Income Tax Appellate Tribunal - Delhi
Chandra Prabha,, Faridabad vs Assessee
IN THE INCOME TAX APPELLATE TRIBUNAL [ DELHI BENCH "B" DELHI ] BEFORE SHRI R. P. TOLANI, JM AND SHRI K. D. RANJAN, AM I. T. Appeal No. 3227 (Del) of 2010.
Assessment year : 2007-08.
Asstt. Commissioner of Income-tax, Shri Bishan Lal [HUF] C i r c l e : 1, F A R I D A B A D. Vs. H.No. 713, Sector: 16-A, FARIDABAD. P A N / G I R No. AAC HB 4931 M. AND C. O. No. 296 (Del) of 2010. [ in I. T. Appeal No. 3227 (Del) of 2010 ]. Assessment year : 2007-08. Shri Bishan Lal [HUF] Asstt. Commissioner of Income-tax, H.No. 92, Sector: 16-A, FARIDABAD. Vs. C i r c l e : 1, F A R I D A B A D. P A N / G I R No. AAC HB 4931 M. AND I. T. Appeal No. 3229 (Del) of 2010. Assessment year : 2007-08. Asstt. Commissioner of Income-tax, Smt. Chandra Prabha, C i r c l e : 1, F A R I D A B A D. Vs. H.No. 92, Sector: 16-A, FARIDABAD. P A N / G I R No. AAT PP 6909 L. AND C. O. No. 297 (Del) of 2010. [ in I. T. Appeal No. 3229 (Del) of 2010 ]. Assessment year : 2007-08. Smt. Chandra Prabha, Asstt. Commissioner of Income-tax, H.No. 92, Sector: 16-A, FARIDABAD. Vs. C i r c l e : 1, F A R I D A B A D. 2 I. T. Appeal Nos. 3227 & 3229 (Del) of 2010 A N D C. O. Nos. 296 & 297 (Del) of 2010. P A N / G I R No. AAT PP 6909 L. ( Appellants ) ( Respondents ) Assessee by : Shri M. Shoaib, Adv.; Department by : Shri Rohit Garg, Sr. D. R.; O R D E R. PER B E N C H :
Both these appeals by the Revenue and the Cross Objections by different assessees for assessment year 2007-08 arise out of separate orders of the ld. CIT (Appeals), Faridabad. These were heard together and are being disposed of, for the sake of convenience, by this consolidated order.
2. The common grounds of appeal raised by the Revenue in both the appeals are as follows:-
" 1. On the facts and in the circumstances of the case, the ld. CIT (Appeals) has erred on facts and in law in directing the AO to delete interest u/s. 234-A and to restrict the levy of interest u/s. 234-B charged by the AO even though the charging of interest u/s. 234-A and 234-B is mandatory in nature and is contrary to the decision of the Hon'ble Supreme Court in the case of CIT Vs. Anjum M. H. Ghaswala & Others (2001) 252 ITR 1 (SC) wherein it was held that section 234-A and 234-B are independent provisions of the Act and if conditions for attracting these provisions exist the AO shall have to levy the same as held that the levy of interest u/s. 234-A and 234-B of the Income Tax Act, 1961 is mandatory in nature;
2. Without prejudice to the above, the ld. CIT (Appeals) has erred on law as he had no jurisdiction u/s. 246 of the Income Tax Act, 1961 to entertain and decide an appeal against orders U/Ss. 234-A, 234-B and 234-C; more so, when 3 I. T. Appeal Nos. 3227 & 3229 (Del) of 2010 A N D C. O. Nos. 296 & 297 (Del) of 2010.
the returned income was accepted u/s. 143(3) and there was no grievance against that order and the separate I.T.N.S. 150 was prepared calculate tax and interest and signed by the AO [copy enclosed as Annexure];
3. On the facts and in the circumstances of the case, the ld. CIT (Appeals) has erred in passing a perverse order without mandate in the case where the assessee could have filed a petition u/s. 154 to the AO instead of filing an appeal before the ld. CIT (Appeals), which does not lie. "
3. The common ground of appeal raised by the assessees in both the cross objections is as follows:-
" Because the appeal by the Revenue is not maintainable in view of instructions No. 2 by the C.B.D.T. dated 24-10-2005 as the tax effect is less than Rs.2,00,000/-. "
4. First we take up the appeals filed by the Revenue. The facts of the case stated in brief, in the case of Smt. Chandra Prabha are that the return of income for AY 2007-08 was filed on 29/11/2007 admitting long term capital gain of Rs.8,26,34,540/- including income from other sources and after adjusting loss of business in trading shares of Rs.89,266/-. The assessee had also shown agricultural income of Rs.76,140/-. The returned income filed by the assessee was accepted under section 143(3) of the Act. The AO while computing tax payable charged under section 234A, 234B and 234C of the Act.
5. In the case of Bishan Lal, (HUF), the return of income declaring income of Rs.10,73,99,030/- was accepted. In this case also the assessing officer while computing tax payable on the returned income charged interest under section 234-B and 234-C of the Act.
4I. T. Appeal Nos. 3227 & 3229 (Del) of 2010 A N D C. O. Nos. 296 & 297 (Del) of 2010.
6. Both the assessees being aggrieved by charging of interest under sections 234A/234B/ 234C of the Act filed appeals before the ld. CIT (Appeals) challenging the levy of interest. Smt. Chandra Prabha challenged the levy of interest under sections 234A, 234B and 234C and Bishan Lal( HUF) under section 234B and 234C of the Act.
7. Before the ld. CIT (Appeals) it was submitted by the ld.AR of the assessees that the sale deeds in both the cases were executed on 28th December, 2006. The assessee received 11.11 per cent of the sale consideration during the previous year relevant to assessment year 2007-08 and the balance amount of 88.89 per cent was received through post-dated cheques in the next financial year 2007-08 relevant to assessment year 2008-09. Therefore, sale of agricultural land was not absolute and was subject to realization of post dated cheques received from the purchaser. As per sale deed the right of the assessee subsisted in the agricultural land till all the cheques issued by the buyer were honoured. Details of payments mainly received after the end of the financial year as well as sale deed as requisitioned by the assessing officer were submitted during the course of assessment proceedings. The assessment was completed on returned income itself without mentioning the chargeability of interest under section 234A, 234B and 234C of the Income Tax Act, 1961 in the order passed by the assessing officer under section 143(3) of the Income Tax Act, 1961. However, interest under section 234A/234B/234C was charged in ITNS-150 which is quite against the decided principle of law. The position has been well settled by different courts in this regard. The ld AR of the assessee relied on the decisions of Hon'ble Supreme Court in the case of Ranchi Club Ltd (2001) 247 ITR 209 and the decision of Hon'ble Delhi High Court in the case of CIT v Insilco Ltd, (20030 261 ITR 220 (Del). It was also submitted that the payment of advance tax under section 208 was subject to other provisions of law i.e. provisions of sections 209 and 210. It was also submitted that the law has put a restriction on buyer to deduct tax on sale proceeds unlike in provisions of section 194LA of the Act i.e. payment of compensation on acquisition of certain immovable property. The buyer in that event would have been under legal obligation to deduct tax on the same as and when payments were made and not before. In view of above it was submitted that the interest under 5 I. T. Appeal Nos. 3227 & 3229 (Del) of 2010 A N D C. O. Nos. 296 & 297 (Del) of 2010.
section 234A, 234B and 234C of the I. T. Act, 1961 was not chargeable in respect of the sale consideration, which was received in the next financial year relevant to assessment year 2008-09.
8. The ld. CIT (Appeals) accepted the contention of the assessee by observing that the assessee was not liable to pay Advance tax under section 208 in financial year relevant to assessment year 2007-08 in respect of the amount not received during the relevant assessment year. The ld. CIT (A) further observed that in the case of Smt. Chandra Prabha, the liability to pay interest under section 234C was not warranted in view of the specific provisions of the Act in respect of capital gains. He, therefore, deleted the levy of interest at Rs.1,84,975/- levied under section 234C. Likewise, in the case of Bishan Lal [HUF], for the same reasons, interest charged under section 234C at Rs.8,90,878/- was also deleted. As regards the liability of interest under section 234B the ld. CIT (A) observed that the assessee had received only 11.11 per cent of sale consideration during the previous year relevant to assessment year 2007-08 and the balance 88.89 per cent amount was received in the next financial year. Therefore, the assessee could not be made liable for interest on the entire amount of capital gains. The ld. CIT (A), therefore, held that the liability to pay advance tax was limited to the sale consideration received in the relevant financial year. The ld. CIT (A) took notice of investments of Rs.50,00,000/- in specified bonds to claim deduction / exemption under section 54-EC of the Act in both the cases. The AO was therefore, directed to restrict the levy of interest under section 234-B on account of capital gains worked out after taking sale consideration at the amount received by the assessee during the financial year 2006-07, deducting proportionate index cost of acquisition and allowing exemption under section 54EC of the Act. The ld. CIT (A) deleted the balance of interest charged under section 234B in both the cases. As regards charging of interest under section 234A in the case of Smt. Chandra Prabha, the ld. CIT (A) noted that the assessee had paid due taxes before the due date of filing of the return. Hence, interest under section 234A of the Act was not chargeable.
6I. T. Appeal Nos. 3227 & 3229 (Del) of 2010 A N D C. O. Nos. 296 & 297 (Del) of 2010.
9. Before us, the ld. AR of the assessee in the cross objection strongly objected to the filing of the appeal by the Revenue on the ground that the tax effect in both the cases was less than Rs.2,00,000/-. He placed reliance on the Board Instruction No. 2 of 2005 dated 24/10/2005. On the other hand, the ld. Sr. DR submitted that interest under section 234A/ 234B/234C of the Act is to be charged mandatorily. Therefore, the ld. CIT (A) was not justified entertaining the appeal filed by both the assessees. It has also been submitted that the ld. CIT (Appeals) had no jurisdiction under section 246 of the Income Tax Act, 1961 to entertain and decide the appeal against the orders passed under section 234A, 234B and 234C of the Act. Therefore, the order passed by the ld. CIT (Appeals) deleting the interest levied under section 234A, 234B and 234C is not justified.
10. We have heard both the parties. There is no dispute about the fact that sale deed in both the cases was registered on 28.12.2006. The assessee had also handed over the possession of land during the previous year relevant to assessment year 2007-08. Therefore, for all practical purposes the lands were transferred to buyers during assessment year under consideration. It is also a fact that assessee had received 88.89% of sale consideration in next financial year relevant to assessment year 2008-09. The title to the land has been transferred in the name of buyer the moment the sale deeds were registered. The contention of the assessee that till all the cheques were honoured the right of assessee subsisted in the agricultural lands and hence capital gain did not accrue to assessee is devoid of merits. The sale without payment of full consideration was voidable at the option of seller and the seller could have approached the court either for payment of balance amount or cancellation of sale deed. The assessee had received entire sale proceeds in the next financial year. It is also a fact that the assessee did not approach the court either for enforcing its right for balance payment or for cancellation of sale deed when some of the cheques were dishonoured. However, according to the assessee entire payment was received by the assessee after delay of small time in next financial year. Therefore, the contention of the assessee that right in the agriculture land subsisted till all the cheques were honoured is not correct. The property was transferred the moment the sale deeds were registered and the possession was handed over. Therefore, for the purposes of section 2(47) of the Act transfer was 7 I. T. Appeal Nos. 3227 & 3229 (Del) of 2010 A N D C. O. Nos. 296 & 297 (Del) of 2010.
effected on the date on which the sale deed was registered in both the cases i.e. 28/12/2006. Therefore, the capital gain was liable to be taxed in assessment year 2007-08.
11. The assessee has not disputed that capital gain was not chargeable in assessment year 2007-08 and in fact both the assessees have admitted the capital gain in assessment year 2007-
08. Having accepted capital gain in the year under consideration as per provisions of law it is incorrect on the part of assessee to say that capital gain did not arise in the year of consideration. Hence, the assessee was liable to pay taxes due on capital gains within the period stipulated in the law, failing which provisions of section 234A, 234B and 234C will be pressed in service. There is no dispute about the fact that the assessee had not paid advance tax on the amount of capital gain when the last installment for advance tax was due on 15th March, 2007. No case has been made out by the assessee that capital gains were not liable for advance tax. In fact the entire tax payable should have been paid by 15th of March, 2007. Since the assessee had not made the payment by way of advance tax in the year under consideration, the interest under section 234-C of the Act is leviable. Further since the tax was not paid by way of advance tax, provisions of section 234-B will be applicable and the interest will be chargeable on the amount of capital gains earned by the assessee. As regards interest chargeable under section 234-A in the case of Smt. Chandra Prabha, the return of income was filed on 29th November, 2007 as against the due date of 31st July, 2007. Therefore, interest under section 234-A is also chargeable. Further, Hon'ble Supreme Court in the case of CIT Vs. Anjum M. H. Ghaswala 252 ITR 1 (SC) has held that charging of interest under section 234-A, 234-B and 234-C is mandatory in nature and, therefore, the same has to be charged. In view of decision of Hon'ble Supreme Court in the case of CIT Vs. Anjum M. H. Ghaswala (supra) it is held that the ld. CIT (A) was wrong in holding that interest under section 234-B will be charged to the extent of sale consideration received by the assessee in the year under consideration.
12. Now coming to the contention of the assessee that the assessing officer had not issued specific directions to charge interest under sections 234A/234B/234C of the Act and hence, levy 8 I. T. Appeal Nos. 3227 & 3229 (Del) of 2010 A N D C. O. Nos. 296 & 297 (Del) of 2010.
of interest is against settled judicial pronouncements. We are unable to agree with the contention of the assessee. There is no dispute about the fact that the AO in the body of assessment order has not given specific direction to charge interest under sections 234A/234B/234C of the Act. However he had directed the office to "issue requisite documents". The assessing officer had initialed demand notice u/s 156 and Form No ITNS-150 containing details of computation of tax payable along with interest under sections 234A/234B/234C. Hon'ble Supreme Court in the case of Kalyankumar Ray Vs. CIT 191 ITR 634 (SC) has held that assessment is one integral process involving not only the assessment of the total income, but also the determination of tax. The latter is as crucial as the former. The Income-tax Officer has to determine, by an order in writing, not only the total income but also the net sum which will be payable by the assessee for the assessment year in question and the demand notice has to be issued under section 156 of the Income Tax Act, 1961, in consequence of such an order. The statute, does not, however, require that both the computations i.e. of total income as well as of the sum payable should be done on the same sheet of paper, the sheet that is superscribed assessment order. It does not subscribe any form for the purpose. Once the assessment of the total income is complete with indications of deductions, rebates, relief and adjustments available to the assessee, the calculation of the net tax payable is a process which is mostly arithmetical but generally time consuming. If, therefore, the Income-tax Officer first draws an order assessing the total income and, indicating the adjustments to be made, direct the office to compute the tax payable on that basis and then approves of it, either immediately or sometime later, no fault can be found with the process, though it is only when both the computation sheets are signed or initialed by the Income Tax Officer that the process described under section 143(3) will be complete.
12.1 ITNS-150 is also a form for determination of tax payable and when it is signed or initialed by the Income Tax Officer it is certainly an order in writing by Income Tax Officer determining the tax payable within the meaning of section 143(3). It may be only a tax calculation form for department purposes as it also contains columns and code numbers to facilitate computerization of the particulars contained therein for statistical purposes, but this 9 I. T. Appeal Nos. 3227 & 3229 (Del) of 2010 A N D C. O. Nos. 296 & 297 (Del) of 2010.
does not detract from its being considered as an order in writing determining the tax payable by the assessee. There is no reason why this document, which is also in writing which has received the imprimatur of Income Tax Officer, should not be treated as part of assessment order in the wider sense in which expression has to be understood in the context of 143(3). All that is needed is that there must be something in writing initialed or signed by the Income Tax Officer before the period of limitation prescribed for completion of assessment has expired in which the tax payable is determined. The form usually stands as assessment form need not itself contain the computation of tax as well. Hon'ble Supreme Court, therefore, came to the conclusion that the moment assessing officer signs ITNS-150 and the assessment order, process under section 143(3) is complete.
12.2 In the case before us it is not the case of the assessee that the AO had not signed ITNS-150. Therefore, in view of decision of Hon'ble Supreme Court in the case of Kalyankumar Ray (supra) for the purpose of determination of tax and interest form No. ITNS-150 has to be taken part of the assessment order. Further Hon'ble SC in the case of CIT Vs. Anjum M. H. Ghaswala 252 ITR 1 has held that the charging of interest under section 234-A, 234-B and 234-C is mandatory. Therefore, if the facts of the case are examined in the light of decisions of Hon'ble Supreme Court in the case of Kalyankumar Ray (supra) and Anjum M. H. Ghaswala (supra) it has to be held that interest under section 234A/234-B/234C being mandatory in nature has to be charged. Hon'ble Allahabad High Court in the case of CIT v. Himalaya Cold Storage & Iron Industries [2005] 147 Taxman 90 (All.) has held that a subsequent declaration of law by the Apex Court would no doubt constitute existence of a mistake apparent on record but that declaration of law by the Apex Court should be available at the time when the proceedings for rectification had been initiated. Therefore, after the decision of Hon'ble Supreme court in the case of Anjum M. H. Ghaswala (supra) non charging of interest u/s 234A/B/C will constitute mistake apparent from record and the assessing officer can charge interest u/s 234A/B/C of the Act provided time for rectification of such mistake has not expired. In view of above, in our considered opinion, the ld. CIT (A) was not justified in deleting the interest charged under 10 I. T. Appeal Nos. 3227 & 3229 (Del) of 2010 A N D C. O. Nos. 296 & 297 (Del) of 2010.
section 234A/234-B/234C of the Act on the ground that entire sale consideration was not received by both the assessee. We, therefore, set aside the order of the ld. CIT (Appeals) and restore the order of the assessing officer.
13. Now coming to the ground raised by the Revenue that the ld. CIT (A) had no jurisdiction under section 246 to entertain and decide the appeal against charging of interest under section 234-A, 234-B and 234-C of the Act. We have gone through provisions of section 246A applicable with effect from 1/10/1998. As per list of appealable orders, no appeal against charging of interest under section 234-A, 234-B and 234-C has been authorized. Hon'ble Supreme Court in the case of Central Provinces Manganese Ore Co. Ltd. v. CIT [1986] 160 ITR 961 (SC) has held that the levy of interest is a part of the process of assessment, it is open to an assessee to dispute the levy of interest under section 139(8) or 215 in appeal, provided he limits himself to the ground that he is not liable to the levy at all. In the case before us the assessee has made a legal case that in a case where sale consideration is not received, the interest will be chargeable to in proportionate to the sale consideration received during the year. Since we have held that the entire capital gain is chargeable to tax in the year in which sale deed was registered, the capital gain has accrued in the relevant year and, therefore, interest will be chargeable under section 234A/B/C in assessment year 2007-08 in view of decision of Hon'ble Supreme Court in the case of Anjum M. H. Ghaswala (supra). The assessees himself have admitted capital gains in the year under consideration. They have disputed levy of interest on the ground that entire sale consideration was not received. Therefore, the appeal filed before the ld. CIT (A) denying the payment of interest is maintainable being a legal issue. Therefore, it is held that the ld. CIT (A) had jurisdiction under section 246A to decide the appeal relating to levy of interest.
14. Now coming to cross objections filed by the assessees, the ld. AR of the assessees had relied on instruction No. 2/2005 dated 24th October, 2005 in support of its contention that the tax effect being less than Rs.2,00,000/- the appeal before the Tribunal is not maintainable. We have gone through the Board's Circular No. 2/2005 dated 24th October, 2005. CBDT in para 3 of the 11 I. T. Appeal Nos. 3227 & 3229 (Del) of 2010 A N D C. O. Nos. 296 & 297 (Del) of 2010.
said Circular has decided that in cases involving substantial question of law of importance as well as in cases where same question of law will repeatedly arise either in the case concerned or in similar cases should be separately considered on merits without being hindered by monetary limits. Since in the instant case the Revenue has raised a substantial question of law, the monetary limit for filing of the appeal before the Tribunal will not be applicable. We, therefore, dismiss the cross objections filed by both the assessees.
15. In the result, the appeals filed by the Revenue in both the cases are partly allowed and COs by assessees are dismissed.
The order pronounced in the open court on : 30th August, 2011.
Sd/- Sd/-
[ R. P. TOLANI ] [ K. D. RANJAN ]
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated : 30th August, 2011.
*MEHTA*
" Copy of the order forwarded to : -
1. Appellants.
2. Respondents.
3. CIT,
4. CIT (Appeals),
5. DR, ITAT, NEW DELHI.
True Copy. By Order.
Assistant Registrar, ITAT."
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I. T. Appeal Nos. 3227 & 3229 (Del) of 2010
A N D C. O. Nos. 296 & 297 (Del) of 2010.