March 2011
Section 234B of the Income-tax Act, 1961 — Once assessee’s bank account was put under attachment, the amount therein is to be considered to be lying with the Department which would indicate constructive payment of advance tax and, therefore, interest u/s.
By C. N. Vaze
Shailesh Kamdar
Jagdish T. Punjabi
Bhadresh Doshi
Chartered Accountants
fiogf49gjkf0d
New Page 1
36 (2010) 134 TTJ 457 (Del.)
S. M. Wahi v. Asst. DIT
(International Taxation)
ITA No. 2779 (Delhi) of 2008
A.Y.: 2007-2008. Dated: 30-4-2009
Section 234B of the Income-tax Act, 1961 — Once assessee’s
bank account was put under attachment, the amount therein is to be considered to
be lying with the Department which would indicate constructive payment of
advance tax and, therefore, interest u/s.234B is not chargeable.
For the relevant assessment year, the Assessing Officer
charged interest u/s.234B. The assessee submitted that a sum of Rs.4 crores was
received by the assessee on 3rd January 2007. His bank account was attached on
12th January 2007. The amount was lying with the Department. In such
circumstances, the assessee cannot make the payment of advance tax and interest
u/s.234B cannot be imposed upon him. He relied upon the judgment of the Delhi
High Court in the case of CIT v. K K Marketing, (2005) 196 CTR (Del.)
611/(2005) 278 ITR 596 (Del). The CIT(A) held that charging of interest u/s.234B
is mandatory. The Assessing Officer has no discretion to charge or not to charge
the interest. He further observed that the assessee did not apply to the
Assessing Officer for permitting him to limited operation of bank account for
payment of advance tax.
The Tribunal, following the Delhi High Court’s decision in
the above-referred case, held that in the present case, for all practical
purposes the amount of Rs.4 crores was considered to be lying with the
Department which would indicate constructive payment of advance tax. Therefore,
interest u/s.234B cannot be imposed.
