2006 (5) TMI 127 - AT - Income Tax

AO empowered to determine tax liability under section 115JA and charge interest under sections 234A, 234B, 234C.

Joint Commissioner Of Income-tax, Special Range - 23, New Delhi. Versus Mohan Exports India Limited.

The Tribunal held that the Assessing Officer (AO) has the power to determine tax liability under section 115JA in an intimation under section 143(1)(a) ... Prima Facie Adjustment Issues Involved:1. Assessing Officer's power to determine tax liability under section 115JA in an intimation under section 143(1)(a).2. Charging of consequential interest under sections 234A, 234B, and 234C.Issue-wise Detailed Analysis:1. Assessing Officer's Power to Determine Tax Liability under Section 115JA in an Intimation under Section 143(1)(a):The revenue disputed the CIT (Appeals)'s decision that the Assessing Officer (AO) was not justified in determining tax liability under section 115JA and making adjustments in an intimation under section 143(1)(a). The relevant provisions of section 143(1)(a) permit the AO to determine tax or interest payable based on the return filed by the assessee. The revenue argued that the AO's computation of tax under section 115JA was based on the documents annexed to the return and did not involve any extraneous information. The CIT (Appeals) erred in holding that the AO lacked such powers under section 143(1)(a).The assessee argued that there was no obligation to declare tax payable under section 115JA in the return of income, referencing the decision in Travel Club (India) (P.) Ltd. by the ITAT Delhi Bench 'A'. The assessee also cited judgments from various High Courts, including Mahalakshmi Glass Works, Super Roller Flour Mills Ltd., and Parikh Engg. & Body Building Co. Ltd., which suggested that tax under section 115J could not be charged by way of intimation under section 143(1)(a) if the assessee did not work out the tax liability.However, the Tribunal found that the AO's determination of tax liability under section 115JA was an integral part of the process under section 143(1)(a) and not an adjustment. The Tribunal emphasized that the AO's action was within the scope of section 143(1)(a) and did not fall into the category of adjustments. The Tribunal also noted that the decision in Travel Club (India) (P.) Ltd. supported the revenue's position, stating that the company was obliged to declare its book profit ascertained under section 115JB as its total income and pay tax thereon.The Tribunal concluded that the CIT (Appeals) was unjustified in holding that the AO could not compute tax liability under section 115JA in an intimation under section 143(1)(a). The Tribunal reversed the CIT (Appeals)'s decision and restored the AO's order.2. Charging of Consequential Interest under Sections 234A, 234B, and 234C:The revenue argued that the charging of interest under sections 234A, 234B, and 234C was mandatory, citing judgments from the Supreme Court, including CIT v. Anjum M.H. Ghaswala, CIT v. Hindustan Bulk Carriers, and CIT v. Sant Ram Mangat Ram Jewellers. The Tribunal noted that the preponderance of judicial opinion supported the AO's power to charge interest under sections 234B and 234C for any shortfall in payment of tax payable under section 115J by way of advance tax.The Tribunal referenced several High Court judgments, including CIT v. Holiday Travels P. Ltd., CIT v. Upper India Steel Mfg. & Engg. Co. Ltd., Karimtharuvi Tea Estates Ltd. v. Dy. CIT, Assam Bengal Carriers Ltd. v. CIT, Itarsi Oils & Flours (P) Ltd. v. CIT, and CIT v. Kotak Mahindra Finance Ltd., which upheld the AO's power to charge interest under these sections.The Tribunal concluded that the CIT (Appeals) was unjustified in holding that the AO could not charge interest under section 115JA while issuing an intimation under section 143(1)(a). The Tribunal reversed the CIT (Appeals)'s decision and restored the AO's order, allowing the revenue's appeal.