Tribunal Rules in Favor of Assessee: Interest Charging Under Income-tax Act Sections 234A, 234B, 234C Deemed Debatable.

The Tribunal ruled in favor of the assessee, allowing the jurisdictional issue concerning the charging of interest under sections 234A, 234B, and 234C of the Income-tax Act, 1961. It held that the issue was debatable and could not be rectified under section 154 by the Assessing Officer. Consequently, the Tribunal dismissed the revenue's appeal and allowed the assessee's Cross Objection, upholding the CIT(A)'s decision to delete the disallowance of interest charged by the rectification order. The decision was pronounced in Chennai on 29th December 2023.

---

---

Issues involved:
The appeal and cross objection arising from the orders of Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC) regarding the charging of interest under sections 234A, 234B, and 234C of the Income-tax Act, 1961.

Jurisdictional Issue:
The assessee raised a jurisdictional issue in the Cross Objection, contending that the charging of interest under sections 234A, 234B, and 234C of the Act is debatable and cannot be rectified by the Assessing Officer under section 154. The Assessing Officer issued a rectification order to correct the interest calculation, leading to a dispute.

Facts and Assessment:
The assessee did not file the income tax return for the assessment year 2010-11 initially. After a notice under section 148, the return was filed, and the assessment was completed by the Assessing Officer, who charged interest under section 234A. A rectification order was issued due to an audit objection, leading to a revised interest calculation and a demand notice.

CIT(A) Decision:
The CIT(A) deleted the disallowance of interest charged by the rectification order, citing provisions of the Act and section 234A. The assessee contended that the charging of interest was debatable, but the CIT(A) did not address the jurisdictional issue, focusing on the provisions of section 234A(1)(b).

Tribunal Decision:
The Tribunal considered the jurisdictional issue raised by the assessee, citing a previous judgment and the view that interest cannot be charged under section 154 for a debatable issue like interest under section 234A. The Tribunal allowed the jurisdictional issue in favor of the assessee, leading to the dismissal of the revenue's appeal and the allowance of the assessee's Cross Objection.

Conclusion:
The Tribunal ruled in favor of the assessee, allowing the jurisdictional issue and dismissing the revenue's appeal. The decision was pronounced in Chennai on 29th December 2023.

---