By C. N. Vaze
Shailesh Kamdar
Jagdish T. Punjabi
Bhadresh Doshi, Chartered Accountants
Sections 139,
153A, 154, 234A – Where a return of income is filed for the first time in response to notice u/s. 153A then interest will be levied u/s. 234A(1)(a) from
the due date of filing return of income mentioned in section 139 of the Act and not
from the due date of filing return of income mentioned in section 153A of the
Act.
In a case
where interest was leviable u/s. 234A(1) but the AO levied interest u/s.
234A(3), it amounts to non-application of a particular provision of the Act and
is undisputedly a mistake apparent from record, which needs to be rectified
u/s. 154 of the Act.
FACTS
The assessee,
an individual, derived income from pension and other sources. In connection
with the search of a group of cases of `S’ Limited, search was initiated
against the assessee as well. The Assessing Officer (AO) issued a notice u/s.
153A calling the assessee to file return of income. The assessee, filed his
return of income, for the first time, in response to notice issued u/s.153A.
The AO
completed the assessment u/s. 143(3) r.w.s. 153A and levied interest u/s. 234B
of the Act with effect from the due date of filing return of income mentioned
in notice u/s.153A of the Act till the date of filing of the return of income
by the assessee.
Subsequently,
the AO issued a notice to the assessee proposing to rectify the mistake in the
order and proposed to levy interest u/s. 234B of the Act from the from due date
of filing return of income u/s. 139 of the Act till the date of filing of
return of income by the assessee instead of from due date of filing return of
income mentioned in notice u/s. 153A of the Act. The assessee submitted that
the levy of interest is a debatable issue which involves prolonged discussion
and cannot be rectified u/s. 154 of the Act. The AO rejected the contentions of
the assessee and passed an order u/s.154 rectifying the mistake.
Aggrieved, the
assessee preferred an appeal to the CIT(A) who upheld the action of the AO.
Aggrieved, the
assessee preferred an appeal to the Tribunal where relying upon the decision of
ITAT, Chennai ‘B’ bench in the case of Dr. V. Jayakumar vs. Asstt. CIT
[2011] 46 SOT 68 (URO)/10 taxmann.com 141, it was argued that where a
notice is issued u/s 153A to the assessee, requiring filing return of income
specifying the due date in the notice, because of the word used in the section
“the provisions of this Act shall, so far as may be, apply accordingly as
if such return was a return required to be filed u/s. 139”, the due date
referred to in section139 of the Act gets shifted to the date prescribed in the
notice u/s. 153A of the Act.
HELD
As regards the
legal contention of the assessee viz. that the mistake under consideration
could not be rectified by invoking the provisions of section 154, the Tribunal
held that since the method of computation of interest u/s. 234A is specifically
provided in the Act, there is no ambiguity in the provisions in as much it is
very clear in terms of section 234A(1) and 234A(3). Section 234A(1) deals with
a situation where return is not filed u/s. 139(1) or 139(4) and 234A(3) deals
with a situation where return is filed after determination of income u/s.
143(1) or computation of income u/s. 143(3) or 147. It noted that the AO
applied the provisions of section 234A(3), which is not applicable to this
case. It held that non-application of a particular provision is undisputedly a
mistake apparent from record, which needs to be rectified u/s. 154 of the Act.
It held that the AO has rightly invoked provisions of section 154, to rectify
the levy of interest u/s. 234A.
Once return is
filed in response to notice u/s. 153A, the provisions of section 139
automatically steps in, accordingly, the due date specified in the said section
comes into operation. If the contention of the assessee is accepted, it would
amount to encouraging the non-filing of returns by the taxpayers, who would
take the chance and file returns as and when notice u/s. 148/153A is issued, so
that they can save interest amount on tax payable to the Govt. exchequer for a
period of four or six years as the case may be.
The method of
computation of interest u/s. 234A is specifically provided. There is no
ambiguity in the provisions. Section 234A(1) deals with a situation where
return of income is filed belatedly and also where no return is filed u/s.
139(1) or 139(4) and section 234A(3) deals with a situation where return is
filed u/s. 148/153A after determination of income u/s. 143(1) or computation of
income u/s. 143(3) or 147 of the Act.
The Tribunal
held that when a return is filed for the first time, the provisions of section
234A(1)(a) are applicable and interest is chargeable for the period commencing
on the date immediately following the due date referred u/s. 139 and ending on
the date of furnishing of the return. Since, the assessee has filed return for
the first time u/s. 153A of the Act, the AO rightly charged interest u/s. 234A
from the due date referred in section 139(1) to the date of filing return u/s.
153A of the Act. The Tribunal upheld the order of the CIT(A).
As regards the
reliance by the assessee upon the decision of ITAT, Chennai ‘B’ bench in the
case of Dr. V Jayakumar (supra) it observed that the bench has upheld
the arguments of the assessee without considering the provisions of sections
153A & 234A of the Act in a right perspective.
The Tribunal
dismissed the appeal filed by the assessee.
