the levy of interest u/s. 234A. He ought to have seen that the AO ought to have calculated interest only from the date of issuance of notice u/s. 153A till the filing of return in response thereto.”

the Income Tax Act, 1961 (hereinafter ‘Act’) was conducted on

18.03.2021 at the business and residential premises of the assessee.

The assessee is a non-filer. The Assessing Officer issued notice

u/s.153A on 10.12.2021 for the relevant assessment year 2015-16, in

consequent to search conducted u/s.132 of the Act dated 18.03.2021.

Consequently, the assessee filed his return of income for the relevant

assessment year 2015-16 on 23.02.2022. While framing assessment

u/s.153A of the Act, vide order dated 31.03.2022, the Assessing Officer

in the computation of income and tax thereon charged interest

u/s.234A of the Act amounting to Rs.27,924/- for default in furnishing

- 3 - ITA Nos.1807 & 1808Chny/2024

return of income u/s.139(1) of the Act. Aggrieved, the assessee preferred

appeal before the CIT(A).

return of income as well as short payment of advance tax are mandatory

u/s.234A and 234B of the Act. For this, the CIT(A) has recorded his

finding as under:-

“4.1 A search u/s 132 was conducted on 18.03.2021. It is seen that the assessee has not filed the returns of income for the impugned AYs and has filed the returns only in response to notice u/s 153A, It is seen from the assessment order that incriminating materials (loose sheets) were seized from the assessee's residence vide ANN/PVD/GG/LS/S during the course of search u/s 132 on 18.03.2021. The assessee has questioned AO on assuming jurisdiction under the provisions of the IT Act and relied on circular 10/2012 dt: 31.12.2012.

4.2 The appellant has not disputed that search has taken place in his case u/s 132. Once search takes place, the AO automatically derives jurisdiction u/s 153A for assessing or reassessing income for the last six years prior to the year of search. The appellant has not provided any valid reason to show that the AO has no jurisdiction. The quoting of the CBDT circular is only in case of assessees for whom the competent authority has relaxed the applicability of 153A for all years except for the year of search as per rule 112F. No such relaxation has been afforded to the appellant.

4.3 The AO has completed the assessment by accepting the return of income for both the AYs. The tax calculation as submitted by the assessee and that determined by the AO is the same.

As per assessee As per department A.Y 2015-16 2016-17 2015-16 2016-17 Total income 574011 511310 574011 511310 Tax 35846 22930 35846 22930

- 4 - ITA Nos.1807 & 1808Chny/2024 The difference in demand payable is on account of computation of interest u/s 234A and 234B. The interest is chargeable for delay in filing the return of income as well for short payment of advancement tax. The chargeability of interest u/s 234A and 234B is mandatory for defaults. There is no tax charged u/s 115JC as alleged by the appellant. 5. In result, the appeals for the AYs 2015-16 and 2016-17 are dismissed.

Aggrieved, now the assessee is in appeal before the Tribunal.

circumstances of the case. We noted that interest u/s.234A of the Act is

to be charged from the due date of filing of return of income u/s.139(1) of

the Act, but the assessee is a non-filer and no original return of income

for the relevant assessment year 2015-16 was filed by the assessee.

However, in the present case the facts are that search was conducted

u/s.132 of the Act by the Income Tax department on the business and

residential premises of the assessee on 18.03.2021 and in consequent

to the same, a notice u/s.153A was issued to the assessee for the

relevant assessment year 2015-16 on 10.12.2021. In response to the

notice, the assessee has filed return of income u/s.153A of the Act on

23.02.2022. As per the notice u/s.153A of the Act, time allowed for

furnishing of return was 15 days, it means, the assessee has to file

return of income on or before 25.12.2021, but actually, the assessee filed

return of income only on 23.02.2022. Thereby, there was delay in filing of

return of income in response to notice u/s.153A of the Act. But, whether

this constitute a default in term of section 139(1) from the due date for

- 5 - ITA Nos.1807 & 1808Chny/2024 filing of original return of income or proceedings are in response to

notice u/s.153A of the Act in consequent to search conducted u/s.132 of

the Act on 18.03.2021.

provision of section 234A(3) deals with the issue and relevant section

reads as under:-

234A (1)….. (2)….. “(3) Where the return of income for any assessment year, required [by a notice under section 148 or section 153A] issued [after the determination of income under sub-section (1) of section 143 or after the completion of an assessment under sub-section (3) of section 143 or section 144 or section 147, is furnished after the expiry of the time allowed under such notice, 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 day immediately following the expiry of the time allowed as aforesaid, and, (a)where the return is furnished after the expiry of the time aforesaid, ending on the date of furnishing the return; or (b)where no return has been furnished, ending on the date of completion of the re-assessment or re-computation under section 147 [or reassessment under section 153A on the amount by which the tax on the total income determined on the basis of such re-assessment or re-computation exceeds the tax on the total [income determined under sub-section (1) of section 143 or on the basis of the earlier assessment aforesaid.”

assessment in a case of search or requisition is prescribed clear the

doubt that once notice u/s.153A is issued, then the assessee files his

return of income in response to the same, the same is to be treated as

- 6 - ITA Nos.1807 & 1808Chny/2024 return, as if, such return was required to be furnished u/s.139 of the Act.

In term of provisions of section 153A(1)(a), it is clear that return furnished

u/s.153A in response to notice u/s.153A of the Act, is to be treated as if,

such return is furnished u/s.139 of the Act. The relevant provisions of

section 153A(1) (a) reads as under:-

Sec. 153A(1) ….. “Sec.153A(1)(a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years and for the relevant assessment year or years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139.”

considered by the co-ordinate Bench of this Tribunal in the case of ACIT

Vs. V.N.Devadoss reported in (2013) 32 taxmann.com 133 (Chennai

Trib), wherein the Tribunal had considered exactly identical issue which

read as under:-

“45. The second common issue raised in all these appeals is regarding levy of interest under section 234A. The case of the Revenue is that the Commissioner of Income-tax (Appeals) has erred in directing the Assessing Officer to charge interest under section 234A from the date of expiry of the notice period given in the notices under section 153A without noting that charging of interest under section 234A is compensatory and that as per the provisions of section 80AC, the assessees ought to have filed returns of income within the due date under section 139(1) and hence the provisions of section 234A(l) is applicable. It is also the case of the Revenue that the Commissioner of Income-tax (Appeals) has failed to note that the order of the Income-tax Appellate Tribunal, B-Bench, Chennai in

- 7 - ITA Nos.1807 & 1808Chny/2024 the case of Dr. V. Jayakumar v. Asstt. CIT [2011] 10 taxmann.com 141/46 SOT 68 (Chennai) (URO) is not applicable to these cases since the facts are distinguishable. In the case of Dr. V Jayakumar (supra), the assessee had paid taxes much before filing the return, whereas in the present cases the assessees have paid taxes under section 140A. The returns of income filed by the assessees on 23-9-2011 cannot be equated with the returns of income required to be filed under section 139(1). It is the case of the Revenue that the assessees have committed default both under sections 234A(l) and 234A(3). It is true that the jurisdictional Tribunal at Chennai in its order rendered in the case of Dr. V. Jayakumar (supra) has held that interest is chargeable under section 234A from the date of expiry of the notice period given to the assessee under section 153A. It is because the return filed under section 153A would be deemed to be a return of income under section 139 as per the express language of the provisions of section 153A(l)(a) and therefore the return of income filed under section 153A also is to be processed under section 143(1) and the income determined thereof. These are all consequences of search conducted under section 132 and the issuance of notice under section 153A. Once a recomputation in the assessment order under section 153A is done, the interest chargeable under section 234A would have to be reckoned from the date of determination of income under section 143(1), read with section 153A to the date of the recomputation of income under section 153A, read with section 143(3). This position is in tune with the law stated in section 234A(3). Therefore we find that the Commissioner of Income-tax(Appeals) is justified in holding that the interest under section 234A is chargeable from the date of expiry of the notice period given under section 153A to the date of completing the assessment under section 143(3). This issue is decided in favour of the assessees.”

made it clear that assessment in case of search, notice is to be issued to

searched person u/s.153A(1) of the Act requiring him to furnish return of

income within such period as may be specified in the notice and

assessee will file return of income in the prescribed form and verified in

the prescribed manner and setting forth such other particulars as may be

prescribed. This provision also makes it clear that provisions of section

153A of the Act so far as made, may be apply accordingly as if, such

- 8 - ITA Nos.1807 & 1808Chny/2024 return of income as required to be furnished u/s.139 of the Act. It means

that requirement of provision is that return is to be treated as return filed

u/s.139 of the Act i.e., return filed by the assessee u/s.153A(1) of the Act.

Hence, this provision for this purpose is to be considered as pari-

materia to section 139 of the Act, and hence, in our view, interest

u/s.234A is to be charged from the end of the month i.e time limit as

specified in the notice issued u/s.153A of the Act. Hence, in the present

case, interest is to be charged for the months of January & February,

2022 only i.e., for two months. We direct the Assessing Officer

accordingly. The first ground raised by the assessee is allowed.

1808/Chny/2024 for the assessment year 2016-17 is exactly identical to

the issue which we have already considered in ITA No.1807/Chny/2024

for the assessment year 2015-16 i.e levy of interest u/s.234A. The

reasons given by us in the preceding paragraphs of ITA

No.1807/Chny/2024 shall mutatis mutandis apply to this appeal as well.

Therefore, for the similar reasons, we direct the Assessing Officer to

charge interest from the month of January & February, 2022 only i.e., for

two months. Ordered accordingly.

assessment year 2015-16 is as regards to the order of the CIT(A)

- 9 - ITA Nos.1807 & 1808Chny/2024 upholding levy of interest u/s.234B of the Act by the Assessing Officer.

For this issue, the assessee has raised the following ground:-

“The CIT(A) erred in upholding the levy of interest u/s. 234B. He ought to have seen that the AO ought to have calculated interest only from the date of issuance of notice u/s. 153A till the assessment after giving credit for the taxes”

repeated. Admittedly, the return of income was filed by the assessee in

response to notice issued u/s.153A of the Act, consequent to search

conducted in the residential and business premises of the assessee

u/s.132 of the Act on 18.03.2021. The assessment was completed

u/s.153A of the Act on 31.03.2022 and interest u/s.234B for default in

payment of advance tax was charged for an amount of Rs.30,072/-.

Aggrieved, the assessee preferred appeal before the CIT(A). The CIT(A)

confirmed the action of the Assessing Officer and his finding recorded is

already extracted in the earlier part order of ITA No.1807/Chny/2024 on

the issue of interest u/s.234A of the Act in para no.4 hereinabove.

without considering the self-assessment tax paid for an amount of

Rs.49,092/- and which has been paid on 31.03.2019. The only limited

plea of the assessee before us is that interest is to be recomputed in

term of the provisions of section 234B(2) of the Act, after considering the

- 10 - ITA Nos.1807 & 1808Chny/2024 payment made by the assessee on account of self-assessment tax.

When this was pointed out to Ld.CIT DR, he only stated that matter can

be referred back to the Assessing Officer for recomputation as per law.

circumstances of the case. We find that interest is to be charged only

after giving effect to the self-assessment tax paid for Rs.49,092/- on

31.03.2019, after verification by the Assessing Officer and accordingly

we decide the levy. In term of above, this appeal of the assessee is partly

allowed.

the assessee for assessment year 2016-17 also. Therefore, the

reasons mentioned in para 14 of this order shall mutatis mutandis apply

to this appeal as well. Hence, we direct the Assessing Officer to decide

the levy accordingly, for the assessment year 2016-17 also.

Order pronounced in the open court on 21st August, 2024

Sd/- Sd/- (महावीर �सह महावीर �सह ) महावीर �सह महावीर �सह (एस एस.आर आर. . . . रघुनाथा रघुनाथा) एस एस आर आर रघुनाथा रघुनाथा (MAHAVIR SINGH) (S.R. RAGHUNATHA) उपा�य� /VICE PRESIDENT लेखा सद�य/ACCOUNTANT MEMBER चे�ई/Chennai, �दनांक/Dated : 21.08.2024 DS

- 11 - ITA Nos.1807 & 1808Chny/2024 आदेशक��ितिलिपअ$ेिषत/Copy to: 1. अपीलाथ�/Appellant 2. ��यथ�/Respondent 3. आयकरआयु% /CIT, Chennai. 4. िवभागीय�ितिनिध/DR 5. गाड*फाईल/GF.