Hasmukhbhai Mohanlal Shah Vs DCIT (ITAT Ahmedabad)
Interest u/s 234A Valid on Delay in Original Return Despite Timely 153C Filing – ITAT Ahmedabad Upholds Rectification Levy of ₹92,153
The Ahmedabad Bench of the ITAT dismissed the assessee’s appeal for AY 2017-18 and upheld levy of interest of ₹92,153 u/s 234A, holding that interest is chargeable for delay in filing the original return u/s 139(1), even when the return in response to notice u/s 153C was filed within the prescribed time.
The assessee had filed the original return on 29.11.2017 against the due date of 05.08.2017, resulting in a four-month delay. After search proceedings in the Avani Group, assessment was completed u/s 153C r.w.s. 153A. Though interest u/s 234A was initially omitted, the AO later passed a rectification order u/s 154 levying interest on the tax determined in the 153C assessment, which was confirmed by the CIT(A).
Before the Tribunal, the assessee argued that since the return u/s 153C was filed within 30 days, no interest could be levied.
The ITAT rejected this contention and held that:
- Section 234A applies to delay in filing the original return, not to the return filed pursuant to 153C notice.
- By virtue of Explanation 3 to section 234A, the first assessment made u/s 153A / 153C is deemed to be a “regular assessment” for computing interest.
- Interest must be computed on the tax determined in the 153C assessment, but the period of default relates to the original return.
- Levy of interest is mandatory and automatic, and omission in the original order was a mistake apparent from record, validly rectified u/s 154.
Accordingly, the ITAT upheld the rectification order and levy of interest u/s 234A, and dismissed the appeal in full.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
