Income Tax Appellate Tribunal - Delhi
Dcit,Central Circle -30 , New Delhi vs M/S. Prakash Industries Ltd., Haryana on 2 December, 2022
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'H', NEW DELHI
Before Sh. C. N. Prasad, Judicial Member
Dr. B. R. R. Kumar, Accountant Member
ITA No. 1451/Del/2021 : Asstt. Year : 2006-07
ITA No. 1452/Del/2021 : Asstt. Year : 2008-09
Prakash Industries Ltd., Vs DCIT,
15 Km Stone, Delhi Road, Central Circle-30,
Hissar, Haryana-125044 New Delhi-110055
(APPELLANT) (RESPONDENT)
PAN No. AABCP6765H
ITA No. 1575/Del/2021 : Asstt. Year : 2006-07
ITA No. 1578/Del/2021 : Asstt. Year : 2008-09
DCIT, Vs Prakash Industries Ltd.,
Central Circle-30, 15 Km Stone, Delhi Road,
New Delhi-110055 Hissar, Haryana-125044
(APPELLANT) (RESPONDENT)
PAN No. AABCP6765H
Assessee by : Sh. Ajay Wadhwa, Adv. &
Ms. Ayushi Gupta, CA
Revenue by : Sh. Rajesh Kumar, CIT DR &
Ms. Rajeshwari R., JCIT
Date of Hearing: 14.10.2022 Date of Pronouncement: 02.12.2022
ORDER
Per Dr. B. R. R. Kumar, Accountant Member:
These appeals filed by the assessee and the Revenue are directed against the orders of the ld. CIT(A)-30, New Delhi dated 18.08.2021.
2. In ITA No. 1451/Del/2021, following grounds have been raised by the assessee:
ITA Nos. 1451 & 1452/Del/2021 ITA Nos. 1575 & 1578/Del/2021 Prakash Industries Ltd.
"1. That on the facts and circumstances of the case, the order dated 18.08.2021 passed by the Learned Commissioner of Income-tax (Appeal) (hereinafter referred to as "Ld. CIT (A)") is bad in law and on facts.
2. That the Ld. CIT(A) has erred in sustaining the chargeability of interest under section 234B and 234C of the Income Tax Act, 1961 ("hereinafter referred to as "the Act") amounting to Rs. 1,69,87,900/- and Rs. 36,07,589/- on the amount of tax computed on book profits under section 115JB of the Act.
3. That the ld. CIT (A) as well as Ld. Assessing Officer erred in confirming/ charging interest under section 234B and 234C on the Book profit as calculated for the purpose of MAT provisions without appreciate the law applicable to the impugned assessment year at that time. That appellant was not required to pay any advance tax while computing the Book profit under the MAT provisions and therefore the interest under section 234B and 234C cannot be charged.
3.1 That the Ld. CIT (A) as well as Ld.A.0 have failed to appreciate the law applicable to the impugned assessment year that appellant was not required to pay any advance tax while computing the book profits under the MAT provisions and therefore the interest under section 234B and 234C cannot be charged.
4. The Ld. CIT(A) as well as the Ld. AO have failed to appreciate that the judgement of Hon'ble Supreme Court in Rolta India Ltd. (330 ITR 470) came in 2011 only and before that the judgement of Hon'ble Karnataka High Court in the case of Kwality Biscuits Ltd. (243 ITR 519) which was affirmed by the Supreme Court was holding the field according to which the assessee was not required to pay advance tax on book profits.
5. Without prejudice to the aforesaid, the order dated 23.11.2020 passed by the Id. AO under section 2 ITA Nos. 1451 & 1452/Del/2021 ITA Nos. 1575 & 1578/Del/2021 Prakash Industries Ltd.
154/254/143(3) and confirmed by the Id. CIT(A) charging interest under section 234B and 234C is barred by limitation."
3. In ITA No. 1452/Del/2021, following grounds have been raised by the assessee:
"1. That on the facts and circumstances of the case, the order dated 18.08.2021 passed by the Learned Commissioner of Income-tax (Appeal) (hereinafter referred to as "Ld. CIT (A)") is bad in law and on facts.
2. That the ld. CIT (A) as well as Ld. Assessing Officer erred in confirming/ charging interest under section 234B and 234C on the Book profit as calculated for the purpose of MAT provisions without appreciate the law applicable to the impugned assessment year at that time. That appellant was not required to pay any advance tax while computing the Book profit under the MAT provisions and therefore the interest under section 234B and 234C cannot be charged.
3. The order passed by the ld. Assessing Officer ("hereinafter referred to as "Id. AO") charging interest under section 234B and 234C of the Income Tax Act, 1961 ("hereinafter referred to as "the Act") amounting to Rs. 7,42,01,704/- is bad in law and on facts.
4. That the Ld. CIT(A) has erred in sustaining the chargeability of interest amounting to Rs. 1,11,06,607/- under section 234C of the Income Tax Act, 1961 ("hereinafter referred to as "the Act") on the amount of tax computed on book profits under section 115JB of the Act.
5. That the ld. CIT (A) as well as ld. AO have failed to appreciate that the interest under section 234C cannot be charged for the first time through a rectification of an appeal effect order and that too in respect of an assessment made under 153A.3
ITA Nos. 1451 & 1452/Del/2021 ITA Nos. 1575 & 1578/Del/2021 Prakash Industries Ltd.
6. That the ld. CIT (A) as well as Id. AO have failed to appreciate the law applicable to the impugned assessment year that appellant was not required to pay any advance tax while computing the book profits under the MAT provisions and therefore the interest under section 234B and 234C cannot be charged.
6.1 The Ld. CIT(A) as well as the Ld. AO have failed to appreciate that the judgement of Hon'ble Supreme Court in Rolta India Ltd. (330 ITR 470) came in 2011 only and before that the judgement of Hon'ble Karnataka High Court in the case of Kwality Biscuits Ltd. (243 ITR 519) which was affirmed by the Supreme Court was holding the field according to which the assessee was not required to pay advance tax on book profits.
7. Without prejudice to the above, the Ld. AO has erred in referring to the intimation issued under section 143(1) of the Act which is in respect of the original return of income filed by the assessee in- spite of the fact that the assessee filed a revised return in February, 2010 which substituted the original return and against such revised return no intimation was issued in which interest was charged.
8. Without prejudice to the above the calculation of interest under section 234B & 234C made by learned A.O is grossly incorrect.
9. The order passed by Ld. CIT(A) as well as the Ld. A.O are not in accordance with the principles of natural justice."
4. In ITA No. 1575/Del/2021, following grounds have been raised by the Revenue:
"1. The ld. CIT(A) has erred in law and on facts of the case in directing the Department to compute the interest u/s 234B from April 2006 to the 31.03.2008 i.e. till payment of self-assessment tax not a regular assessment i.e. 31.12.2008.4
ITA Nos. 1451 & 1452/Del/2021 ITA Nos. 1575 & 1578/Del/2021 Prakash Industries Ltd.
2. The ld. CIT(A) has erred in law and on facts of the case and ignored the provisions continued in the (2) of Section 234B r.w.s. 140A and the explanation thereon which justify the action of the AO."
5. In ITA No. 1578/Del/2021, following grounds have been raised by the Revenue:
"1 The Ld. CIT(A) has erred in law and on facts of the case in deleting the interest of Rs.6,30,94,800/- charged on the assessee u/s 234B of the IT Act.
2. The Ld CIT(A) has erred in law and on facts of the case in considering the income of the assessee u/s 115JB of the IT Act as Rs. 185,11,16,416/- instead of 198,74,47,666/- despite the fact that the assessee in its original return and revised return filed on dated 30.09.2008 and 26.02.2010 respectively declared its income u/s 115JB as Rs. 198,74,47,666/- . The assessee in pursuance to the notice u/s 153A of the IT Act again filed return of income on 17.11.2014 declaring income Nil under normal provision and income u/s 115JB at Rs. 185,11,16,416/-. The AO in order u/s 153 A dated 29.03.2016 assessed income of the assessee at Rs. 153,18,19,400/- after making addition of Rs. 24,25,43,674/-. Since the tax under normal provision was higher than that of the income u/s 115JB, the income of the assessee under the section 115JB was not discussed in the main body of the order u/s 153 A. Hence, the contention of the Ld CIT(A) vide para 9.15 that in the case the assessments 153A and 143(3) have been finalized assessing the income of the appellant u/s 115JB, is factually incorrect. After tha t the AO passed order u/s 154/153A dated 16.01.2017 and given credit to the b/f losses of Rs.
128,92,75,729/-. Consequently, the income of the assessee was reduced to Rs. 24,25,43,674/-. Since the tax under the normal provision was less than that of the tax u/s 115JB, the AO computed the tax u/s 115JB. At the time of computation of tax, the AO had taken income u/s 115JB of the Act as Rs.5
ITA Nos. 1451 & 1452/Del/2021 ITA Nos. 1575 & 1578/Del/2021 Prakash Industries Ltd.
185,11,16,416/- instead of Rs. 198,74,47,666/- declared by the assessee in original ITR/revised ITR. The AO had not discussed the said changes of income u/s 115JB in the main body of the order. Later on when the error came to the notice order u/s 154 of the IT Act was passed on 05.01.2021, rectifying the income of the assessee u/s 115JB of the Act as Rs. 198,74,47,666/-.
3. The Ld. CIT(A) has erred in law stating the facts that during the assessment proceeding u/s 153 A and during the appeal effect, the AO could have only operated under clause 3 and 4 of section 234B and charge interest only in respect of difference between the income assessed u/s 153 A and 143(3). Stating so the Ld. CIT(A) has ignored the fact that demands raised in subsequent proceeding under IT Act get merged with the demand raised to the current proceeding. Hence the interest charged on the assessee u/s 234B(1) of the IT Act, which was computed u/s 154 of the Act vide order date d 05.01.2021 would also be a part of the demand raised under this Section. Here it important to note that the assessee had deliberately not computed interest u/s 234B(1) and paid it, while paying the Self Assessment Tax as per the scheduled given below:
Sl.No. Date Amount
1 11.12.2008 10197000
2 29.01.2009 30251100
3 27.02.2009 20394000
4 31.3.2009 110127600
5 04.07.2009 5665000
6 31.08.2009 19317220
7 31.08.2009 6496734
8 31.08.2009 17484161
Total 219932815
The assessee paid entire tax in form of Self Assessment Tax after 01.04.2008 which was supposed to pay within the FY under consideration as advance tax.6
ITA Nos. 1451 & 1452/Del/2021 ITA Nos. 1575 & 1578/Del/2021 Prakash Industries Ltd.
4. While deleting the interest charged u/s 234B of the Act the Ld. CIT(A) ignored the fact that the assessee did not pay any interest u/s 234B and 234C of the IT Act, which was the statutory obligation of the assessee and was supposed to be paid during the financial year under consideration or at the time of filing the return of income or after processing of the case u/s 143(1) of the Act. The assessee deliberately did not discharge this statutory obligation and did not pay the interest even on later dates.
5. The Ld. CIT(A) has erred in law and on the facts stating the action of the AO of passing order u/s 154 beyond the jurisdiction despite the fact that the AO had passed order u/s 154 of the Act on the issue of interest u/s 234B and rectified the errors in past orders for which the provisions of section 154 of the IT Act permits the AO to take remedial action. The action of the AO for passing order u/s 154 of the IT Act is correct in all parameters of the Act."
6. The assessee company is engaged in the business of manufacturing of sponge iron, steel, power generation etc.
7. On 06.11.2020, the Assessing Officer has issued a notice for initiating the rectification proceedings u/s 154 of the Income Tax Act, 1961 to rectify the computation of interest charged u/s 234B and 234C of the Act calculated while passing the order u/s 143 sub section (3) of the Act dated 31.12.2008 by referring to the order passed on 26.12.2018 u/s 254 r.w.s 143 sub section (3) of the Act. The assessee vide its reply dated 17.11.2020 has requested the AO to drop the proceedings as the proceedings initiated were barred by limitation and also the assessee is not liable to pay interest u/s 234B and 234C while computing the tax under MAT provisions. The AO vide order dated 23.11.2020 has passed the rectification order u/s 154 of the Act rectified 7 ITA Nos. 1451 & 1452/Del/2021 ITA Nos. 1575 & 1578/Del/2021 Prakash Industries Ltd.
the order passed on 31.12.2008 and charged interest u/s 234B and 234C of the Act amounting to Rs. 56,32,400.
8. Since, the issue involved is similar there being dealt together in this order.
Assessment Year 2008-09: (Assessee Appeal)
9. The original return of income was filed on 30.09.2008 which was revised on 26.02.2010 in both the returns tax has been paid on book profits of Rs. 198,74,47,666/- computed under section 115JB of the Income Tax Act, 1961.
10. The assessment under section 143(3) of the Act taking cognizance of the revised return was made on 11.05.2010. Since the tax on book profits paid by the assessee on returned income was higher than the tax on assessed income computed under normal provisions of the Act, income was assessed on returned book profits under section 115 JB of the Act and no interest under section 234B/234C of the Act was charged in the computation form attached along with the demand notice issued under section 156 of the Act. A search under section 132(1) of the Act was conducted on 30.10.2012, consequent to which the return of income under section 153A was filed by the assessee on 17.11.2014. Assessment under section 153A of the Act, consequent to search, was made on 29.03.2016 wherein yet again additions were made to the total income computed under normal provisions of the Act and no interest under section 234C was charged in the computation or demanded from the assessee.
8ITA Nos. 1451 & 1452/Del/2021 ITA Nos. 1575 & 1578/Del/2021 Prakash Industries Ltd.
11. Since, the tax on book profits paid by the assessee on returned income was higher than the tax on income assessed under section 153A under normal provisions of the Act, a rectification order was passed on 16.01.2017 in respect of the computation made vide order under section 153A of the Act dated 29.03.2016. In the said rectification, the income was computed as per the book profits and yet again no interest under section 234B/234C was charged.
12. An appeal had been filed against the order dated 29.03.2016 passed under section 153A of the Act, in respect of all the additions made under the normal provisions of the Act on account of share capital, brokerage, salary paid in cash, unaccounted investments in purchases and scrap.
13. The Id. CIT (A) passed his order dated 31.03.2017 deleting additions and granting part relief to the assessee.
14. On 06.07.2017, the Assessing Officer gave effect to the order of the Id. CIT (A) wherein he gave relief in respect of the additions deleted by the CIT (A) and re-computed the income under the normal provisions of the Act, though the tax on returned book profits was higher than the normal income, and did not charge any interest under section 234B/234C of the Act. However, vide order dated 05.01.2021, which is the impugned order, the Assessing Officer rectified the appeal effect order dated 06.07.2017 under section 154 of the Act wherein he computed the income at book profits and charged interest under section 234C for the first time.
9ITA Nos. 1451 & 1452/Del/2021 ITA Nos. 1575 & 1578/Del/2021 Prakash Industries Ltd.
15. Against the rectification order dated 05.01.2021, the assessee filed an appeal before the Id. CIT (A). The Id. CIT (A) confirmed the action of Assessing Officer of charging interest under section 234C of the Act stating, • that interest chargeable under section 234C is static in nature and does not vary with income and, therefore, can be charged at any stage of the proceedings.
• relying on the judgment in the case of the Anjum M.H. Ghaswala (2001] (252 ITR 1] (SC) wherein it was held that the charge of interest under section 234A, 234B and 234C is mandatory in nature and there is no power of waiver with the Settlement Commission.
• dismissing the assessee's claim that the decision in the case of Rolta India Ltd. (330 ITR 470) wherein the interest held to be chargeable even on income computed under section 115 JB of the Act, cannot be applied retrospectively as at the time of payment of advance tax the judgement of Hon'ble Kerala High Court in the case of Kwality Biscuits Limited (243 ITR 519) affirmed by the Hon'ble Supreme Court in 284 ITR 434 was prevailing.
16. Against the impugned order of Assessing Officer charging interest under section 234C of the Act and the order of the Id. CIT(A) sustaining such rectification, the assessee filed appeal before us.
17. With regard to the arguments about charging of Section 234C, the revenue has relied on the case of Anium M.H. 10 ITA Nos. 1451 & 1452/Del/2021 ITA Nos. 1575 & 1578/Del/2021 Prakash Industries Ltd.
Ghaswala 252 ITR 1 (SC) wherein it was held that the charge of interest under section 234B and 234C is mandatory in nature.
18. Rebutting the argument of the revenue, the ld. AR Shri. Ajay argued that a decision is to be read vis-a-vis the facts of the case, and the ratio of the decision cannot be applied without considering its facts and the basis. It was argued the issue was whether the Settlement Commission has the power to reduce or waive interest under section 234A, 234B and 234C of the Act since the Settlement Commission held inter-alia that settlement essentially is an interplay of compromise and settlement and the Settlement Commission has powers which are coterminous that of the CBDT and in order to give purposive interpretation, they have the power to waive interest in suitable cases. The ld. AR argued that the Hon'ble Supreme Court held that there is no such power vested with the Settlement Commission since sub section 4 of section 234A and 234B specifically states that charge of interest is to be increased or decreased consequent to the order passed by the Settlement Commission and further held that the section says that interest shall be charged and "shall" has to be interpreted to mean "must" and not "may".
19. The ld. AR further argued that the involved in rectification was not related to appeal filed by the assessee before the Id. CIT(A) or decision/findings given by him in his order. The impugned rectification order seeking to rectify the issue which was out of context and purview of the appellate order in the appeal effect order is not permissible. It was argued that the additions under challenge before the ld. CIT(A) were in respect of share capital, brokerage, salary paid in cash, unaccounted 11 ITA Nos. 1451 & 1452/Del/2021 ITA Nos. 1575 & 1578/Del/2021 Prakash Industries Ltd.
investments in purchases and scrap. Hence, levy of interest under section 234B and 234C was never ever the question before the Id. CIT (A). Hence, the Assessing Officer could not rectify the order giving appeal effect to create a fresh demand under section 234C, particularly, wherein limited scope was to give effect to the order of the Id. CIT (A) and nothing more and the issue of interest was never subject matter of appeal or direction by the ld. CIT(A). It was argued by the ld. AR that as per the provisions of section 154(1A) only that part of the assessment order cannot be rectified which has been considered and decided in appeal. If the addition/any levy made in the assessment order was not appealed before the appellate authorities, it continues to have independent existence.
20. It was argued by the ld. AR that if at all, mistake was crept in the original notice of demand dated 29.03.2016 issued under section 156 of the Act along with the computation of tax/ interest in the Form of ITNS 150 as it was the part of order passed under section 153A of the Act as per the decision of Hon'ble Supreme Court in the case of Kalyankumar Ray v. CIT (1991) 191 ITR 634, the Assessing Officer, if at all, could have rectified such notice of demand and not the order giving effect to the order of the Id. CIT (A).
21. The ld. AR relied on the judgment of Hon'ble High Court of Bombay in the case of CIT vs. Sakseria Cotton Mills Ltd. (2 Taxman 152) for the proposition that the ITO cannot go beyond the directions of the AAC. The Hon'ble Court held that only that part of the order of the ITO is, therefore, affected by the order of the AAC in respect of which the AAC has exercised his 12 ITA Nos. 1451 & 1452/Del/2021 ITA Nos. 1575 & 1578/Del/2021 Prakash Industries Ltd.
appellate jurisdiction which may consist of confirming, reducing, enhancing or annulling the assessment. If the AAC has not been called upon or has not actually dealt with any part of the assessment order made by the ITO, there is no question of that part of the order merging or being superseded by the order of the AAC.
22. With regard to the limitation of the rectification, the ld. AR relied on the judgment of Hon'ble High Court of Calcutta in the case of CIT vs. Shaw Wallace & Co. Ltd. (73 Taxman 469) wherein it was held that so long as the original order of assessment remains unaffected and does not merge with the appellate order, the limitation for rectification will run from the date of original order and not from the date when the ITO has given effect to the order of the appellate authority. The short question for determination was whether the mistake, if any, occurred in the original order dated 30.05.1973 or in the order dated 18.07.1975 which was passed by the ITO in giving effect to the order of the appellate authority. If the mistake was in the original order, then the order of rectification was on the face of it barred by limitation. If, however, the mistake was in the subsequent order, that is to say, order giving effect to the appellate order, in that event it was not barred by limitation. The Hon'ble further elaborated that if the mistake rectified under section 154, had occurred in the original assessment order which continued in the order passed for giving effect to the appellate orders. As that portion of the order in which the mistake occurred was not carried in appeal, the question of its merger with the appellate order did not arise. In view of this, 13 ITA Nos. 1451 & 1452/Del/2021 ITA Nos. 1575 & 1578/Del/2021 Prakash Industries Ltd.
the period of limitation for passing order under section 154 would be reckoned from the date of passing the original order. Similar view has been taken by the Hon'ble High Court of Calcutta in the case of ITO vs. Ryam Sugar Co. Ltd. (109 ITR
819)and also by the the Co-ordinate Bench of ITAT Jodhpur in the case of A.K. Modi vs. DCIT (4 SOT 473)
23. The ld. CIT DR Sh. Rajesh Kumar argued at length and submitted his arguments in writing which are as under:
"In this case, the Assessing Office r passe d an order u/s 154/250/153A dated 05.01.2021 rectifying his e arlier order u/s 250/153A dated 06.07.2017, wherein the AO has give n incorre ct appe al e ffect and this order was passed in consequence to rectification order u/s 154/153A dated 16.01.2017. Vide rectification order, Assessing Officer has charged the correct tax and the statutory/mandato ry interest u/s 234B/234C payable by the assessee, which has been duly charged in the body o f re gular assessment order passed u/s 153A r.w.s 143( 3) of I.T. Act dated 29.03.2016.
Against the abo ve stated rectification order, the assessee pre ferred an appeal be fore the CIT(A) and the Ld. CIT(A) vide order dated 18.08.2021 has de cided as unde r:-
(1) Upheld the interest charge d u/s 234C of the IT Act, of Rs.1,11,06,607/-.
(2) Delete d the intere st charged u/s 234B of Rs.6,30,94,800/-. (3) Ld. CIT(A) has conside red the income under sectio n 115JB of Rs.1,85,11,16,416/- instead o f Rs. 1,98,74,47,666/-.
The department has file d an appeal in ITAT (ITA 1578/ DEL/ 2021) against accepting of income of Rs.1,98,74,47,666/- instead of 14 ITA Nos. 1451 & 1452/Del/2021 ITA Nos. 1575 & 1578/Del/2021 Prakash Industries Ltd.
Rs.1,85,11,16,416/- u/s 115JB of the IT Act. Further, de partment has also file d an appe al against deletion o f interest u/s 234B of the IT Act which is m andatory as per provision o f income tax Act,1961 and duly charged in the assessment orders.
The assessee file d an appeal in IT AT (ITA 1451/ DEL/2021) against confirming o f inte rest o f Rs.1,11,06,607/- u/s 234C o f the IT Act by the CIT (A).
The case was argued in detail before the Ho n'ble H-Bench on 14.09.2022. Further the case is again listed for clarificatio n on 14.10.2022 and for assistance of the Hon'ble Bench, the fo llo wing writte n submissions are filed.
Submissions o n charging of inte rest u/s 234B & 234C o f the IT Act.
In its defe nce, the assessee has take n the following main grounds.
(1) The department has not charged the interest u/s 234B and 234C earlier i.e. u/s 143(l) and re gular assessment u/s 143( 3) and u/s 153A and the department cannot charge inte rest u/s 234B and 234C for the first time thro ugh rectificatio n of an appe al e ffect order.
(2) As per the law applicable at the time of impugne d assessment year i.e. AY 2008-09(FY 2007-08), inte rest u/s 234B and 234C was not applicable on the companies paying taxes unde r MAT on book profits.
(3) The assessee is covered by the decision o f Hon' ble K arnataka High Court in the case of Kwality Biscuits Ltd. 243 ITR 519 (30.11.1999) and the decisio n of M/s Rolta India Ltd. of S upreme Court in 230 ITR 470 came in 2011 only, acco rdingly the assessee was not cove red by the decision.
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(4) Furthe r, the asse ssee has also mentione d that it is covered by the judgment o f Bombay High Court in the case of M/s Mangalo re Refine ry and Pe tro chemicals Ltd. ITA No.875 and 2017.
All the contentio ns raise d by the assessee have been duly re butted during the course of the he aring and some of the contention raised by the assessee are incorrect and misleading accordingly the following submissions are made to make the issue more clear and for the assistance o f the Hon' ble Bench.
ISSUE No. 1) The department has not charged the interest u/s 234B and 234C earlie r i.e . u/s 143( l)and regular assessme nt u/s 143( 3) and u/s 153A and the de partment canno t charge interest u/s 234B and 234C for the first time thro ugh rectificatio n of an appeal e ffect order.
At the o utse t, it is submitted that the conte ntion of the assessee is incorrect and misleading as mentio ned in the fo llo wing points.
(1) The assessee has file d its original return of income on 26.08.2009 and the same was processed u/s 143( 1) of the IT Act. The order u/s 143(1) is place d at page No .39 of the paper book where in it is clearly mentione d the inte rest u/s 234B of Rs.3,79,86,092/- and intere st of Rs.1,11,84,102/- u/s 234C of the IT Act. No t only this, the assesse e moved an application dated 04.09.2009 for re ctification and re ctification order u/s 154 date d 04.11.2009 was passed, copy of which is placed at Page No. 40 o f Pape r Book file d by assessee whe rein again interest u/s 234B of Rs. 3,27,36,372/- & interest u/s 234C of Rs. 1,12,84,102/- was charged.
(2) The order u/s 143(3) o f the IT Act, was passe d on 11.05.2010 (copy o f which is place d at page No .80 to 87 of pape r book) and in the last page of the assessment o rder i.e. page No .85 o f the Paper 16 ITA Nos. 1451 & 1452/Del/2021 ITA Nos. 1575 & 1578/Del/2021 Prakash Industries Ltd.
Book, the AO has clearly mentione d "charge intere st as per law". Thus, the assesse e contention is wrong as interest was duly charged in o rder u/s 143( 3). Though, inadvertently it appears that interest u/s 234B and 234C was not mentio ned in the calculation shee t.
(3) Assessment orde r u/s 153A read with section 143(3) was passed o n 29.03.2016 ( page No.127 to 131) of the pape r book and again on the last page of the order i.e . page No .128 o f Paper Book it is clearly mentioned by the A O to charge inte rest u/ s 234A/B/ C as per provisions o f the I.T. Act in the body o f the assessment order to charged interest u/s 234B and 234C as per the pro visions o f the IT Act. No t only this, in the income tax computation form at page no . 129 & 130 of the pape r book, inte rest under sectio n 234B was duly charged and by typographical error sectio n 234C was inadvertently mentione d as 234A. Ho wever, even though the interest was charged in the income tax computation fo rm but it was wro ngly calculated, but it is clear that the interest was duly charge d both in the bo dy of the assessment order as well as IT computation form.
Thus, the assesse e's contentions that interest was charge d for first time in orde r u/s 154 which was the rectification of appeal effect order is clearly incorrect and misle ading because it is clearly evide nt from the abo ve discussio n and documents that interest was charged at each and eve ry stage of assessment procee dings i.e. u/s 143( 1), 143(3) and even after search asse ssment u/s 153A r.w.s 143( 3).
In fact the assessee is wro ngly and incorrectly alle ging the department of charging interest u/s 234B & 234C for the first time in rectification orde r passe d u/s 154/250/ 153A date d 05.01.2021, howeve r it is the assessee who has not contested the charging of inte rest at all thre e stages i.e . u/s 143( 1), in regular assessment u/s 143(3) and 153 r.w.s. 143(3) , when the interest was clearly charged at all three stages in the body o f the assessment order .
17ITA Nos. 1451 & 1452/Del/2021 ITA Nos. 1575 & 1578/Del/2021 Prakash Industries Ltd.
Further, the assessee case is cle arly cove red by decision o f Hon' ble Madhya Pradesh High Court in the case Ramesh Prasad Dhahayat vs. CIT 45 taxmann.com 446 where in the Hon'ble High Court has clearly held that if in the assessment orde r, it is indicated that inte rest is to be paid in acco rdance with law without mentioning any particular provisio n, the be nefit has to be give n to the revenue and as payment of interest is mandato ry accordingly the interest has to be charged/ recovere d. For ready refe rence , the relevant extract of the decision of the Hon'ble High Co urt in para 8 of the o rde r is reproduce d below:
"8. As far as accrued inte rest on the re-pawne d article s are concerne d, the claim has been re jected on the ground that re- pawning was do ne with various m oney lenders, to tal 9 in numbe rs and with regard to one of the money lender Shri J agdish Prasad Sahu, his premises was also raide d and amount recovered from him. Based on the sam e accrued interest for re-pawning with this money lende r has been allo wed and for the remaining amount the explanation has not been accepted on the ground that with regard to re-pawned articles there is nothing to show that the same was re- invested by the Assessee. This has also bee n do ne base d on the material available on reco rd and we see no reason to interfere . As far as imposition of interest under Section 234B and 234C is concerne d, learne d counsel tried to indicate that in the assessment order it is only indicated that inte rest as pe r rules be charged. It is said that in the absence of any specific direction for payment of inte rest, the inte rest cannot be levyed and in suppo rt thereo f, the judgment of Himachal Pradesh High Court was pro posed into service . In the o rder passed by the Assessing Officer on 31.3.94 it is indicated that penalty proposing are indicated separate ly and inte rest be charge d as per rules. T he Himachal Pradesh High Court conside red the question of charging of inte rest in a proceeding held 18 ITA Nos. 1451 & 1452/Del/2021 ITA Nos. 1575 & 1578/Del/2021 Prakash Industries Ltd.
on a re ference made to it and the questio n o f law formulate d for conside ratio n by the Himachal Prade sh High Co urt reads as under:-
"Whether inte rest unde r Sectio n 234B of the Act could be charged in the notice of de mand issued under s. 156 in the absence o f any specific orde r demanding inte rest in the assessment or rectification orders?"
This question has been answe red by the High Co urt in para 17 and it is he ld by the Himachal Pradesh High Court after following certain judgments re nde red by the Uttarakhand and Allahabad High Co urt that payment of interest unde r Section 234A, 234B and 234C is a mandatory, the assessing autho rity while passing the original assessment order or while reassessment or rectification order has to pass o rders o n payment o f intere st. I t is held that even if in the order it is indicated that interest be paid in accordance with law, without specifying any particular provision, the benefit has to be give n to the Re ve nue and since payment of interest is mandato ry, the inte rest can be recove red. It is held that if the Assessment order is silent about payment o f interest and nothing in this re gard is indicated, the Re venue cannot claim inte rest under Sectio n 234A, 234B and 234C. I f the case in hand is e valuated in the backdrop of the afo resaid judgment, it is clear that in the assessment order it is clearly held that interest be charge d as pe r rules. That be ing so, the requirement o f law as laid down in the aforesaid judgment having been made, we find no error."
Thus, in vie w of the above , the assessee's contention being incorrect and wro ng has to be dismissed, especially in view of the abo ve no ted decision o f the Ho n'ble High Court.
Moreover charging of inte rest u/s 234B and 234C of the I.T. Act has alre ady attained finality in the case of the assessee, as the assessee 19 ITA Nos. 1451 & 1452/Del/2021 ITA Nos. 1575 & 1578/Del/2021 Prakash Industries Ltd.
has no t challenge d the charging o f inte rest u/s 234B & 234C o f the I.T. Act before CIT(A) neither when the assessee challenge d the order passed against sectionl43( 3) nor against the appeal filed against the order passed u/s 153A r.w.s. 143(3) o f the I.T. Act ( page no. 135 to 155 o f the Paper Book) .
Further, the assessee also raised the issue that as the appeal effe ct order was modifie d by orde r u/s 154/ 250/ 153A date d 05.01.2021, the same canno t be do ne as the appeal orde r is covered by the Doctrine of Merger. Howe ver eve n this contention is wrong and misleading because the issue of charging o f interest by asse ssee u/s 234B/ 234C was ne ver raise d be fore CIT(A). Accordingly this issue o f charging of interest u/s 234B/ 234C is untouched part of the assessment order which was never subject matter o f appeal. Thus Doctrine o f merger is no t applicable on the issue of charging o f inte rest u/s 234B/234C, which has already attaine d finality at the Assessing o fficer stage only. Re liance is placed o n the decision o f Hon'ble Allahabad High Court in the case of M ehra bro the rs Partne rship v/s CI T orde r dated 11/ 3/15 in writ Tax no. 185 of 2015 ISSUE No . 2 : As per the law applicable at the time o f impugne d assessment o rder, inte rest u/s 234B and 234C was not applicable o n the companies paying taxes under MAT on book pro fits.
This contention o f the assessee is clearly wrong and inco rrect as mentione d in the following paragraphs:
1. The pro visions of section 115JB was intro duce d by F inance Act, 2000 and applicable for the A.Y.2001-02 onwards. The section clearly provides fo r paym ent o f Advance Tax by the companies paying taxes u/s 115JA and 115JB of the I .T. Act.
2. CBDT Circular No . 13/2001 was issued on 9- 11- 2001 regarding the liability fo r payment of advance tax under the new MAT 20 ITA Nos. 1451 & 1452/Del/2021 ITA Nos. 1575 & 1578/Del/2021 Prakash Industries Ltd.
provisio ns of section 115J B of the Act and it is abundantly made clear in the said Circular that the new pro visions of the section 115JB as introduced by Finance Act, 2000 is a self-contained Co de. Sub-section ( 1) lays down the manner in which inco me-tax payable is to be compute d. Sub-section ( 2) provides for computation o f 'book profit' . S ub-sectio n (5) specifies that save as othe rwise provide d in this section, all other provisions of this Act shall apply to eve ry assessee, be ing a company mentioned in that section. In othe r words, e xcept for substitution o f tax payable under the pro vision and the manne r of co mputation o f book profits, all the provisions of the tax including the provision re lating to charge , de finitio ns, reco veries, payment, assessm ent, etc., would apply in re spect of the provisio ns of this section. The scheme of the Income-tax Act also needs to be referred to. Section 4 of the Act charges to tax the income at any rate or rates which may be prescribed by the Finance Act every year and section 207 deals with liability for payment o f advance tax and section 209 deals with its computation base d on the rates in fo rce for the financial year, as are contained in the Finance Act and the first pro viso to se ction 2( 8) o f the Finance Act, 2001 pro vides that the tax payable by way of advance tax in respect of income chargeable under section 115JB as intro duce d by Finance Act, 2000 and consequently the pro visions of sections 234B and 234C for inte rest o n de faults in payment of advance tax and defe rment o f advance tax would also be applicable where facts of the case warrant.
3. Furthe r the no te to Finance Bill 2002 made the issue more clear and pro vided that companies paying taxes under MAT provisio ns are liable to pay advance tax and in case of failure in payment, inte rest u/s 234B & 234C are to be mandatorily paid.
4. The issue was also examined by Hon'ble Supreme Court in the case of JCIT vs. Rolta India Ltd. [330 ITR 470 (2011)] and after 21 ITA Nos. 1451 & 1452/Del/2021 ITA Nos. 1575 & 1578/Del/2021 Prakash Industries Ltd.
examining the pro visions o f 115J and 115JA/115JB cle arly he ld that advance tax was always re quired to be paid by MAT companies and there is no e xclusion of section 115J/ 115JA/ 115JB in the le vy o f inte rest u/s 234B/ 234C of the I .T . A ct. (para 7, 8 & 9 of the Hon' ble Supreme Court o rder) Besides the above , this issue of payment of advance tax has been dealt by seve ral High Co urts and the Supreme Court also and the following pro position is brought out:
(1) Interest u/s 234B/ 234C is mandatory in nature and the le vy of the same is automatic i.e . the m oment, it is prove d that there is default in payment of advance tax, interest u/s 234B and 234C is automatically charged.
(2) This issue of mandato rily charging of interest u/s 234B / 234C has been decide d by the Hon' ble Supreme Court in the case of M/s Bhagat Construction Co. Pvt. Ltd. (2016) 383 ITR 9 and by the Hon'ble Supreme Court in the case of CIT vs. Anjum M.H. Ghaswala (2001) 252 ITR 1.
Thus, from the above it is cle ar that the assessee companies was require d to pay advance tax u/s 208 of IT Act and as the assessee defaulted on the payment of advance tax, it is required to mandatorily pay interest u/s 234B and 234C of the IT A ct.
Witho ut prej udice to the above , the reliance is also placed o n the decision of Hon'ble K arnataka High Co urt in the case of Commissioner o f I ncome Tax vs. Sankala Polymers (P) Ltd. 338 ITR 617 whe rein the Hon'ble High Co urt has decided that when a specific provisio n o f Act has not been applie d while passing an o rder of assessment, it co nstitutes a mistake apparent from the record, the Income Tax authority has the po wer to rectify such mistakes by invoking Section 154 o f the Inco me Tax Act. This decision was 22 ITA Nos. 1451 & 1452/Del/2021 ITA Nos. 1575 & 1578/Del/2021 Prakash Industries Ltd.
rende red with regard to provisions charging interest u/s 234B and u/s 234C of the I ncome Tax Act only in case of com panies paying taxes u/s 115JB o f the I ncome Tax Act, 1961. Thus, the decisio n in this case squarely covers the instant case also . (Para 12 & Para 13 of the decision.) Further, the sim ilar issue was decided by the Hon' ble High Court o f Gujarat in the case of AIMS Oxyge n Ltd. vs. Addl. Co mmissioner of Income Tax in 55 taxmann.com 269 (2015) . I n that case, the Ho n'ble High Co urt held that intere st u/s 234B can be charged when income of assessee is mo dified u/s 154 e ven if no inte rest has been charged at the time of framing of re gular assessment. (Para 5.1 of the Hon'ble High Co urt decision) .
ISSUE No . 3 The assessee is cove red by the de cision of Hon'ble Karnataka High Court in the case of Kwality Biscuits Ltd. 243 ITR 519 (30.11.1999) and the decision of M/s Ro lta India Ltd. of Supreme Court in 230 ITR 470 came in 2011 o nly accordingly the assessee was not covered by the de cision.
The contention o f the assessee that it is co vere d by the decision of Hon'ble High Co urt in the case o f Kwality Biscuits Ltd. 243 ITR 519 (30.11.99) is incorrect, wrong, to tally not j ustifie d and cle arly misleading because of the fo llo wing reasons:
1. The decision o f Kwality Biscuits ltd. was confine d to sectio n 115 J of the I .T Act whe reas the assessee case is co vered by section 115 JB of the Income Tax Act (This fact was also mentioned by Hon'ble SC in Ro lta India ltd. case Para 9) .
2. The decision o f Kwality Biscuits Ltd. was given by Hon'ble Karnataka High Co urt on 30- 11-199, however e ven the provisio ns of the section 115 J B ( which cove rs assessee's case) came with effect from 01.04.2001 by F inance Act 2000. Thus, how come the 23 ITA Nos. 1451 & 1452/Del/2021 ITA Nos. 1575 & 1578/Del/2021 Prakash Industries Ltd.
assessee's case is covered by the decision o f Kwality Biscuits eve n when pro visions o f section 115J B was not a part o f I ncome Tax Act.
3. Section 115JA (4) and section 115JB(5) state that all o ther provisio ns of the I T Act, 1961 shall apply to MAT companies liable to pay A dvance tax and on default, liable to pay inte rest u/s 234B and u/s 234C, similar provisio n was not there in Section 115J of the IT Act.
4. The assessee is based in Haryana and co vered by the decisions of jurisdictional High Court of Punj ab and Haryana. The Hon'ble High Court o f Punj ab and Haryana in the case of CIT Vs. Upper India Stee l Mfg. & Engg. Co . Ltd. ( 2005) 279 IT R 123 decided the ide ntical issue in favour of the de partment. The rele vant extract of the Hon'ble High Court decision is reproduced be low:
18. Section 207 of the Act pro vides that tax shall he payable in advance during the financial year in accordance with the scheme provide d in sectio ns 208 to 219 in respect of the to tal income of the assessee that wo uld be charge able to tax fo r the assessment year immediate ly fo llo wing that financial year. Such income has been described as ''current income". T hus, this sectio n contemplates estimation of current income by the end o f the financial year and o n the basis of such estimation, the assessee is required to pay advance tax. Advance tax is payable on the curre nt income irrespective of whethe r the same is compute d under section 115J or under the othe r provisio ns of the Act. In other words, the e xpre ssion "current income", on which advance tax is payable under the provisio ns of section 207, does not e xclude the income computed under the provisio ns o f section 115J . We, therefo re, find no merit in the contention that the provisio ns of se ctions 234B and 234C of the Act would no t be attracted in cases where a company is assessed on the income computed unde r sectio n 115J. As alre ady observed, the levy 24 ITA Nos. 1451 & 1452/Del/2021 ITA Nos. 1575 & 1578/Del/2021 Prakash Industries Ltd.
is automatic without any notice to the assessee. The Tribunal has cancelled the levy by placing reliance on its earlie r order decided on the basis of the judgment of the Karnataka High Court in the case of Kwality Biscuits Ltd. (supra) . The Karnataka High Court while accepting the claim of the assessee has obse rve d as unde r (at page
526):
"........T he liability of the assessee for payment of tax under section 115J arises if the total income as computed under the provisions of the Act is less than 30 per cent o f its boo k profits. This e xercise for determining the to tal income in acco rdance with the provisions o f the Act and that o f bo ok pro fit can be o nly after the end of the re levant assessment year. It is o nly the deemed income for which the provisio ns of section 115J have bee n inco rporate d. When a deeming fiction is brought unde r the statute it is to be carrie d to its logical conclusion but without cre ating furthe r deeming fiction so as to include o the r pro visions o f the Act which are not specifically made applicable. Since the entire exe rcise of computing the income or that of book pro fit co uld be only at the end of the financial ye ar, the provisio ns of sections 207, 208, 209 or 210 cannot be made applicable, until and unless the accounts are audite d and the balance-sheet is prepared even the assessee may not know whethe r the pro vision o f se ction 115J would be applicable or not. The liability would be afte r the book pro fits are determined in accordance with the Companies Act. The words for the purposes o f this section' in the Explanation to section 115J( 1A) are rele vant and canno t be construed to extend be yond the computation o f liability o f tax........."
19. From the above , it is clear that two facto rs had we ighed with the High Co urt while granting relie f to the assessee. F irstly, that the provisio ns of section 207 are no t applicable to an inco me determined unde r section 115J and; secondly, that a hardship is caused to the assessee because the liability to pay tax on the book pro fits is 25 ITA Nos. 1451 & 1452/Del/2021 ITA Nos. 1575 & 1578/Del/2021 Prakash Industries Ltd.
determined o nly at the end of the financial year. Both the gro unds, according to us, are not tenable . As alre ady observed earlier, provisio ns o f section 207 do not exclude the inco me determine d unde r section 115J from the purview of current income on which advance tax is payable. S imilarly, there is no sco pe for considering hardship o f the assessee as the levy is automatic and does not require any opportunity to be given to the assessee. We, the refo re, dissent from the judgment of the Karnataka High Co urt in the case o f Kwality Biscuits Ltd. (supra) .
Further, the similar issue was again decided by Ho n'ble Punj ab & Haryana High Court in the case of CIT vs. Nahar Spinning Miles Ltd. (2011) 339 ITR 557 and after considering the various decisions of the High Courts and the Ho n'ble Supreme Court, the Hon'ble Court again decided the issue in favo ur of the department.
Lastly, this issue has been decided in clear and abso lute manner by Hon'ble S C in JCI T vs. Ro lta India Ltd. 330 ITR 470 (SC) and leaves no ambiguity as it is decide d that S 115 JB is a self contained code and all companies were liable for payment of advance tax u/s 115JB and in case of de fault, pro visions of section 234B & sectio n 234C imposing inte rest were also applicable. ( Para 7, 8 & 9 of Ho n'ble SC decision) . Also, The Supreme Court has also mentione d that decision of Kwality Biscuits Ltd. was no t even followed by even the Karnataka High Co urt in the case of Jindal Thermal Po wer Co . Ltd vs. DCIT (2006) 154 Taxmann 547 and held that companies paying taxes unde r MAT u/s 115 JB are liable to pay advance tax and in case o f default, also liable fo r inte rest u/s 234B and 234C o f IT Act, 1961.
Also, the assessee 's contentio n that the decisio n of Ho n'ble S upreme Court in the case of Rolta I ndia Ltd. canno t be applied retrospective ly was answere d by the same decision of the Hon' ble Supreme Court, which stated that all companies which were liable for 26 ITA Nos. 1451 & 1452/Del/2021 ITA Nos. 1575 & 1578/Del/2021 Prakash Industries Ltd.
payment of Advance Tax were also liable to pay intere st u/s 234B & 234C on de fault.
The issue of date of application of the laws was also covered by the Hon'ble Supreme Court in the case of CIT vs. Saurashtra Kutch Stock Exchange Ltd. (2008) 305 ITR 227, which clarified abo ut the application of the various laws ( Para 42 of the Ho n'ble Supreme Court Order) .
"42. In our judgment, it is also well-settled that a judicial decision acts retrospectively.
According to Blackstonian theory, it is not the functio n of the Court to pronounce a 'new rule' but to maintain and expound the 'old o ne'. In othe r wo rds, judges do no t make law, the y only discover o r find the correct law. T he law has always been the same. I f a subse quent decision alters the earlie r one, it (the later de cision) does not make new law. I t only disco vers the correct principle of law which has to be applie d re trospectively. To put it differe ntly, e ven where an earlier decision o f the Court ope rated for quite sometimes, the decision rende red late r on would have re trospective e ffect clarifying the legal positio n which was earlie r not co rrectly understood".
Further, the similar issue charging of inte rest u/s 234B/234C by the companies paying taxes under MAT provision u/s 115JB was also decide d by the Ho n'ble ITAT, Ko lkata Bench 'A' in Binani Cement Ltd. vs. DCIT , Ce ntral Circle - XXVIII, Kolkata (2015) 56 taxmann.com 48, which afte r co nside ring the various decisions of Hon'ble Supreme Court and High Co urt decide d the issue in favour o f revenue.
ISSUE NO 4 : The assessee has also mentione d that it is co vered by the judgment o f Bombay High Court in the case of M/s Mangalo re Refine ry and Pe tro chemicals Ltd. ITA No.875 and 2017.
27ITA Nos. 1451 & 1452/Del/2021 ITA Nos. 1575 & 1578/Del/2021 Prakash Industries Ltd.
The assessee is once again trying to mislead the Hon'ble Bench by raising wrong facts. As discussed in detail in issue No. 3, when the assessee is not co vered by the decision of Kwality Biscuits Ltd, than how can it be covered by the decision of Bombay High Court in the case of Mangalo re Refine ry and Petro chemicals Ltd. in I TA No. 875 of 2017 which is given with regards to the judgment of kwality Biscuits Ltd.
Further, as the assessee is based in Haryana and as the jurisdictio nal High Court o f Punjab & Haryana in the case of Upper India Stee l Mfg. & Engg Ltd. ( 2005)279 ITR 123(De cision on 25th September 2004) has clearly dissented with the view taken by Karnataka High Court in the case o f Kwality Biscuits Ltd., the n the assessee canno t claim that it is co ve red by the decisio n of Mangalo re Refine ry & Petrol Chemicals Ltd. by any stre tch o f im agination. Also the assessee case is of A.Y 2008-09 and as the decision of jurisdictio nal High Court o f Punjab & Haryana in the case of Upper India Steel Mfg. & Engg Ltd. ( 2005) 279 ITR 123 is o f 2004 than in FY 2007- 08, the decision o f jurisdictional High Court was available and applicable on the assessee and the assessee was duty bo und to pay advance tax and assessee cannot say that it was gove rne d by the decision o f Ho n'ble Karnataka High Court in the case of Kwality Biscuits Ltd.
Thus all the co ntentio ns of the assessee are wrong and misleading and cle arly rebutted both during the argument stage as well as by the abo ve submission, accordingly the assessee appeal may be allo wed."
24. Similar arguments have been put forth by the Represented by Ms. R. Raja Rajeshwari, Ld.Sr.DR representing for the A.Y.2006-07 in I TA No. 1575/Del/2 021. She argued eloquently and submitted her arguments in writing.
28ITA Nos. 1451 & 1452/Del/2021 ITA Nos. 1575 & 1578/Del/2021 Prakash Industries Ltd.
25. The submission of the ld. DR is as under:
1. Brie f F acts:
1.1. Return of income was e-file d by the assessee co mpany o n 30.11.2006 declaring income at "Nil". T hereafte r, the revise d return at "Nil" Income was filed on 31.03.2008. The assessee declared income of Rs. 86,20,27,361 u/s 115JB of the Income-tax Act, 1961.
The assessee paid self-assessment tax o f Rs.7,14,37,417 at the time of filing o f return and had TDS credit o f Rs. 11,92,185.
1.2. The case was selected under CASS and assessment order u/s 143(3) of the Act was passed on 31.12.2008 after following making additions/ disallowances:
S. No . Particulars Amount 1 Disallo wance o f e xpenditure claimed u/s 43B 1,76,21,571 2 Payment re garded funded interest related to 2,00,00,000 A.Y 1997- 98 allo wed 3 Disallo wance o f payment o f F BT 34,44,878 4 Disallo wance o f payment o f WT 14,345 5 Disallo wance o f prior period expense s 25,65,536 1.3. The assessment was comple te d on 31.12.2008 afte r determining "Nil" Income (afte r setting o ff b/f losses of Rs.79,03,65,216) unde r no rmal pro visions and income of
Rs.86,20,27,361 under special provisions o f the Act. While passing the assessment o rder u/s 143(3) , tax liability was calculate d unde r MAT provisions. As the assessee had not paid any advance tax, inte rest u/s 234B of Rs.1,69,87,900 was charged from 01.04.2006 till date of payment of self- assessment tax i.e . 31.03.2008. No inte rest u/s 234C was charged while passing order u/s 143( 3) of the Act.
29ITA Nos. 1451 & 1452/Del/2021 ITA Nos. 1575 & 1578/Del/2021 Prakash Industries Ltd.
1.4. Assessee pre ferre d an appeal against the order o f the AO. T he CIT(A) by order date d 09.12.2009 allowed the appe al of the assessee. The CIT (A) sustaine d the inte rest liability u/s 234B of the Act. The demand raise d u/s 234B was paid by the assessee and no furthe r appe al be fore ITAT was filed by the assessee.
1.5. Against the Orde r of CIT(A), the De partment filed an appeal before the Hon'ble ITAT. The Hon' ble ITAT affirmed the o rder of CIT(A). In o rder to give e ffect to the ITAT order, o rde r u/s 254/143(3) of the Act was passed by the AO on 26.12.2018 assessing normal income at "N il" ( allo wing se t o ff o f b/ f losses o f Rs.76,77,99,680 and income unde r special pro visions at Rs.86,20,27,361.
1.6. After passing of 254/143(3) order, the AO realize d that the inte rest u/s 234B was charge d fro m 01.04.2006 till the date o f payment of self-assessment tax no t till the date o f completion o f regular assessment as per section 234B ( 2) of the Act r.w.s 140A of the Act. Furthe r, it is also noticed by the AO that the inte rest u/s 234C was no t charged at all.234B and 234C be ing mandatory statuto ry liability, the AO rectifie d the order u/s 254/143(3) dated 26.12.2018 after providing an opportunity o f be ing heard to the assessee. By o rder u/s 154/254/143( 3) date d 23.11.2020, the A O rectifie d the mistake and calculated the interest liability u/s 234B of Rs.1,90,12,711 till the date of regular assessment o rder (i.e .) 31st December,2008 for 33 months. This is led to additional le vy o f inte rest u/s 234B of Rs. 20,24,811 to the A ssessee as against the original inte rest liability dete rmine d in the assessm ent orde r u/s 143(3) of the Act. The AO by the said o rde r date d 23.11.2020, also levie d interest u/ s 234C o f the Act o f Rs.36,07,589.
1.7. Against the above order 154/254/ 143(3) date d 23.11.2020, the assessee pre ferre d an appeal be fore the CIT(A). The learne d CIT(A) 30 ITA Nos. 1451 & 1452/Del/2021 ITA Nos. 1575 & 1578/Del/2021 Prakash Industries Ltd.
by his orde r dated 18.08.2021 he ld that the assessee was liable to pay interest u/s 234B and 234C o n failure to pay advance tax in respect o f tax payable unde r section 115JB by re lying on the decisio n of Hon' ble Supreme Court in the case of M/s Ro lta India Ltd 330 ITR
470.(para no.8- page no . 18) . While deciding so , the learned CIT(A) held that since the returned inco me (MAT income) was accepte d unde r section 143(3) without any variatio n, clause (2) of 234B is squarely applicable and the terminal date fo r charge of inte rest unde r section 234B is the date o f payment of self-assessment tax which is 31.03.2008. (Para no . 9.4, Page No.22). Accordingly, the CIT(A) delete d the additional levy of inte rest u/s 234B of Rs. 20,24,811.
2. Appeals be fore the Hon'ble ITAT by the De partment as well as by the Assessee:
2.1. Against the abo ve refe rred o rde r of learne d CIT(A), the assessee has preferred an appeal before the Hon' ble ITAT in ITA No.1451/ Del/ 2021 mainly on the contention as under:
(a) The assessee was not re quired to pay advance tax on MAT Income as per the decision of the Hon'ble K arnataka High Court in the case of Kwality Biscuits Ltd( 243 ITR 519) which was affirmed by the SC was ho lding the field according to which the assessee was not require d to pay advance tax on book pro fits at that tim e.
(b) Order dated 23.11.2020 passed by the AO under 154/254/143( 3) is barre d by limitation as the mistake was appare nt only in the assessment order u/s 143(3) dated 31.12.2008 and which canno t be rectifie d in the year 2020 in the garb o f appeal e ffect order u/s 254/143(3).
The detailed arguments on the above two grounds were made on 14.09.2022 by the learned CIT(DR) before the Ho n'ble Bench in the 31 ITA Nos. 1451 & 1452/Del/2021 ITA Nos. 1575 & 1578/Del/2021 Prakash Industries Ltd.
case of the assessee for A.Y.2008- 09 in ITA No.1578/De l/2021 and as the issues are same, the same may kindly be conside red while deciding the grounds for A.Y .2006- 07. F urther, it is also submitte d that the assessee had no t pre ferre d appeal against sustenance o f inte rest o f liability u/s 234B by CI T(A) in the first o f litigatio n and paid the interest liability u/s 234B( Reference: Para. 1.4) 2.2. With respect to the departmental appe al against the learned CIT's orde r date d 18.08.2021 in ITA NO.1575/ del/2021, it is submitted that the said appeal has been file d o n the ground that:
CIT(A) has erred in law and o n facts of the case in dire cting the Department to co mpute the inte re st u/s234B from April 2006 to 31.03.2008 ( i.e .) till payment o f self-assessment tax not till the date of regular assessment by ignoring the provisio ns o f section 234B(2) r.w.s. 140A of the Act.
2.2.1. In this regard, the rele vant portion o f sectio n 234B( 2) o f the Act is repro duce d as unde r:
"Inte rest fo r defaults in payment o f advance tax.
234B. (1) S ubject to the othe r provisions of this section, whe re, in any financial ye ar, an assessee who is liable to pay advance tax unde r sectio n 208 has faile d to pay such tax or, whe re the advance tax paid by such assessee unde r the provisio ns of section 210 is less than ninety per cent of the assessed tax, the assessee shall be liable to pay simple inte rest at the rate o f one pe r ce nt for every month or part of a month comprised in the period from the 1st day of A pril next fo llo wing such financial ye ar to the date of de termination o f total income under sub-section (1) of section 143 and where a regular assessment is made , to the date of such re gular assessment, on an amount equal to the assesse d tax or, as the case may be, on 32 ITA Nos. 1451 & 1452/Del/2021 ITA Nos. 1575 & 1578/Del/2021 Prakash Industries Ltd.
the amount by which the advance tax paid as aforesaid falls short of the assessed tax.
.........................
(2) Whe re, befo re the date o f de te rmination of total income under sub-section ( 1) of section 143 or completion of a regular assessment, tax is paid by the assessee unde r section 140A or otherwise ,--
(i) interest shall be calculated in accordance with the forego ing provisio ns of this section up to the date o n which the tax is so paid, and reduced by the inte rest, if any, paid under section 140A to wards the interest chargeable under this section;
(ii) thereafte r, inte re st shall be calculated at the rate afo resaid on the amount by which the tax so paid together with the advance tax paid falls sho rt of the assessed tax.
2.2.2. Further, the re le vant po rtion o f Explanation to section 140A o f the Act is produced as under:
"Self- assessment.--
140A. ( 1) Where any tax is payable on the basis of any return require d to be furnishe d unde r section 115WD or section 115WH or section 139 or section 142 or sectio n 148 or section 153A or, as the case may be, section 158BC, after taking into acco unt,--
(i) the amount o f tax, if any, already paid under any provision of this Act;
(ii) any tax deducte d or co llected at source; (iia) any re lie f o f tax claimed under section 89;
(iii) any relief o f tax or deductio n of tax claimed under sectio n 90 or section 91 on acco unt of tax paid in a country outside India;33
ITA Nos. 1451 & 1452/Del/2021 ITA Nos. 1575 & 1578/Del/2021 Prakash Industries Ltd.
(iv) any re lie f of tax claimed under section 90A on acco unt of tax paid in any specified te rritory outside I ndia re ferred to in that section; &[***]
(v) any tax cre dit claimed to be set off in acco rdance with the provisio ns of section 115JAA or--[se ction 115J D; and] --[(vi) any tax or interest payable according to the provisio ns of sub-section ( 2) of section 191] the assessee shall be liable to pay such tax together with interest and fee payable unde r any provision of this Act fo r any de lay in furnishing the return or any de fault or delay in paym ent o f advance tax, be fore furnishing the return and the return shall be accompanie d by proo f o f payment o f such tax, interest and fee.
Explanation.--Whe re the amount paid by the assessee under this sub-section falls short of the aggre gate o f the tax, interest and fee as aforesaid, the amount so paid shall first be adjusted towards the fee payable and thereafte r towards the interest payable as aforesaid and the balance , if any, shall be adjusted towards the tax payable ."
2.2.3. As on 31.03.2008, the assessee paid the self- assessment tax liability witho ut conside ring the interest liability u/s 234B and 234C of the Act. As per pro visions of Explanations to sectio n 140A o f the Act, the payment made by the asse ssee on 31.03.2008 was adj uste d towards the intere st liability existe d on that date first and there after adjusted on the outstanding tax liability. As there was balance tax payable after 31.03.2008, interest u/s 234B was calculated on the said balance amount till the date o f regular assessment. There fore , it is humbly submitted that the finding of the CIT(A) that since the returned income (MAT income) was accepted under section 143(3) without any variation, clause(2) o f 234B is squarely applicable and the te rminal date for charge o f interest under sectio n 234B is the date of payment of self assessment tax is incorrect. Hence, it is 34 ITA Nos. 1451 & 1452/Del/2021 ITA Nos. 1575 & 1578/Del/2021 Prakash Industries Ltd.
requested that the abo ve submissions may kindly be considere d while deciding the gro und raise d by the Department.
3. ln additio n to the above , it is submitte d that as per Form No.36, the tax effect is Rs. 16,60,206 which is be low the monetary limit specifie d by the CBDT . Howeve r, the appe al has be en filed in the case as this case involves Re venue Audit Objection which falls under the exceptio nal clause provide d under the CBDT s Circular No. 3/2018 dated 11.07.2018. A co py o f the Reve nue Audit Objectio n is enclosed fo r kind perusal."
26. The ld. CIT DR further argued on 14.10.2022 that the case was fixed for clarification and at the stage of clarification the assessee cannot raise any new ground which it has not taken in the grounds of appeal and in the earlier proceedings. The issuance of intimation u/s 143(1) on charging of interest u/s 234B and 234C in the said intimation has been argued in detail by him and on 14.09.2022 when the arguments concluded and assessee did not take this ground on 14.09.2022 when the substantive arguments took place. From the perusal of the grounds of appeal filed by the assessee, it is seen that the assessee never took this ground i.e. after the issuance of notice u/s 143(2) intimation u/s 143(1) becomes irrelevant and accordingly after the completion of trial and the detailed arguments the assessee cannot raise this fresh ground. Thus, the department objects to raising of this grounds of appeal by the assessee without taking this ground in the grounds of appeal. The ld. DR submitted that there is no legal bar in issuance of 143(1) after the issuance of notice u/s 143(2). In the case of the assessee, intimation u/s 143(1) were issued in 26.08.2009 and interest u/s 234B of Rs. 3,79,86,092/- and 35 ITA Nos. 1451 & 1452/Del/2021 ITA Nos. 1575 & 1578/Del/2021 Prakash Industries Ltd.
interest u/s 234C of Rs. 1,12,84,102/- was duly charged (page 39 of the paper book). It was submitted by the ld. DR that rectification order u/s 154 was passed on 04.11.2009 of intimation u/s 143(1) on the assessee's application dated 04.09.2009 and in the rectification order also interest u/s 234B of Rs. 3,27,36,372/- and interest u/s 234C of Rs. 1,12,84,102/- was duly charged. It was submitted that this rectification order u/s 154/143(1) was passed based on the application by the assessee dated 04.09.2009. Thus by its own action of moving an application after the issuance of notice u/s 143(2), the assessee as itself agreed to the charging of interest u/s 234B and U/s 234C and the assessee cannot now take the ground that the intimation u/s 143(1) and rectification order u/s 154/143(1) becomes a relevant.
27. The ld. CIT DR, Sh. Rajesh Kumar argued that the assessee never filed any appeal against intimation u/s 143(1) and u/s 154 orders if the assessee aggrieved with the charging of interest of u/s 143(2)/154 of the IT Act. Not only this the Assessing Officer i.e. DCIT, Hisar has given an intimation dated 25.11.2010 wherein he clearly mentions that refund of Rs. 14,24,080/- for A.Y. 1993-94, was adjusted against the outstanding demand of the AY 2008-09 and the outstanding demand was with regard to charging of interest u/s 234B and u/s 234C only. Again the assessee never protested nor filed an appeal against the intimation of the Assessing Officer. Further vide order dated 05.04.2011 u/s 154 for AY 2006-07 there Assessing Officer has again adjusted the refund of Rs. 8,98,770/- for AY 2006-07 against the outstanding demand for 36 ITA Nos. 1451 & 1452/Del/2021 ITA Nos. 1575 & 1578/Del/2021 Prakash Industries Ltd.
AY 2008-09 and the assessee again did not file an appeal against the adjustment of refund by the Assessing officer.
28. The ld. DR passionately argued that at the time of impugned AY i.e. 2008-09 there was no bar u/s 143 of the IT Act which prohibited summery assessment u/s 143(1) after the issuance of notice u/s 143(2). Even after the subsequent amendment u/s 143(2) sub section 2 brought about by Finance Act 2012 and by Finance Act 2017 there was no bar of processing the return after the issuance of the notice u/s 143(2). The provision of section as amended by the subsequent Finance Act 2017 merely mentions that the processing of return shall not be necessary where a notice has been issued u/s 143(2) which was mainly brought in the Income Tax Act to stop the granting of refunds in the case of assessee's, whose return has been taken for scrutiny u/s 143(2). In other words, even the subsequent amendment u/s 143(2) was inserted only for protection of the interest of the revenue so as to stop the department from issuing refund in cases where demand is anticipated after scrutiny. Thus the assessee contention that after issuing of notice u/s 143(2), the intimation u/s 143(1) becomes an irrelevant and invalid is clearly not borne out of provisions of section 143 and accordingly the assessee contention is not tenable as per law.
29. Recalling the provisions of the Income Tax Act, the ld. DR submitted that as the order u/s 143(1) get subsumed in order u/s 143(3) accordingly there is no sanctity of demand raised in order u/s 143(1). It was submitted before the Bench that this contention of the assessee is completely devoid of any merits 37 ITA Nos. 1451 & 1452/Del/2021 ITA Nos. 1575 & 1578/Del/2021 Prakash Industries Ltd.
because even if the order u/s 143(1) gets subsumed in order u/s 143(1), even then the natural corollary is that the demand raised in order u/s 143(1) especially on account of statutory levies u/s 234B and 234C becomes automatically a part of 143(3) which has also been duly mentioned by the Assessing Officer in the body of the object of the assessment order which shows charged interest as per law. It was argued that nothing is provided in the Income Tax Act which shows that the demand raised u/s 143(1) specially on account of statutory liability becomes null and void after the issuance of order u/s 143(3) and the assessee also could not cite any mention of the same in Income Tax Act and decisions of the order of jurisdictional High Court and Hon'ble Supreme Court. Any demand raised by the order u/s 143(1) remains a demand till its paid by the assessee or its annulled by the subsequent order. In the instant case also, the demand raised u/s 143(1) on account of statutory levies u/s 234B and section 234C of the IT Act is still outstanding and that has been communicated to the assessee several time in the past as mentioned above and also it has been specifically mentioned by the Assessing Officer while passing impugned order u/s 154/250/153A of the IT Act dated 05.01.2021 only.
30. In conclusion, the ld. DR argued that the demand raised vide order u/s 143(1) and subsequently reconfirmed vide order u/s 154/143(1) dated of 04.11.2009 is still outstanding and even on merits, the issue raised by the assessee has no meaning because the charging of interest for default in payment of advance tax was mandatory and automatic as clearly mentioned in section 234B and 234C of the IT Act and affirmed 38 ITA Nos. 1451 & 1452/Del/2021 ITA Nos. 1575 & 1578/Del/2021 Prakash Industries Ltd.
by Hon'ble High Court and Hon'ble Supreme Court and various High Courts in various decisions.
31. Heard the arguments of both the parties and perused the material available on record.
32. To cull the chaff to find out the seed, we have gone through the core arguments of the assessee that the order dated 23.11.2020 passed by the AO u/s 154/254/143(3) and confirmed by the ld. CIT(A) charging interest u/s 234B and u/s 234C is barred by limitation while the revenue was aggrieved with the deletion made by the ld. CIT(A) on account of interest levied on Section 234B and also the grievance at ground no. 5 in ITA No. 1578/Del/2021 wherein the ld. CIT(A) held that the order u/s 154 is beyond jurisdiction and deleted interest u/s 234B.
33. We find that the root cause of the matter was the audit objection raised at a later stage on the issue of non-levy of interest. The said audit objection is as under:
ORDER & DATE S CRUTINY, DATED 31 -Dec-2008 INTERNAL AUDIT P ARTY No OBSERVATION REL ATES TO 234C, 234 B Observation Non levy of interes t Section 234C of the Income Tax Act, 1961, provides that, where in any financial year, the company who is li able to pay advance tax u/s 208, has failed to pay such tax or where the installments of -advance tax paid by such assessee is l ess than the percentage fixed for specifi ed months, then the company shall be liable to pay simple interest at the rate of one per c ent for three mon ths on the amount of shortfall.39
ITA Nos. 1451 & 1452/Del/2021 ITA Nos. 1575 & 1578/Del/2021 Prakash Industries Ltd.
Further Section 143(3) of the Income Tax Act 1961 provides that in a scrutiny assessment, the Assessing Officer is required to make a correct assessment of the total income or l os s of the assessee and determine the correct sum payable by him or refundable to him on the basis of such assessment. Further Section 234 B of the Income Tax Act, 1961, provides that, where in any financial year, an assessee who is l iable to pay advance tax has failed t o pay su ch lax or, where t he advance tax paid by such asses see is l ess than ni nety percent of the assessed tax. the assessee shall be liable to pay si mple interest at the rate of one per cent (from 8 September 2003) for every month or part of a month comprised in the period from the 1st day of April next follow ing such financial year to the date of determination of total income u/s 143(1) and where a regular assessment is made to the date of such regular assessment, on an amount equal to the assessed tax or a s the case may be on the amount by which the advance tax paid as afor esaid falls sh ort of the assessed tax .
The assessment of M/s Prakash Industries Pvt. Ltd. for t he assessment year 2006-07 was completed (Decem ber 2008) determining nil income (after setting off b /f loss es of Rs. 79, 03,65,216) under normal provision and Rs 862027361 under special pr ovisi on of the Act. In December 2018, order u/s 254/143(3) was passed thereby assessing normal income at nil (allowing set off of b/s losses of Rs. 767,79,99,680) and income under speci al provisi on at Rs 862027361. Audit noticed that the assessee had not paid any advance tax as such interest u/s 234C of Rs. 36,07,589/- and 234B of Rs. 1,90,12,7 11/- was required to be levi ed on the balance of tax after adjustment of TDS/T CS at credi t However, the interest was neither offered by the assessee nor charged by the Department. This resulted in non-l evy of interest of Rs.2 ,26,20,300/-.
Calculation Sheet
Pa rt i cu l a rs A m ou n t ( in R s.)
R et u rn e d Ta x 72539602
TD S / T CS 1102135
Bala n c e Ta x 71437417
40
ITA Nos. 1451 & 1452/Del/2021
ITA Nos. 1575 & 1578/Del/2021
Prakash Industries Ltd.
1 5 0 6 .2 0 1 0 [ ( 1 5 % o f 7 1 4 3 7 4 1 7) - 0] x 3 % 321468
1 5 . 0 9 .2 0 1 0 [ ( 4 5 % o f 7 1 4 3 7 4 1 7) - 0] x 3 % 964405
1 5 . 1 2 .2 0 1 0 [ ( 7 5 % o f 7 1 4 3 7 4 1 7)- 0] x 3 % 1607342
1 5 . 0 3 .2 0 1 1 [ ( 1 0 0 % o f 7 1 4 3 7 4 1 7) - 0] X 1 % 714374
T ot a l i nt e re s t u / s 23 4C 36 07 5 89
Bala n c e Ta x 71437417
In t e r est u / s 2 3 4 B f o r 2 4 m on t h s ( u p t o Ma r ch 2 0 0 8) 17144980(A)
S el f A ss t t . Ta x p ai d on 3 1 .0 1 . 2 0 0 7 o f R s 1 1 2 2 0 0 0 1122000
S el f A ss t t . Ta x p ai d On 3 1 .0 3, 2 0 0 8 o f R s 7 0 3 1 5 4 1 7 70315417
T ot al s el f as st t . t a x p aid 71437417
Ta x an d In t e r e st t o b e ad j u st ed ( 7 1 4 3 7 4 1 7 + 3 6 0 7 5 8 9 92189986
+ 1 7 1 4 4 9 8 0)
Bala n c e t a x 20752569
In t e r est f o r 0 9 m on t h s ( D e c em b e r 0 8) 1 8 6 7 7 3 1 ( B)
T ot al in t e r e st u / s 2 3 4 B [ A +B] 19012711
T ot al n on - l e v y o f in t e r e st ( 2 3 4 C an d 2 3 4 B) 22 62 0 30 0
34. The audit objection has been accepted and an order u/s 154 has been passed by the revenue. The main grievance of the assessee is that the interest u/s 234C has been charged for the first time on 05.01.2021 by rectifying u/s 154 the appeal effect order dated 06.07.2017.
35. The pertinent facts relevant to the adjudication of the issue are as under:
Date of filing of return for A.Y. 2008-09 - 30.09.2008 Date of intimation u/s 143(1) - 26.08.2009 Date of issue of notice u/s 143(2) - 19.08.2009 Interest charged u/s 234B - Rs.00 Interest charged u/s 234C - Rs.1,12,84,102/- Date of rectification u/s 154/143(1) - 04.11.2009 Interest charged u/s 234B - Rs.3,27,36,372/- Interest charges u/s 234C - Rs.1,12,84,102/-
Date of filing of revised return - 26.02.2010 41 ITA Nos. 1451 & 1452/Del/2021 ITA Nos. 1575 & 1578/Del/2021 Prakash Industries Ltd.
Date of assessment u/s 143(3) - 11.05.2010 Mentions "charge interest as per law"
Demand raised - Nil Tax calculation u/s 143(3) Interest u/s 234B - Nil Interest u/s 234C - No column Date of order u/s 153A - 29.03.2016
Mentions "charge interest u/s 234A/234B/234C Interest charged u/s 234B - Rs.20,68,41,315/- Demand notice issued for - Rs.50,82,38,660/-
Date of order u/s 154 - 16.01.2017 Tax demanded - Nil Date of order u/s 250 - 06.07.2017 Revised demand - Nil Date of rectification u/s 154 - 09.12.2020
36. From the above, it can be observed that the interest u/s 234B has not been charged while issuing the intimation u/s 143(1). The assessee has filed revised return on 26.02.2010 and assessment u/s 143(3) was completed on 11.05.2010. The notice u/s 143(2) was issued on 19.08.2009. The assessee has filed revised return on 26.02.2010 which has been duly taken cognizance and the assessment u/s 143(3) was passed on 11.05.2010. The interest u/s 234B and u/s 234C has not been charged while issuing the intimation and the demand raised as per the record was Nil. The date of order u/s 154 was 16.01.2017 pertaining to the Assessment Order passed u/s 153A and date of rectification order u/s 154 r.w.s. 254/143(3) was dated 09.12.2020 which tried to modify the order of 2009. With the filing of the revised return and issue of notice u/s 143(2), 42 ITA Nos. 1451 & 1452/Del/2021 ITA Nos. 1575 & 1578/Del/2021 Prakash Industries Ltd.
the revenue looses the right of processing the return u/s 143(1). We reiterate that the ld. DR vehemently argued that at the time of impugned AY i.e. 2008-09 there was no bar u/s 143 of the IT Act which prohibited summery assessment u/s 143(1) after the issuance of notice u/s 143(2). Even after the subsequent amendment u/s 143(2) sub section 2 brought about by Finance Act 2012 and by Finance Act 2017 there was no bar of processing the return after the issuance of the notice u/s 143(2). The provision of section as amended by the subsequent Finance Act 2017 merely mentions that the processing of return shall not be necessary where a notice has been issued u/s 143(2) which was mainly brought in the Income Tax Act to stop the granting of refunds in the case of assessee's, whose return has been taken for scrutiny u/s 143(2). In other words, even the subsequent amendment u/s 143(2) was inserted only for protection of the interest of the revenue so as to stop the department from issuing refund in cases where demand is anticipated after scrutiny. Thus the assessee contention that after issuing of notice u/s 143(2), the intimation u/s 143(1) becomes an irrelevant and invalid is clearly not borne out of provisions of section 143 and accordingly the assessee contention is not tenable as per law. However, the same cannot be accepted in view of the jurisprudence laid down by the Hon'ble Apex Court.
37. We find that the Hon'ble Supreme Court in the case of CIT Vs. Gujarat Electricity Board 129 taxman 65 held that where summary procedure u/s 143(1) has been adopted, a regular assessment can be made u/s 143(3) after issuing of notice u/s 143(2) but the converse is not correct. The provisions u/s 43 ITA Nos. 1451 & 1452/Del/2021 ITA Nos. 1575 & 1578/Del/2021 Prakash Industries Ltd.
143(1D) provides that notwithstanding anything contained in sub-section (1), the processing of a return shall not be necessary, where a notice has been issued to the assessee under sub-section (2). The Hon'ble High Court held that where regular assessment proceedings have been commenced u/s 143(2), the processing of the return u/s 143(1) was not required. Even, after considering the submission of the ld. DR with regard to refund and collection of tax, we would like to bring it on record that the Hon'ble Gujarat High Court, the order of which has been contested by the revenue before the Hon'ble Apex Court held that Section 143(1) enacts a summary procedure for quick collection of tax and quick refunds and it was meant for seeking any rectification u/s 154. The Hon'ble High Court held that the legislature therefore intended that where the procedure under sub-section (1) has been adopted, there should be scope available for the revenue either suo moto or at the instance of the assessee to make a regular assessment under sub-section (2) of Section 143. The converse is not available, a regular assessment proceedings having been commenced u/s 143(2), there is no need for a summary proceedings u/s 143(1)(a). This view of the Hon'ble Gujarat High Court has been held to be correct on principle by the Hon'ble Supreme Court in the order passed on 12.11.2002. Thus, we find the order of the rectification u/s 154 passed by the revenue authorities on 09.12.2020 rectifying the order of the earlier decade is barred by limitation and cannot be held to be legally valid.
44ITA Nos. 1451 & 1452/Del/2021 ITA Nos. 1575 & 1578/Del/2021 Prakash Industries Ltd.
In the result, the appeals of the assessee are allowed and the appeals of the Revenue are dismissed.
Order Pronounced in the Open Court on 02/12/2022.
Sd/- Sd/-
(C. N. Prasad) (Dr. B. R. R. Kumar)
Judicial Member Accountant Member
Dated: 02/12/2022
*Subodh Kumar, Sr. PS*
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR
45