Brief of the case
In the Case of ACIT v Akhil Jain, ITAT Delhi held that no interest will be levied u/s 234B during the Block Assessment by the virtue of Section 158BF.
Facts of the Case
In the present facts of the Case, the Settlement Commission passed an order dated 31.03.2011 u/s 245D(4). The Assessing Officer passed an order u/s 158BC/245D(4) on 04.05.2011 determining income at Rs.8,21,000/- and raised a demand of Rs.60,548/-. The demand raised was duly paid by the assessee. Subsequently, a notice u/s 154 was issued to the assessee proposing to charge interest u/s 234B of the Act. In response, it was submitted that there was no mistake apparent from the record within the meaning of section 154 of the Act and also contended that interest u/s 234B is not chargeable in respect of income determined in the block assessment. The Assessing Officer, however, rejected the contentions raised by the assessee and passed an order u/s 154/158BC/245D (4) of the Act raising a demand u/s 234B of the Act amounting to Rs.7,88,252/-.
Held by CIT(A)
The ld. CIT(A) held that section 158BF lays down that ‘no interest’ under the provisions of section 234A, 234B or 234C or penalty u/s 271(1)(c), 271A, 271B ‘shall be levied or imposed upon the assessee in respect of the undisclosed income determined in the block assessment’. The levy of interest and penalty in cases assessed under Chapter XIVB are strictly guided by the provisions of section 158BFA. Under these circumstances the AO could not have imposed interest u/s 234B in the case at hand.
The provisions of section 234B(4), have to be read harmoniously with section 158BF, such that orders of the Settlement Commission u/s 245D(4) referred in section 234B(4) would necessarily exclude orders relating to block assessment falling under Chapter XIVB of the Income Tax Act.
Contention of the Revenue
The ld. DR submitted that the Settlement Commission has specifically directed to levy interest u/s 234B of the Act up to the date of order passed u/s 245D(1) of the Act.
Contentions of the Assessee
The ld. Counsel of the Assessee relied on the findings of CIT(A).
Held by the Hon’ble Tribunal
The Hon’ble Tribunal held that when charging of interest u/s 234B of the Act is not permissible in the cases of block assessment under Chapter XIV-B of the Act, by virtue of section 158BF, the Assessing Officer had wrongly charged interest u/s 234B of the Act. The non-levy of interest u/s 234B of the Act, in the original order of the Assessing Officer dated 04.05.2011, cannot be stated to be a mistake apparent on record warranting rectification u/s 154 of the Act. Therefore, the CIT (A) was justified in quashing the order passed by the AO u/s 154 of the Act.
Accordingly, the Appeals were dismissed.