Case Law Details

Case Name : Income Tax Officer Vs. M/s. Heritage Project (ITAT Amritsar)
Appeal Number : I.T.A No. 170/(Asr)/2016
Date of Judgement/Order : 12/10/2017
Related Assessment Year : 2009- 10
Courts : All ITAT (7435) ITAT Amritsar (62)

Income Tax Officer Vs. M/s. Heritage Project (ITAT Amritsar)

The conclusion of Hon’ble Supreme Court in the case of CIT Vs. Ranchi Club Ltd. is that in the absence of any specific mention of the Assessing Officer in the assessment order for charging of interest u/s 234A and 234B, no interest would be recovered from the assessee merely by way of a demand notice. We further find that Hon’ble Delhi High Court in the case of CIT Vs. Kishan Lal (HUF) has again followed the order of Hon’ble Supreme Court and has held that in the absence of any direction in the assessment order for charging interest u/s 234A and 234B interest cannot be recovered.

The Hon’ble Court has held that if there is no direction in the original assessment order, no rectification can be made as there is no mistake apparent from record. The case law relied on by Ld. DR is on a different aspect where the Hon’ble Court has said that omission of application of statutory provision is a mistake rectifiable u/s 154 of the Act whereas in the present case the issue is as to whether interest not charged in the original assessment can be rectified or not and the case law of Hon’ble Supreme Court and other case laws are directly on the issue.

ORDER

PER T. S. KAPOOR (AM):

This is an appeal filed by revenue against the order of Ld. CIT(A), Amritsar dated 16.12.2015 for Asst. Year: 2009-10.

2. The grounds of appeal taken by revenue are reproduced below:

“1. On the facts and circumstances of the case & as per law, the Ld. CIT(A) erred by not acknowledging the fact that the Assessing Officer can take a remedial action to rectify any mistake that is apparent from record or any previous order by passing an order u/s 154 of the Act. The Ld. CIT(A)-2 relied on the decision of Hon’ble Supreme Court in the case of Ranchi Club Ltd., and decision of Hon’ble Delhi & Rajasthan High Court. However, the above judgment are silent on the fact that the Assessing Officer can take a remedial action to rectify any mistake that is apparent from record or any previous order by passing an order u/s 154 of the Act as is done in this case.

2. On the facts and circumstances of the case that the decision of Ld. CIT(A)-2 is merely based on the fact that order to charge interest is to contain a specific direction giving reference to the section under which interest is to be charged and where such an order is silent on whether interest is leviable, the notice of demand u/s 156 cannot go beyond the order & demand interest.

3. Appellant craves leave to amend or add any or more grounds of appeal”

3. At the outset, the Ld. DR submitted that the assessee was required to pay interest u/s 234A of the Act which is a statutory provision and which the assessee had not paid and therefore Assessing Officer vide rectification order u/s 154 passed an order to pay interest u/s 234A of the Act. It was submitted that Ld. CIT(A) has wrongly deleted the demand of interest by holding that the said omission was not rectifiable u/s 154 of the Act. It was argued that charging of interest is a statutory provision and omission of applying statutory provision is a rectifiable mistake u/s 154 of the Act and reliance was placed on the order of Hon’ble Punjab & Haryana High Court in the case of CIT Vs. Steel Strips Ltd. 200 Taxman 0368.

4. The Ld. AR on the other hand argued that in the original assessment order passed by Assessing Officer, there was no specific direction of Assessing Officer to charge interest u/s 234A of the Act and Hon’ble Supreme Court of India in the case of CIT Vs. Ranchi Club Ltd. has held that in the absence of any specific mention of charging of interest in the assessment order u/s 234A and 234B no interest would be recovered from the assessee merely by way of a demand notice. It was further submitted that Hon’ble Delhi High Court in the case of CIT Vs. Kishan Lal (HUF) has again held that in the absence of no direction in the assessment order for charge of interest u/s 234A and 234B, no interest can be recovered. It was submitted that the case law relied on by
Ld. DR is on different facts as in that case, the Hon’ble Punjab & Haryana High Court had held that omission to take into account a statutory provision was rectifiable u/s 154 of the Act whereas in the present case, the issue is as to whether non charging of interest can be rectified which was not in the original assessment order.

5. We have heard the rival parties and have gone though the material placed on record. We find that assessee filed a return of income declaring a loss of Rs. 2,84,909/- The return of income was filed on 31.03.2010 which was required to be filed on 30.09.2009. The Assessing Officer vide assessment order dated 23.12.2012 completed the assessment after making certain additions and in the body of assessment order charged interest u/s 234B. However, he did not make any direction to charge any interest u/s 234A of the Act later on he passed an order u/s 154 on 10.05.2013 and created an additional demand of Rs.2,14,9,438/- being interest for six months which the assessee was liable to be charged u/s 234A of the Act. The Ld. CIT(A) has deleted the demand for interest by following the decision of Hon’ble Supreme Court in the case of CIT Vs. Ranchi Club Ltd. in 247 ITR 0209. The Hon’ble Supreme Court order in the case of Ranchi Club Ltd. has dismissed the appeal of revenue against the Patna High Court.

The conclusion of Hon’ble Supreme Court in the case of CIT Vs. Ranchi Club Ltd. is that in the absence of any specific mention of the Assessing Officer in the assessment order for charging of interest u/s 234A and 234B, no interest would be recovered from the assessee merely by way of a demand notice. We further find that Hon’ble Delhi High Court in the case of CIT Vs. Kishan Lal (HUF) has again followed the order of Hon’ble Supreme Court and has held that in the absence of any direction in the assessment order for charging interest u/s 234A and 234B interest cannot be recovered. For the sake of completeness, the findings of the Ld. CIT(A) are reproduced below:

“I have considered the rectification order and the written submissions of the appellant. The copy of the assessment order u/s 143(3) of the Act dated 23-12-2011 in the case of the appellant was perused. It is revealed that no order was given by the AO to charge interest u/s 234A in the body of the assessment order, The AO found subsequently that interest u/s 234A for late filing the return was not charged and that the assessee was liable to be charged interest u/s 234A for 6 months. Considering the same to be a mistake apparent from record, the AO rectified the assessment order and charged interest at Rs 21,49,438/- u/s 154 of the Act vide order dated 10-05-2013.

The decision of Honorable Supreme Court in the case of CIT vs Ranchi Club reported in 247 ITR 209 (SC) is squarely applicable in the present case of the appellant. The Honorable Delhi High Court and Rajasthan High Court have followed the decision of Hon’ble Supreme Court in the case of Ranchi Club Ltd. (2001) 247 ITR 209 in the following cases even after the judgment in the case of Anjuman M. H. Ghaswala (2001) 252 ITR 1 (SC).

(i) CIT vs Insilco Ltd (2003) 261 ITR 220 (Del)

(ii) CIT vs Inchcape India (P) Ltd (2003) 179 ITR 212 (Del)

(iii) CIT vs Autolite (India) Pvt. Ltd. (2002) 256 ITR 303 (Raj)

(iv) CIT vs Kishan Lai, HUF (2003) 133 Taxman 102 (Del)

In the above cases it was held that the order to charge interest is to contain a specific direction giving reference to the section under which interest is to be charged and where such an order is silent on whether the interest is leviable, the notice of demand u/s 156 cannot go beyond the order and demand interest.

Therefore there was no mistake apparent from record in the assessment order u/s 143(3) dated 23-12-2011, as no order was given by the AO therein to charge interest u/ s 234A of the Act. Therefore following the decision of Honorable Supreme Court in case of Ranchi Club ltd(Supra), and decisions of Honorable Delhi 85 Rajasthan High Court as above the interest charged u/s 234A of the Act at Rs 21,49,438/- vide order u/s 154 of the Act dated 10-05-2013 is thereby deleted.”

The Hon’ble Court has held that if there is no direction in the original assessment order, no rectification can be made as there is no mistake apparent from record. The case law relied on by Ld. DR is on a different aspect where the Hon’ble Court has said that omission of application of statutory provision is a mistake rectifiable u/s 154 of the Act whereas in the present case the issue is as to whether interest not charged in the original assessment can be rectified or not and the case law of Hon’ble Supreme Court and other case laws are directly on the issue.

Therefore we find no infirmity in the above order of CIT(A).

6. In view of the above, the appeal filed by revenue is dismissed.

Order pronounced in the open court on 12.10.2017

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2 Comments

  1. S Ramasswamy says:

    In a particular assessment order, the AO has directed the department to charge interest u/s 234. Can the Department charge interest u/s 234A, 234B, etc. on the basis of the said direction in the assessment order.

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