Taxpayers can take advantage of the decision of the Mumbai Bench of the Income-Tax Appellate Tribunal. The tribunal, in a one order, held that a taxpayers need not pay interest, if the assessment order does not clearly mention the quantum of interest.
The tribunal struck down an order of the income-tax department charging interest from an individual taxpayer, solely on the grounds that the assessment order did not mention the quantum of interest charged on him. There was a mention of the quantum of interest in the notice of demand sent to the assessees, but no mention of interest in the assessment order. The income-tax rules stipulate that assessment order should contain the quantum of interest, if interest has to be recovered from the taxpayer.
The rules specify that the quantum of interest should be mentioned in the body of the assessment order. In most cases the concerned officer computes the tax and interest in a separate paper and then mentions the figures of both at the bottom of the assessment order. However, in many cases, the officers mention the quantum of interest in the notice of demand, but not on the assessment order.
The interest cannot be recovered from the taxpayer if there is no mention of the quantum of interest in the assessment order. In one case Bharat C. Gandhi, vide ITA No. 4270/Mum/2009, there was a mention of interest charged under section 234 B (for delay in filing returns) and section 234 C (for non-payment or shortfall in payment of tax) of the Income-Tax Act but there was no mention of interest charged under section 234 D (arising from excess refunds). In that case, assessee’s counsel took a view that interest under section 234D of Income-Tax Act could not be recovered from his client because there was no mention of it on the body of the assessment order. The tribunal accepted his argument.
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(Republished with Amendments by Team Taxguru)
• IT: ITNS Form 150 is an integral part of assessment order; and where assessment order did not speak about charging of any interest under sections 234B and 234C, vide ITNS 150 computation Form, said interest could be charged
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[2016] 66 taxmann.com 48 (Patna)
HIGH COURT OF PATNA
Commissioner of Income-tax (I), Patna
v.
Natraj Engineers (P.) Ltd.*
RAMESH KUMAR DATTA AND SUDHIR SINGH, JJ.
MISC. APPEAL NO. 466 OF 2005†
SEPTEMBER 7, 2015