2009 (10) TMI 420 - HC - Income Tax

High Court rules interest under Income-tax Act can be charged based on computation sheet, emphasizing mandatory nature.

The High Court held that interest under sections 234B and 234C of the Income-tax Act can be charged based on the computation sheet forming part of the ... Advance Tax-Interest- The Assessing Officer determined the total income of the assessee for the year in question at Rs.25,24,155. No specific order levying interest was recorded by the Assessing Officer. However, in the computation sheet (Form No. ITNS 150) annexed to the assessment order interest under sections 234B and 234C of the Act was computed while determining the total sum payable by the assessee. Aggrieved by the levy of interest, the assessee filed an appeal before the learned Commissioner of Income-tax (Appeals) who by order deleted the interest charged under sections 234B and 234C of the Act. Against the aforesaid order of the first appellate authority the Revenue moved the learned Tribunal. The learned Tribunal by order dated July 20, 2006, upheld the order of the first appellate authority giving rise to the present second appeal under section 260A of the Act. Held that- interest shown in computation sheet annexed to the assessment order. Computation sheet is the integral part of the assessment order. Thus interest had to be paid. Issues:Interpretation of sections 234B and 234C of the Income-tax Act, 1961 regarding the levy of interest based on the assessment order and computation sheet.Analysis:The judgment dealt with the issue of whether interest under sections 234B and 234C of the Income-tax Act, 1961, can be charged based on the computation sheet forming part of the assessment order when not explicitly mentioned in the assessment order itself. The Revenue appealed against the Tribunal's decision that interest cannot be charged in such a scenario. The Assessing Officer finalized the assessment without a specific order levying interest, but the computation sheet included interest under sections 234B and 234C. The first appellate authority deleted the interest, leading to the Revenue's appeal. The Revenue argued that the computation sheet is part of the assessment order, citing the Supreme Court's decision in Kalyankumar Ray v. CIT. They contended that the Tribunal erred in not upholding the interest levy. The respondent countered that the assessment order did not mention the levy of interest, emphasizing the independence of determining income and sum payable. They highlighted the mandatory nature of interest under sections 234B and 234C and the preconditions for its levy under sections 208 and 210.The High Court analyzed the rival submissions, distinguishing previous judgments. They noted that the computation sheet, when signed by the Income-tax Officer, constitutes an order determining tax payable under section 143(3) of the Act. Referring to Kalyankumar Ray v. CIT, the Court held that the computation sheet is integral to the assessment order, justifying the interest levy indicated therein. They emphasized the mandatory nature of interest under sections 234B and 234C, citing the apex court's decision in Anjum M. H. Ghaswala. The Court rejected the respondent's argument about the absence of preconditions for interest levy, stating that the computation sheet's inclusion in the assessment order suffices. Ultimately, the Court allowed the appeal, setting aside the Tribunal's order and upholding the interest levy based on the computation sheet.In conclusion, the judgment clarified the legal position regarding the levy of interest under sections 234B and 234C of the Income-tax Act, emphasizing the significance of the computation sheet as part of the assessment order in determining the interest payable by the assessee. The Court's decision aligned with the mandatory nature of interest under the Act and upheld the interest levy based on the computation sheet, dismissing the respondent's arguments against its imposition.