Case Law Details
PCIT Vs Manoj Kapoor (Jharkhand High Court)
Jharkhand High Court held that interest under Section 234B of the Income Tax Act has to be charged on the assessed income and not on the returned income of an Assessee.
Facts- The Assessee is an individual and deriving income from trading of spare-parts of motorcar and mobile phones and filed its return of income. The case of the Assessee was selected for scrutiny assessment. In course of assessment proceedings, the Assessee voluntarily surrendered the LTCG for taxation. But the A.O added the entire receipt from sale of shares amounting to Rs.10,45,266/- including the cost price/investment made by the Assessee amounting to Rs.5,40,000/- as unexplained investment u/s 69 of the Act vide its order passed u/s 143(3) of the Act.
CIT(A) dismissed the appeal. However, ITAT allowed the appeal and directed AO to delete Rs.5,40,000/- out of the total addition made u/s. 69 of the Act. Tribunal also directed AO to delete the addition and charge the interest u/s 234B of the Act on returned income instead of assessed income.
Conclusion- Held that bare perusal of Section 234B of the Act it is crystal clear that the interest has to be charged on an amount equal to the assessed tax or, as the case may be, on the amount by which the advance tax paid as aforesaid falls short of the assessed tax. The term “assessed tax” has been defined in Explanation-1 of Section 234B (1). As per said Explanation-1 “assessed tax” means the tax on the total income determined under sub-Section (1) of Section 143 and where a regular assessment is made, the tax on the total income determined under such regular assessment as reduced by the amount provided in Explanation-I to section 234B. Therefore, the interest under Section 234B has to be charged on the assessed income and not on the returned income of an Assessee.
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