Income Tax Appellate Tribunal - Madras
Income-Tax Officer vs M.M. Subramania Mudaliar on 19 December, 1997
Equivalent citations: [1998]67ITD136(MAD)
ORDER
1. This appeal by the Revenue arises out of the order dated 29-12-1994 of the Dy. CIT (Appeals) for the assessment year 1991-92.
2. The only dispute relates to the period for which the interest under section 234-B of the Income-tax Act, 1961 is to be charged. The assessee filed return on 23-12-1992 which was processed under section 143(1)(a). The case was selected for scrutiny with the prior approval of the Dy. Commissioner and the notice under section 143(2) was issued. The assessment was completed under section 143(3) on 3-3-1994. The Assessing Officer levied interest under section 234-B upto 3-3-1994 which is the date of regular assessment under section 143(3) of the Act. The assessee by letter dated 15-4-1994 requested the Assessing Officer to levy such interest only upto the date of intimation under section 143(1)(a) of the Act and not upto the date of assessment under section 143(3) of the Act. The Assessing Officer rejected the plea of the assessee. The matter was taken up in appeal. The learned Dy. CIT(A) following the order of the Tribunal in the case of ITO v. V. S. Madasamy [I.T. Appeal No. 1723 (Mad.) of 1993] for the assessment year 1990-91 decided the issue in favour of the assessee. The Revenue is aggrieved.
3. The learned departmental representative strongly relied upon the decision of the Allahabad High Court in the case of Pradeep Kumar Har Saran Lalv. Assessing Officer [1997] 94 Taxman 124. According to him, the intimation passed under section 143(1)(a) is not an assessment order and in the light of the amended provisions of section 234-B the interest is leviable upto the date of regular assessment where there is a regular assessment under section 143(3) of the Act.
4. The learned counsel for the assessee however pointed out that the decision of the Allahabad High Court in the case of Pradeep Kumar Har Saran Lal (supra) was not applicable to the facts of this case and heavily relied upon the order of the Tribunal in the case cited supra.
5. I have carefully considered the rival submissions in the light of the material placed on record. In my view, the stand taken by the Revenue deserves to succeed. The provisions of section 234B read as under :-
"234B(1). Subject to the other provisions of this section, where, in any financial year, an assessee who is liable to pay advance tax under section 208 has failed to pay such tax or, where the advance tax paid by such assessee under the provisions of section 210 is less than ninety per cent of the assessed tax, the assessee shall be liable to pay simple interest at the rate of two per cent for every month or part of a month comprised in the period from the 1st day of April next following such financial year to the date of determination of total income under sub-section (1) of section 143 and where a regular assessment is made, to the date of such regular assessment, on an amount equal to the assessed tax or, as the case may be, on the amount by which the advance tax paid as aforesaid falls short of the assessed tax."
Section 234B was inserted by the Taxation Laws (Amendment) Act, 1987 with effect from 1-4-1989. The section was amended by the Direct Tax Laws (Amendment) Act, 1989 with effect from 1-4-1989. In the section, as originally enacted, interest was to be charged "from 1st day of April next following such financial year", "to the date of regular assessment". The words "to the date of regular assessment" were substituted by the words "to the date of determination of total income under sub-section (1) of section 143 or regular assessment". In short, the section as originally enacted had not taken cognisance of the possibility that in a number of cases a summary order under section 143(1) is the end of the assessment proceeding. The amendment provided for charge of interest in both the circumstances namely, where a summary assessment under section 143(1) is made and where it is followed by a regular assessment under section 143(3). Another amendment was made by the Finance Act, 1995 with effect from 1-4-1989. While explaining the necessity of this amendment, the Explanatory Memorandum to the Finance Bill 1995 stated as under :-
"The legislative intention is that the interest for default in payment of advance tax is to be charged till the date of the determination of total income under section 143(1) and where a regular assessment is made, till the date of such assessment. However, on the basis of the language used in section 234B, a view has been taken in certain quarters that if interest has already been charged in a case till the date of determination of total income under section 143(1), the Assessing Officer cannot further levy the interest till the date of regular assessment. In order to set the aforesaid doubts at rest, the Bill seeks to amend section 234B to clarify that an assessee shall be liable to pay interest for default in payment of advance tax till the determination of the total income under section 143(1) and where a regular assessment is made, till the date of such assessment."
This legislative intention has been achieved by the substitution of the word "and" for "or" in sub-section (1). As a result of the amendment, the defaulting assessee shall be liable to pay interest for default in payment of advance tax till the determination of total income under section 143(1) and where regular assessment is made till the date of such regular assessment.
6. In my view, the terminus period for charging interest under section 234B is the date of assessment under section 143(3) where there is regular assessment. Similar view has been expressed by the Special Bench of the Settlement Commission in Sahitya Mudranalaya (P.) Ltd., In re [1995] 79 Taxman 463 (ITSC - Bom.). In the light of this discussion, I am of the opinion that the order of the Assessing Officer is in order and the same is restored.
7. In the result, the appeal is allowed.