IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH `D ' NEW DELHI)
BEFORE Shri U. B. S. BEDI, JUDICIAL MEMBER and
Shri S V MEHROTRA, ACCOUNTANT MEMBER
I.T.A. No. 2182/Del/2013
(Assessment year 2002-03)
Laxmi Publication Pvt. Ltd., Vs. ACIT, Circle 4(1),
113, Golden House, Daryaganj, New Delhi
New Delhi
PAN : AAACL0375Q
(Appellant) (Respondent)
Assessee by : Sh. V.D. Aggarwal, Advocate on first conclusion
and None on second conclusion when fixed for
clarification.
Department by: Shri Vivek Kumar, Sr. DR
ORDER
PER U.B.S. BEDI, JUDICIAL MEMBER:
This appeal of the assessee is directed against the order passed by Ld.
CIT(A) VIII, New Delhi dated 19.02.2013 relevant to assessment year 2002-
03 wherein, following two effective grounds have been raised.
"1. Ld. CIT(A) is not justified in law and facts and circumstances of the
case in dismissing the appeal on the basis of the judgement of the ITAT and
ignoring the judgement of higher court in case of CIT Vs Shri b.
Lakshmikanthan and CIT Vs Sego Restaurant & Amp wherein Hon'ble
court held specifically that whether assessment is made u/s 143(1) or
143(3) for the purpose of charging interest u/s 234B(3), no difference can
be made on the baiss of original assessment completed u/s 143(1) or
143(3).
2. Ld. CIT(A) is erred in law and facts and circumstances of the case
particularly in the circumstances hewn there is difference of opinion in
interpreting the section the view which is favorable to the assessee should
be adopted. In this case there is only one case of Bombay ITAT while other
3 cases on which assessee has relied in which one was of the ITAT and two
of the High Court was in favour of the assessee, hence dismissal of the
appeal is bad in law."
2 I.T.A. No.2182/Del/2013
2. In both the above grounds, the only issue involved is regarding the
contention of the assessee that the A.O. had wrongly charged interest u/s
234B(1) whereas, it had to be charged u/s 234B(3) of the I. T. Act, 1961.
The brief facts of the case are that the original return of income was filed on
28.10.2002 declaring income of Rs.11,73,630/-. A survey u/s 133A was
conducted on the premises of the assessee on 26.03.2007 and 27.03.2007.
The notice u/s 148 was issued to the assessee and in response thereto, the
return of income was filed on 30.03.2007. The assessee had made
application u/s245C before the Hon'ble Settlement Commission and
subsequently the assessment was framed on 13.6.2011 u/s 143(3) read with
Sections 147 and 245D(iv) in pursuance to the order of Settlement
Commission. The A.O. had charged interest u/s 234B(1) whereas, the
assessee contended in his appeal before the first appellate authority that
interest should have been charged under the provisions of Section 234B(3)
for the period commencing on the day falling at the date of determination of
total income u/s 143(1). During the course of appellate proceedings, the
assessee has further submitted that since the order had been passed u/s 147,
therefore, the interest should have been charged under the provisions of
Section 234B(3) and not u/s 234B(1). In support of such contention, the
assessee had placed reliance on the decisions of Hon'ble Kerala High Court
in the case of CIT Vs B Lakshmikanthan, 198 Taxman 485 dated 20.01.2011
and CIT Vs M/s. Sago Restaurant & Others I.T.A. No. 1022 of 2009 dated
14.12.2001.
3. Ld. CIT(A) considered the arguments of the assessee but did not
accept the plea of the assessee and relied upon the order of ITAT Mumbai
Bench in the case of Barbar Ship Management India (P) Ltd. Vs ITO, 2009-
3 I.T.A. No.2182/Del/2013
TIOL-824-ITAT-Del and by reproducing the relevant portion from the said
order in his order, has concluded to dismiss the appeal as under:
"Perusal of the above order of the Hon'ble jurisdictional ITAT shows
that it has clearly been held that intimation u/s 143(1)(a) is not an
assessment and if the assessment for the first time is completed u/s
147 then the case will fall under sub-section (1) of section 234B. In
the instant case also, it is observed that assessment for the first time
was completed under the provisions of section 147 therefore, the case
will fall under the provisions of sub-section (1) of section 234B. The
case law relied upon by the appellant are based on different facts. In
view of the findings above and in view of the decision of the Hon'ble
Delhi ITAT discussed above these grounds of appeal are dismissed."
4. Aggrieved, the assessee has come in further appeal and while
reiterating the submissions as made before the lower authorities, relied upon
the decisions in the case of Shri B Lakshmikanthan and Sego Restaurant &
Amp (supra) and by placing copies of these decisions, it was pleaded for
allowing the appeal of the assessee.
5. Ld. D.R. strongly relied upon the order of Ld. CIT(A) and pleaded for
its confirmation. Reliance was placed on the decision of Hon'ble Madras
High Court in the case of Textile Dye-Chem Corpn. Vs ACIT as reported in
(2013) 35 Taxmann.com 467 to plead for confirmation of the order of Ld.
CIT(A).
6. None appeared on behalf of the assessee on second occasion when
case was fixed for clarification. After hearing the Ld. DR and on perusing
the material available on record, we are adjudicating the matter on merits.
7. We have heard the Ld. DR and perused the material on record and
have gone through the orders of authorities below. We have also gone
through the provisions as contained in Section 234B(1) and u/s. 234B(3) as
well and the case law as cited by rival sides. There is no dispute about the
facts that consequent upon the original return filed, the same was processed
4 I.T.A. No.2182/Del/2013
u/s 143(1) and intimation was received by the assessee. Subsequently, a
survey u/s 133A was conduced on the premises of the assessee and notice
u/s 148 was issued. Thereafter, the assessee filed return in response thereto
and had also gone before the Settlement Commission, assessment u/s 143(3)
read with sections 147 and 245D(iv) in pursuance to order of Settlement
Commission, was completed on 13.06.2011. The A.O. has charged interest
u/s 234B(1) whereas, the assessee in appeal contended before the first
appellate authority that interest should have been charged u/s 234B(3) for
the period commencing from the date falling on the day of determination of
total income u/s 143(1). The assessee has also taken the plea before the first
appellate authority that since, the order has been passed u/s 147, the interest
should have been charged under the provisions of Section 234B(3) and not
u/s 234B(1). The plea of the assessee was not accepted by Ld. CIT(A)
despite relying upon two decisions of Hon'ble Kerala High Court, the
assessee has filed further appeal before this bench.
7.1 Now, the question to be considered by us is, as to which of the sub-
sections of section 234B is attracted for levy of interest. In this case, there
was determination of total income under sub-section (1) of section 143
before the regular assessment got completed u/s 143(3), the A.O. found that
the advance tax paid is less than 90% of the assessed tax so, he levied
interest u/s 234B(1) of the Act. Whereas, the assessee's contention is that
the provisions of Section 234B(3) was to be applied and not of section
234B(1). So, it would be apt to reproduce the relevant provision of Section
234B(1), Explanation 2 and 234B(3) which are as under:
"[Interest for defaults in payment of advance tax.
5 I.T.A. No.2182/Del/2013
234B. (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 153A], the assessment so made
shall be regarded as a regular assessment for the
purposes of this section.]
[Explanation 3** ** ** **
(2)** ** ** ** **
6 I.T.A. No.2182/Del/2013
(3) Where, as a result of an order of reassessment or
recomputation under section 147 [or section 153A], 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 153A],
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."
7.2 The contention of the revenue is that, if the return is accepted and
demand is raised by processing the return u/s 143(1), the interest is to be
charged u/s 234B(1) and the same is for the period commencing from first
day of the financial year following the previsions year during which,
advance tax was paid. According to Ld. D.R., pursuant to survey, notice u/s
148 was issued to the assessee, by virtue of operation of relevant provision,
return filed pursuant to the notice under the said provisions will be treated as
7 I.T.A. No.2182/Del/2013
return filed u/s 139. So much so, the department is entitled to process the
return u/s 143(1) and issue of the proceedings which has entitled the A.O. to
levy interest in terms of section 234B(1) of the Act. It was further clarified
by Ld. D.R. that intimation issued u/s 143(1) is not an assessment and so
much so, section 234B(1) to apply even in a case where intimation issued u/s
143(1) pursuant to the return called for on notice u/s 148. Whereas, Ld.
counsel for the assessee on the other hand, contended before lower
authorities that irrespective of notice and proceedings completed pursuant to
the return filed in response to notice u/s 148, such assessment is always
reassessment or recomputation under relevant provisions. So, the provisions
applicable for interest on short/non payment of advanced tax is served by
section 234B(3) of the Act and not u/s 234B(1).
7.3 On careful consideration of arguments of the Ld. DR, in light of the
relevant provisions of law and precedents as relied upon, we find that going
by the Explanation 2 to Section 234B of the Income Tax Act, when the
assessment was made for the first time u/s. 147 read with section 143(3) of
the I.T. Act, the said assessment is a regular assessment attracting the
provisions of sub-section (1) of Section 234B. Given fact that the assessment
is a regular assessment, rightly the AO levied interest u/s. 234B(1) and as
confirmed by the Ld. CIT(A). Therefore, going by clear
8 I.T.A. No.2182/Del/2013
wording of the relevant portion of section 234B as reproduced in para 7.1 of
this order and admitted fact position for assessment is a regular assessment
and not a reassessment, we confirm the order of the ld. CIT(A) and dismiss
the appeal of the assessee being devoid of any merit.
8. As a result, the appeal of the assessee gets dismissed.
9. Order pronounced in the Open Court on 11th July, 2014.
Sd/- Sd/-
(S.V. MEHROTRA) (U.B.S.BEDI)
Accountant Member Judicial Member
Date: 11-7-2014.
Sp./SRB
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(A), New Delhi AR, ITAT,
5. CIT(ITAT), New Delhi NEW DELHI
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