2013-TIOL-487-HC-MAD-IT
IN THE HIGH COURT OF MADRAS
Tax Case (Appeal) No.214 of 2010
M/s TEXTILE DYE-CHEM CORPORATION
Vs
THE ASSISTANT COMMISSIONER OF INCOME TAX, CHENNAI
Chitra Venkataraman And K B K Vasuki, JJ
Dated : June 4, 2013
Appellant Rep. by : Mr. M P Senthil Kumar
Respondent Rep. by : Mr. N V Balaji Standing Counsel for Income Tax
Respondent Rep. by : Mr. N V Balaji Standing Counsel for Income Tax
Income Tax - Sections 143, 147, 234B (1)&(3) - Whether interest under section 234B can be attracted, if the assessment was completed as per the provisions of Section 147 read with Section 143 of the Income Tax Act - Whether such completed assessment cannot be considered as a regular assessment, but only a re-assessment.
The assessee returned an original assessment u/s 143(1), which was subsequently completed u/s 147 read with Section 143(3) of the Income Tax Act. The assessee had paid an advance tax and filed certificates towards tax deducted at source. However, by reason of assessment u/s 147 read with Section 143(3) , proceedings were initiated for levy of interest u/s 234B(1). The assessee contested the levy of interest u/s 234B(1) could not be levied because such assessment was not a regular but a re-assessment. The CIT (A) allowed the case and held that there was no default on the part of the assessee in paying the advance tax and hence, no penalty could be levied.
Aggrieved, the Revenue appealed before the Tribunal and contended that the assessment made on the assessee u/s 147 read with Section 143(3) was a regular assessment and the provisions of Section 234B(1) stood attracted. The Tribunal accepted the contention of the Revenue and aggrieved, the assessee has filed this appeal before the High Court.
Having heard the parties, the High Court held that,
+ we do not agree with the submission of the assessee herein on the admitted fact that the assessment made on the assessee is a regular assessment made for the first time under Section 147 read with Section 143(3) of the Income Tax Act. Given the fact that the assessment is a regular assessment, rightly the Assessing Officer levied interest under Section 234B(1), as confirmed by the Tribunal. Going by the clear wording of the Section and the admitted fact position that the assessment is a regular assessment and not a reassessment, we have no hesitation in confirming the order of the Tribunal, thereby dismissing the Tax Case Appeal.
Assessee's appeal dismissed
JUDGEMENT
Per : Chitra Venkataraman, J :
The assessee is on appeal as against the order of the Tribunal, raising the following substantial questions of law, relating to the Assessment Year 2004-05:
(i) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that interest under Section 234B is chargeable under Section 234B(1) and Section 234B(3) has no application?(ii) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in not following the decision of the Income Tax Appellate Tribunal, Mumbai Bench, in the case of Datamatics Ltd. Vs. ACIT reported in 2008 (299) ITR (AT) 286 = (2009-TIOL-89-ITAT-MUM) and deciding the issue contrary to that decision, without referring to Special Bench?
2. It is seen from the facts narrated herein that the assessee returned an original assessment under Section 143(1) of the Income Tax Act on 31.03.2006. Subsequently, the assessment was completed under Section 147 read with Section 143(3) of the Income Tax Act, computing the total income at Rs.90,28,820/- as against the returned income of Rs.7,81,009/-. Admittedly, the assessee paid an advance tax of Rs.6,48,000/- and filed certificates towards tax deducted at source to the value of Rs.3,61,449/- that the assessee was entitled to a refund of Rs.2,26,320/-. However, by reason of assessment under Section 147 read with Section 143(3) of the Income Tax Act, proceedings were initiated for levy of interest under Section 234B(1) of the Income Tax Act. The assessee contested the levy of interest under Section 234B(1) by placing reliance on the decision of the Mumbai Bench of the Tribunal reported in 110 ITD 24 = (2009-TIOL-89-ITAT-MUM) (Datamatics Ltd. Vs. ACIT). The Commissioner of Income Tax (Appeals) allowed the case of the assessee by following the decision of the Mumbai Bench of the Tribunal and held that there was no default on the part of the assessee in paying the advance tax and hence, no penalty could be levied under Section 234B of the Income Tax Act. The Revenue contended that considering the fact that the assessment made on the assessee under Section 147 read with Section 143(3) was a regular assessment, going by Explanation (2) to Section 234B, the provisions under Sections 234B(1) of the Income Tax Act stood attracted. Thus the Department disputed the view of the Commissioner of Income Tax (Appeals) in following the decision of the Mumbai Bench of the Tribunal and allowing the assessee's case.
3. On a consideration of the rival contentions and the provisions of the Income Tax Act, the Tribunal held that going by Explanation (2) to Section 234B of the Income Tax Act, when the assessment in the assessee's case was admittedly made for the first time under Section 147 read with Section 143(3) of the Income Tax Act, the said assessment is a regular assessment attracting sub section (1). It further pointed out that the Mumbai Bench decision related to a case of reassessment; hence, the case of the assessee being different from the decided case, interest was chargeable under Section Section 234B(1) of the Income Tax Act. Aggrieved by this, the assessee is on appeal before this Court.
4. We do not agree with the submission of the assessee herein on the admitted fact that the assessment made on the assessee is a regular assessment made for the first time under Section 147 read with Section 143(3) of the Income Tax Act.
5. Given the fact that the assessment is a regular assessment, rightly the Assessing Officer levied interest under Section 234B(1), as confirmed by the Tribunal. For the sake of convenience, we extract the relevant portion from Section 234B(1) Explanation (2) and Section 234B(3) of the Income Tax Act:
"234-B. Interest for defaults in payment of advance tax. - (1) Subject to the other provisions of this section, where, in any financial year, an assessee who is liable to pay advance tax under Section 208 has failed to pay such tax or, where the advance tax paid by such assessee under the provisions of Section 210 is less than ninety per cent of the assessed tax, 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 from the 1st day of April next following such financial year to the date of determination of total income under sub-section (1) of Section 143 and where a regular assessment is made, to the date of such regular assessment, on an amount equal to the assessed tax or, as the case may be, on the amount by which the advance tax paid as aforesaid falls short of the assessed tax.Explanation 1. - ...Explanation 2. - Where, in relation to an assessment year, an assessment is made for the first time under Section 147 or Section 153-A, the assessment so made shall be regarded as a regular assessment for the purposes of this section.Explanation 3. - ...(2) ...(3) Where, as a result of an order of reassessment or recomputation under Section 147 or Section 153-A, the amount on which interest was payable under sub-section (1) is increased, 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 following the date of determination of total income under sub-section (1) of Section 143 and where a regular assessment is made as is referred to in sub-section (1) following the date of such regular assessment and ending on the date of the reassessment or recomputation under Section 147 or Section 153-A, on the amount by which the tax on the total income determined on the basis of the reassessment or recomputation exceeds the tax on the total income determined under sub-section (1) of Section 143 or on the basis of the regular assessment aforesaid.(4) ...(5) ... "
6. Going by the clear wording of the Section and the admitted fact position that the assessment is a regular assessment and not a reassessment, we have no hesitation in confirming the order of the Tribunal, thereby dismissing the Tax Case Appeal.
In the result, the Tax Case Appeal stands dismissed. No costs.
Regards,
Pawan Singla
BA (Hon's), LLB
Audit Officer
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