Interest under section 234A, B and C are mandatory in nature and no discretion is vested in the Assessing Officer
CASE LAW DETAILS
Decided by: HIGH COURT OF KERALA, In The case of: Dr. R. P. Patel v. CIT, Appeal No.: ITA Nos. 94,95,98,103, 104,106,108 & 109 of 2007, Decided on: April 3, 2009
6. Question Nos. 10 and 11 pertain to assessee’s challenge against levy of interest under section 234B of the Act for non-payment of advance tax. The assessee has relied on the decision of the Supreme Court in CIT V. RANCHI CLUB LTD., 247LT.R, 209 and decision of the Delhi High Court in CIT v. INCHCAPE INDIA (P) LTD., 179 LT.R. 212 (Del.) and the decision of this Court m CIT V. TRAVANCORE TITANIUM PRODUCTS, 183 CTR 473 and contended that interest cannot be levied under Section 234B. However, Tribunal relying on the special Bench decision of the Tribunal in MOTOROLA V. DY. CIT 95 ITD 269 (Dei.) upheld the levy in principle though remanded the matter for recomputation of the actual interest liability. Standing counsel for the department has contended that Sections 234A, 234B and 234C are mandatory in nature and they relied on the decision of the Supreme Court in CIT V. ANJUM M.H. GHASWALA 252 LT.R. L and that of this Court in CIT v R. & MALINGAIR; 241 LT.R. 753. The mail! contention raised by the assessee is that except for the assessment years 1996-97 and 1998-99, there is no statement in the assessment order about interest charged under Section 2348 of the Act. However, assessee admits that in the computation portion, the assessing officer has worked out the interest due under Section 234B in all the assessment orders. We do not think the assessee’s contention is tenable because after the amendment to the provisions in the statute by Direct Tax Laws (Amendment) Act, 1987 with effect from 1.4.1989 interest payable under Sections 2 34 A, B and C are mandatory in nature and no discretion is vested in the assessing officer in this regard. In tact provisions prior to amendment gave discretion in regard to waiver of interest. Once interest is made mandatory, the liability falls automatically on the assessee on default* The balance is only working out the amount due. The Supreme Court in KALYAN KUMAR RAY V. CTT (1996) 191 I.T.R. 654 held that calculation part of tax payable need not be done in the assessment order itself, but can be done separately in form No. ITNS 150, subject to the condition that the said form is signed or initialed by the Income-tax Officer. In this case, the omission in the assessments except for two years is that assessing officer does not say that interest is charged, but he has worked out the interest in the assessment order itself. When interest which is mandatory under the Act, fells automatically on default, there is no need for the assessing officer to write in the assessment order that he is charging interest. In fact there is a need to pass such an order only if he has the discretion about interest. Since liability is statutory on default, officer is left with only the duty to work out the interest which admittedly he has done in the assessment order itself. Therefore technical objection raised by the assessee was rightly found to be untenable by the Tribunal. So far as quantum of interest demanded is concerned. Tribunal has remanded the matter for fresh consideration by the assessing officer. We do not find any ground to interfere with the order of the Tribunal on this issue also.