HIGH COURT OF JHARKHAND
Commissioner of Income-tax, Ranchi
TAX APPEAL NO. 8 OF 2002
NOVEMBER 7, 2012
1. Heard learned counsel for the parties.
2. We are not going into the details of facts, in view of the reason that the question of law involved in this Tax Appeal requires no detailed consideration of facts because of the reason that the facts are not in dispute, which are relevant for the purpose of deciding this appeal.
3. The respondent-assessee submitted his self-assessed returns of income, quantifying at Rs. 1,44,74,480/-. Assessee’s income was assessed Rs. 1,45,40,721/- under section 143(3) of the Income Tax Act, 1961. On 29th September,1976, this returns was subjected to proceeding under section 148 and ex parte order was passed on 29.3.1982 which was vacated on 8.7.1982 and the case was reopened under section 146. Then the assessee submitted another returns of income of Rs.1,96,91,399/- on 12th January, 1984. After several rounds of appeals etc., ultimately the tax liability of the assessee was determined by the appellate order dated 24th March, 1992. The issue involved in this Tax Appeal is only whether the assessee, who himself submitted revised returns of self-assessment of his income under section 140A of the Act of 1961, was liable to pay interest from the date of his filing revised returns, i.e., from 12th January, 1984, or was liable to pay interest when his tax liability was finally determined by the appellate order dated 24th March, 1992. The facts are not in dispute and assessment, appellate and remand orders are not relevant; therefore, we are not going to refer the various orders passed at various stages in this very proceeding.
4. This appeal was admitted on the basis of following questions of law:-
“(A) Whether on the facts and in the circumstances of the case, the ITAT was justified in holding that the original demands had got completely wiped off during the intervening period firstly by way of appellate order dated 29.1.1985 by the Commissioner of Income Tax (Appeals) and secondly by way of setting aside the further orders passed consequent thereto from time to time and no demand was pending during the period from 1.1.1985 to 24.3.1992?
(B) Whether on the facts and in the circumstances of the case, the ITAT was justified in holding that interest under section 220(2) could not have been charged upto 24.3.1992 when liability to pay balance self assessment tax arose on 12.1.1984, the date on which the Assessee filed revised return of income showing total income of Rs. 1,96,91,399/- (which is equal to the income assessed in the final order passed by the Assessing Officer on 24.3.1992 in pursuance of the order of the ITAT) and did not pay self-assessment tax on the difference of income between revised return of income and original return of income?
(C) Whether the income tax Department should not be compensated by way of realising interest under section 220(2) for delayed payment of legitimate Government dues which always remained quantified to the extent of Assessee’s liability to pay balance self-assessment tax in pursuance of revised return by him on 12.1.1984?
Though three questions of law have been framed, in our opinion, they, in fact, only constitute one question, which we have already referred above and it will answer all three questions.
5. According to the learned counsel for the Revenue, Sri Deepak Roshan, it is clear from Section 140A of the Act of 1961 that it is the duty of the assessee to self-assess the tax and the assessee is liable to pay self- assessed tax without any order of any authority and he is further liable to pay interest if he had not paid self-assessed tax in time as fixed by the statutory provision. If the assessee failed to pay self-assessed tax and interest under section 140A, then by virtue of sub-section (3) of section 140A, such assessee is deemed to be “an assessee in default” in respect of the tax or interest or both, which remained unpaid. Therefore, it is clear from the facts of the case that the assessee assessed himself to be liable to pay tax and interest on his income to the tune of Rs. 1,96,91,399/- and on 12th January, 1984 as admitted in his revised returns of income, he did not pay interest over the said amount in view of his revised returns on 12th January, 1984. Therefore, the assessee was statutorily “an assessee deemed to be an assessee in default” in respect of tax and interest amount which he did not pay. At the cost of repetition, it may be stated that, according to the learned counsel for the appellant, the assessee was defaulter in view of sub-section (3) of section 140A from the time when he was supposed to pay tax and interest and he did not pay the interest and therefore, automatically without any order of any authority, he was liable to pay the interest.
6. Learned counsel for the Revenue, Mr. D. Roshan, also submitted that section 156 of the Act of 1961 provides for issuance of demand notice for the cases wherein any tax, interest, penalty, fine or any other sum is payable in consequence of any “order passed” under the Act of 1961 and then the assessee is required to be served with a notice of demand in the prescribed form specifying the sum so payable. In contra, in this case, no such order was required to be passed by any Assessing Officer demanding the tax or interest liability to the assessee, when the assessee was liable to pay tax and interest by his own assessment under section 140A. Therefore, without there being any notice under section 156 issued on 12th January, 1984, prior to 24th March, 1992, the assessee was liable to pay the tax and interest. However, the assessee since has paid the tax amount, he is liable to pay interest only now.
7. Learned counsel, Sri Binod Poddar, Sr. Counsel, submitted that admittedly a notice under section 156 was, in fact, issued and served upon the assessee only after appellate order dated 24th March, 1992, because of the reason that by final order dated 24th March, 1992, the assessee’s liability crystallized and before that, assessee’s liability had not attained finality and crystallized in quantified form. Therefore, in case of self-assessment, one can assess his income and submit the returns accordingly along with the proof of payment of tax and if there is delay, with proof of payment of interest. It is submitted that in the case of self-assessment by the assessee but crystallizing tax liability of the assessee by final order, the interest can be levied under section 220(2) of the Act of 1961 only after service of demand notice demanding specified amount, which the assessee is required to pay within the stipulated period of 30 days and in default thereof, he is liable to pay the interest. It is further submitted that the appellate authority and the Tribunal rightly held that the assessee is liable to pay interest from the date of final order passed by the appellate authority on 24th March, 1992. Learned counsel for the respondent relied upon judgment of the Division Bench of Bombay High Court delivered in the case of CIT v. Chika Overseas (P.) Ltd.  23 taxmann.com 315 and upon judgment of Calcutta High Court delivered in the case of Birla Cotton Spg. & Wvg. Mills Ltd. v. ITO  211 ITR 610. Learned counsel for the respondent also relied upon one judgment of Calcutta High Court delivered in the case of CIT v. Chloride India Ltd.  186 ITR 217.
8. We considered the submissions of the learned counsel for the parties and perused the relevant provisions of law.
9. It is clear from section 140A that after taking into account the relevant factors as enumerated in sub-clauses (i) to (v) under sub-section (1) of section 140A, the assessee is liable to assess his income and to pay tax calculated according to the above provisions together with interest as payable under any of the provisions of the Act of 1961 and is required to pay tax in advance before furnishing returns and returns shall be accompanied with the proof of payment of such tax and interest. Such aggregate of tax and interest as deposited by the assessee is required to be adjusted to reply against tax and then surplus against interest as per Explanation appended to section 140A. Sub-section (3) of section 140A provides that, if assessee fails to pay the whole or any part of such tax or interest or both in accordance with the provisions of sub-section (1) of section 140A, then he will be “deemed to be an assessee in default” in respect of the tax or interest or both, which remained unpaid. And it has also been provided in sub-section (3) of section 140A that all the provisions of this Act shall apply accordingly, obviously treating such assessee to be a defaulter – defaulter in payment of tax and interest. In spite of declaring such assessee to be a defaulter, in the same section 140A liability of the interest has not been created on such unpaid amount and Explanation appended to section 140A only provided that the amount so paid by the assessee under section 140A shall be adjusted against tax liability and excess shall be against interest liability. For creating interest liability, a separate provision has been made under the heading “Calculation and Recovery” by section 220. Sub-section (2) of section 220, which is sought to be applied by the Revenue, provides that if the amount as specified in the notice of demand under section 156, is not paid within the period limited under sub-section (1), the assessee shall be liable to pay simple interest at the stipulated rate of interest from the date specified. Sub-section (1) of section 220 provides that any amount, otherwise than by way of advance tax, specified as payable in a notice of demand under section 156, shall be paid within thirty days of the service of the notice upon the assessee. Therefore, all tax liability, except advance tax, have been made liable to be followed by a notice under section 156 and only when the assessee fails to comply with the conditions of the notice under section 156 and fails to pay the due amount, then he is liable to pay interest. No other provision has been shown to us creating any liability for self-assessment default cases and for deemed defaulter under sub-section (3) of section 140A. Undisputedly notice under section 156 was given to the assessee after final assessment order dated 24th March, 1992. The authorities below were, thus, right in holding that the assessee in the present case was liable to pay interest from the date of the order dated 24th March, 1992. The question is, therefore, answered accordingly.
10. In view of the above reasons, there is no merit in this appeal, which is dismissed.