M/S PALLIPURAM SERVICE CO-OP BANK LTD,ERNAKULAM vs. THE ITO NON CORP WARD 2(5), KOCHI

This is an Appeal by the Assessee arising out of the Order dated 20.03.2023 by the Commissioner of Income-tax (Appeals), Income Tax Department [CIT(A)], dismissing the assessee’s appeal contesting the rectification of it’s assessment u/s.147 read with section 143(3) of the Income-tax Act, 1961 (the Act), dated 30.12.2016 for assessment year (AY) 2011-2012, vide rectification order u/s.154 dated 31.03.2019. The assessee has also filed a stay petition, also posted along with.

The brief facts of the case are that the assessee’s assessment, noticing it had failed to file any return of income u/s.139 of the Act, was completed u/s.147 r/w s. 143(3) of the Act on 31.03.2019 at an income of Rs.8,62,333, raising a demand of Rs.4,55,650 u/s.156 on 30.12.2016, including interest u/s.234A at Rs.10,536 (DPB 26). Subsequently, it was discovered that the said interest, which had been levied for four months, i.e., from May, 2016 (the assessee’s return in response to notice u/s.148(1) being due on 11.05.2016), to August, 2016 (the assessee filing the said & SA 59/Coch/2023 (AY 2011-12) Pallipuram SCB Ltd. v. ITO return u/s.148 on 22.08.2016), instead of 59 months, i.e., from October 2011 (the assessee being liable to file it’s return of income up to 30.09.2011), to August, 2016 (i.e., the actual filing of the return u/s. 148), it was show caused u/s.154 vide notice dated 05.07.2018. As it appears, no response thereto was filed by the assessee, which was required to be by 25.07.2018. Order u/s.154, charging additional interest u/s.234A(1) (corresponding to 55 months) in the sum of Rs.1,44,811 was accordingly passed on 31.03.2019. In appeal, the assessee raised the following ground: ‘The order of the ITO under section 154 is against the law. The time limit for AY 2011-12 has lapsed. Even though the ITO has passed order under section 154, the overall time limit under section 147 applies to the assessment year and hence the order of the ITO is against law.’ That is, charging the rectification order as time barred. The same was answered by the ld. CIT(A) in the negative. Adverting to sec.154, he held that an order there-under could be passed within four years of the order proposed to be amended, so that the impugned order was in time. Aggrieved, the assessee is in second appeal.

We have heard the parties, and perused the material on record. 4.1 We find no substance in the assessee’s case. The Gd. as to the impugned order being time barred, raised before the ld. CIT(A), though finds mention in Gd.10 of the GoA before us, was not pressed. The same only needs to be stated to be rejected and, in any case, stands answered conclusively by the ld. CIT(A). The issue raised before 2 | P a g e & SA 59/Coch/2023 (AY 2011-12) Pallipuram SCB Ltd. v. ITO us per an additional Grd. is the maintainability of the levy in the absence of the direction by the AO in the assessment order for levy of interest u/s.234A. To begin with, the said legal ground could be raised only in appeal against the order dated 30.12.2016 charging the said interest without a direction to that effect in the assessment order. The rectification order only seeks to compute the same correctly, i.e., in accordance with the relevant provision of law inasmuch as the assessment made, though u/s. 147, is the first assessment and the return in response to notice u/s. 148(1), the first return. The said order having not been appealed against, had attained finality. The raising of this issue before us is not maintainable. Reference in this context be made to, inter alia, Bhopal Sugar Industries Ltd. v. ITO [1960] 40 ITR 618 (SC); Hindustan Coco Cola Beverages v. CIT [2007] 293 ITR 226 (SC). Continuing further, it was nevertheless a common contention before us that the said ground is not maintainable in view of the law as clarified by the Apex Court per it’s decisions in Mansarovar Commercial Pvt. Ltd. v. CIT [2023] 453 ITR 661 (SC) and CIT v. Bhagat Construction Co. Pvt. Ltd. [2016] 15 SCC 738, rendered following it’s constitutional Bench decision in CIT v. Anjum M.H.Ghaswala [2001] 252 ITR 1 (SC), as also it’s subsequent decision in Karanvir Singh Gossal [2012] 349 ITR 692 (SC). Per the same, adverted to during hearing, it stands abundantly clarified that the matter admits of no two views; the charging of interest u/s.234A, as indeed u/ss. 234B and 234C, mandatory and compensatory in nature, is automatic. Decisions, holding to the contrary, viz. Tej Kumari v. CIT [2001] 247 ITR 210 (Pat) (FB); CIT v. Ranchi Club Ltd. [1996] 222 ITR 44 (Pat), do not represent good law. That being the case, the AO has no discretion in the matter. His failure, therefore, in not issuing the direction to charge interest in the assessment order, is to no consequence, and clearly a mistake, rectifiable u/s. 154. Finally, we consider the aspect of computation of interest, on which, again, no issue was raised by the assessee. The assessment being for the first time, even as observed in South Indian Bank Ltd. v. CIT [2010] 325 ITR 517 (Ker), albeit in the 3 | P a g e