IKG ASSOCIATES,MUMBAI vs. ASST CIT RG 23(1), MUMBAI

Assessee by: Shri Dilip V. Lakhani Department by: Shri B.C.S.Naik सुनवाई की तारीख / Date of Hearing: 20.07.2016 घोषणा की तारीख /Date of Pronouncement: 18.11.2016 आदेश / O R D E R

PER AMARJIT SINGH, JM:

3. Thereafter, in pursuance of the said order and during the course of working out of the tax assessment of the assessee an amount of Rs.11,05,38,735/- was added on account of non-payment of advanced tax on 15.09.2007 and 15.12.2007 u/s.234C of the Act. Thereafter, the said order was challenged and the CIT(A) has confirmed the said order, therefore, the assessee has filed the present appeal before us. The only difference in the other is that the Assessing Officer passed an another rectification order u/s.154 of the Act, after the issuance of the notice dated 04.07.2014 and after obtaining the reply, the said addition i.e. Rs.11,05,38,735/- was added on account of non-payment of advanced tax on 15.09.2007 and 15.12.2007 and the said order was also upheld by the CIT(A), hence the assessee filed an appeal before us in this case also.

1. On the facts and circumstances of the case, the order passed under section 154 dated 14.11.2013 and confirmed by learned Commissioner of Income Tax (Appeal) confirming the passing of the order under section 154 be cancelled as the learned Assessing Officer had not given show cause notice for levy of interest under section 234C.

2. On the facts and circumstances of the case, the order passed by the learned Assessing Officer under section 154 dated 14.11.2013 and confirmed by learned Commissioner of Income Tax (Appeal) be deleted as there is no mistake apparent from record. &3140/M/15 A.Y. 2008-09

3. On the facts and circumstances of the case, the appellant was not liable to make the payment of advance tax on advance tax on 15.09.2007 and 15.12.2007 and consequently is not liable to pay interest under section 234C amounting to Rs.11,05,38,735/-.

4. The appellant prays that the order passed under section 154 dated 14.11.2013 be cancelled and interest levied under section 234C be deleted.

5. All the issues are interconnected, therefore are being taken up together for adjudication. Under these issues the assessee has challenged the order dated 14.11.2013 passed u/s.154 of the Act. In the instant case the assessment was completed on 21.12.2010 raising demand to the tune of Rs.9.46 crores (including an interest liability of Rs.11.05 crores for deferment of advance tax for the quarters ended September 2007 and December 2007). Subsequently, the assessee moved an application u/s.154 of the Act on 16th February 2011 and the said application was in connection with the deletion of addition on account of the payment of advance tax to the tune of Rs.11.05 crores. The contention of the assessee was that the assessee did not earn any income, therefore, the assessee was not liable to pay deferment advance tax up to 15th December 2008. The contention of the assessee was accepted by virtue of order dated 25.02.2011. However, the department also issued the refund to the tune of Rs.1,59,14,979/- vide RO No.854733. Thereafter, on 22.08.2012, the Assessing Officer issued the notice proposing to add back the claim of interest A.Y. 2008-09 expenses to the tune of Rs.11,89,845/-, being interest paid on delayed payment on TDS. The Assessing Officer no doubt raised the said demand to the tune of Rs.11,89,845/- but have also recomputed the interest on the deferment of advanced tax at Rs.11.05 crores u/s.234C of the Act. Here it is pertinent to mentioned that the notice does not contains the contents for the re-computation of the interest of deferment on advanced tax at Rs.11.05 crores u/s.234C of the Act. In the instant appeal before the ITAT the assessee has challenged the said order on the ground of non-issuance of notice and on the ground of this fact that this matter had already been adjudicated by virtue of order dated 25.02.2011 and it is not a mistake apparent on record. What has been decided by the Assessing Officer by passing the order dated 25.02.2011 is required to be produced on record for ready reference:- “The assessee’s representative vide letter dated 16.02.2011 has stated that while passing the order u/s.143(3) interest is levied u/s.234C at Rs.11,05,38,735/- and the same is not leviable stating that the assessee is not liable to make the payment of advance tax u/s.208 of the I. T. Act 1961, there will be no question of failure to make the payment of advance tax or failure to make the short payment of advance tax on the sue dates. For the purpose of levy of interest u/s.234C(1)(a)(i) if the assessee fails to make the payment of advance tax on or ITA No.3169&3140/M/15 A.Y. 2008-09 before 15th June, 15th September and 15th December, of the prescribed percentage being 15%, 45% and 75% respectively of the tax due on the returned income then he is liable to pay interest. The basic condition for levy of interest u/s.234C(1)(a)(i) is that the assessee should be liable to pay advance tax u/s.208 of the I.T. Act at the prescribed rate on 15th June, 15th September and 15th December. Section 210(1) provides that every person who is liable to pay advance u/s.208 shall, of his own accord, pay, on or before each of the due date specified u/s.211, the appropriate percentage specified in that section of the advance tax of his current income as income calculated in the manner laid down u/s.209. Section 209 clearly provides that the assessee will have to estimate his current income for the purpose of the advance tax. If the assessee has not earned any income on the date when the installment for payment of advance tax. If the assessee has not earned any income on the date when the installment for payment of advance tax has become due and the assessee is in a position to demonstrate this fact, then he was not liable to make payment of any advance tax on the due dates and consequently will not be liable to pay interest.

2. On going through the records, the assessee’s contention is found to be correct. The assessee is not liable for interest A.Y. 2008-09 u/s.234C of the I.T.Act. The mistake being apparent from the records is rectified u/s.154 of the I.T.Act. The total income remains unchanged at Rs.1222,29,16,295/- as per order u/s.143(3) dated 21.12.2010.