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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: MS. SUCHITRA KAMBLE & SHRI B.M. BIYANI
आदेश / O R D E R
Per B.M. Biyani, A.M.:
Feeling aggrieved by appeal-order dated 09.08.2021 passed by learned Commissioner of Income-Tax (Appeals), National Faceless Appeal Center, [“Ld. CIT(A)”], which in turn arises out of rectification-order dated 05.05.2020 passed by learned ADIT, CPC, Bangalore [“Ld. AO”] u/s 154 of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2018-19, the assessee has filed this appeal on following solitary ground:
“(1) That on the facts and circumstances of the case and in law, the Ld. CIT-NFAC had erred in rejecting the appeal against the levy of interest under section 234 of the Act”
AFE Education P. Ltd. Assessment year 2018-19 2. Heard the learned Representatives of both sides and case-records perused.
Briefly stated the facts are such that the assessee is a private limited company who filed return of income of relevant AY 2018-19 on 21.09.2018 declaring a total income of Rs. 29,59,090/-. The return was processed u/s 143(1) vide intimation dated 15.05.2019 wherein interest of Rs. 37,972/- had been levied u/s 234C of the Act for deferment of advance-tax. Finding that the interest u/s 234C has been wrongly levied / computed in the aforesaid intimation which constitutes an apparent mistake, the assessee moved 1st application dated 26.12.2019 u/s 154 to the Ld. AO seeking rectification of the intimation but the same was rejected by Ld. AO through order dated 31.01.2020. Thereafter, the assessee moved 2nd application dated 02.03.2020 u/s 154 to the Ld. AO again seeking the rectification of the intimation but the same was also rejected by Ld. AO vide order dated 05.05.2020. Aggrieved, the assessee filed appeal to Ld. CIT(A) against the order dated 05.05.2020 but did not succeed. Now the assessee has come in appeal before us assailing the order of Ld. CIT(A).
On perusal of Page No. 3 of the order of Ld. CIT(A), it appears that the basis of rectification pleaded by assessee was different in aforesaid 1st application and 2nd application. Be that or not, the present-appeal before us is concerned with 2nd application and therefore we proceed on the basis of apparent-mistake raised by assessee in 2nd Application, which as noted by Ld. CIT(A) on Page No. 3 of his appeal-order and also contested by Ld. AR during hearing before us, is as under:
“Assessee accrued income during last quarter of the financial year and paid tax accordingly. CPC wrongly charged interest of Rs. 37,972/- u/s 234C whereas there was no deferment. Hence interest u/s 234C should be deleted and refund should be issued.” 5. The assessee has also filed a Written-Submission dated 12.09.2022 (received in the office of ITAT on 19.09.2022). In Para No. 3 and 4 on Page No. 6 thereof, the submission of assessee reads as under: Page 2 of 5
AFE Education P. Ltd. Assessment year 2018-19 “3.……This contention is further reinforced by the factual matter of record that the Assessee / Appellant had commenced its business activities in September, 2017 and approximately 99 percent of the gross-receipt and profits of the Appellant were earned by the Appellant in the last quarter of the concerned financial year. It is submitted that in period of time from 1st April, 2017 to 31st 4. December, 2017, the Appellant’s gross receipt and profits were INR 79869.27 and INR 21570.32, respectively whereas in period of time from 1st January, 2018 to 31st March 2018, the Appellant’s gross receipt and profits were INR 5270705.00 and INR 2207414.85. In light of this, clearly and unambiguously, it is evident that 99 percent of the income of the Appellant had accrued in the last quarter of the concerned financial year and such a substantial increase was neither in contemplation of the Assessee nor could be anticipated by the Assessee by any reasonable stretch of imagination. Copies of revenue related records and ledgers evidencing the above-noted facts regarding substantial and unanticipated increase in the Appellant’s income are attached in Annexure-1.” The Annexure-1 referred herein is extracted below:
“Revenue Coaching Monthly Summary 1-Apr-2017 to 31-Mar-2018 Particulars Transactions Closing Debit Credit balance Opening Balance April May June July August September 60.45 60.45 October 14,000.00 14,060.45 November 12,000.00 26,060.45 December 53,808.84 79,869.29 January 13,750.00 37,81,996.20 38,48,115.49 February 14,17,478.83 52,65,594.32 March 5,94,676.00 6,32,837.38 53,03,755.70 Grand Total 6,08,426.00 59,12,181.70 53,03,755.70 6. Referring to the above submissions, Ld. AR emphasized twin-facts, viz. (i) the assessee has commenced business activities in September, 2017; and (ii) 99% of the revenue had accrued in last quarter of the financial-year. Ld. AR submitted that in such a situation when the business in new and the Page 3 of 5
AFE Education P. Ltd. Assessment year 2018-19 assessee has no means to anticipate its business-receipts, the assessee cannot be obligated to pay interest u/s 234C and therefore the action of revenue authorities in charging hefty interest of Rs. 37,972/- is clearly unjustified. Ld. AR has also placed reliance on certain rulings in support of this proposition.
On a careful consideration of the law of section 234C as prescribed by Parliament, we observe that the 1st Proviso to section 234C, which gives relief to the taxpayers in the matter of levy of interest in such types of cases, has already been amended through Finance Act, 2016 w.e.f. 01.06.2016 whereby clause (c), reproduced below, has been introduced to addresses the grievance of present assessee. We reproduce below the complete provision of 1st Proviso including newer clause (c) therein:
“Provided that nothing contained in this sub-section shall apply to any shortfall in the payment of the tax due on the returned income where such shortfall is on account of under-estimate or failure to estimate— (a) the amount of capital gains; or (b) income of the nature referred to in sub-clause (ix) of clause (24) of section 2; or (c) income under the head "Profits and gains of business or profession" in cases where the income accrues or arises under the said head for the first time; or (d) the amount of dividend income, and the assessee has paid the whole of the amount of tax payable in respect of income referred to in clause (a) or clause (b) or clause (c) or clause (d), as the case may be, had such income been a part of the total income, as part of the remaining instalments of advance tax which are due or where no such instalments are due, by the 31st day of March of the financial year: 8. Reverting back to the submission of assessee in Written-Submission stating “Assessee / Appellant had commenced its business activities in September, 2017” ; having regard to the amendment in 1st Proviso to section 234C by way of introduction of newer clause (c) w.e.f. 01.06.2016; and the present case of assessee being related to AY 2018-19, we are of the view that the assessee is entitled to the benefit of the amended law. Being so, we direct the Ld. AO to consider the case of assessee adequately in terms
AFE Education P. Ltd. Assessment year 2018-19 of aforesaid clause (c) of the 1st proviso to section 234C and re-compute interest u/s 234C in accordance with such law.
In the result, this appeal of assessee is allowed for statistical purpose.
Order pronounced as per Rule 34 of I.T.A.T. Rules, 1963 on 31/10/2022.