TaxTMI 
TaxTMI 
2006 (6) TMI 184
X X X X Extracts X X X X
X X X X Extracts X X X X
....ection 154 on 13-9-2004 for deletion of interest levied under section 234B of the Act since there was no liability to pay advance tax in accordance with section 208. The Assessing Officer dismissed the petition under section 154 holding that there is no mistake apparent on record vide order dated 22-9-2004. Aggrieved the assessee went in appeal before the CIT(A) who confirmed the order of the Assessing Officer. 3. Further aggrieved the assessee is in appeal before us. The contention on behalf of the assessee was that as per return of income, the assessee's total tax liability is below Rs. 5,000 and that interest under section 234B was not charged while processing return under section 143(1)(a). The income was enhanced because of addition on account of difference in cost of construction. Before the addition, the income was Rs. 69,536 and after the addition of Rs. 1,43,837 towards cost of construction the income raised to Rs. 2,13,373 and accordingly tax was increased. If there was no addition the net tax effect would be less than Rs. 5,000. Further, the learned counsel for the assessee relied on the order of the Tribunal in the case of Sri Renukeswara Rice Mills v. ITO [2005] 93 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d for this reason also there was no necessity for the assessee either to file an estimate or pay any advance tax for this assessment year under consideration. Hence he submitted that when there is no liability to pay advance tax under section 208 interest under section 234B cannot be charged. 5. On the other hand, the learned Departmental Representative submitted that the Finance Act (No.1), 1996 is applicable for the period 1-4-1988 to 30-9-1996, the assessee is liable to pay advance tax at the threshold tax limit under section 208 Rs. 1,500. As a result of the amendment of section 208 by the Finance Act (No.2), 1996 the threshold tax limit has been raised from Rs. 1,500 to Rs. 5,000 with effect from 1-10-1996. He strongly relied on the orders of the lower authorities and submitted rectification under section 154 sought by the assessee is not possible as it is a debatable issue. 6. We have given our careful thoughts to the facts and circumstances of the case and perused the materials to which our attention was invited. It would be appropriate to record some of the applicable provisions of the Act. Section 207 as substituted with effect from 1-4-1988 lays down that tax shall ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the last date of February. Sub-section (4) empowers the Assessing Officer to pass and revise order for payment of advance tax by the assessee, subsequent to passing of original order, but before the first day of March. Sub-section (5) enables the assessee to pay less amount of advance tax than what was demanded under sub-section (3) or (4) if the advance tax payable on his current income would be less than the amount demanded by the Assessing Officer. Subsection (6) correspondingly requires the assessee to estimate his current income where the amount of advance tax payable on current income is likely to be higher than the advance tax demanded by the Assessing Officer under subsection (3) or (4) or intimated by him under sub-section (5). 8. Section 209 of the Act, after amendment by the Amending Act, 1987 lays down the method of computing advance tax payable during a financial year as follows :- "(a) Where the calculation is made by the assessee for paying the advance tax, either of his own accord or on the basis of the estimate of his current income after the assessee is served with a notice by the Assessing Officer under section 210(3) or (4) for payment of advance tax, inco....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rging of interest for default in payment of advance tax. Further, language used by the Legislature in bringing this provision is also significant. First part of the section provides - "An assessee who is liable to pay advance tax under section 208 has failed to pay such tax or...". At the very outset, it is to be ascertained as to whether the assessee was liable to pay advance tax or not. In the instant case assessee is assessed to tax in earlier year and for the current assessment year, the assessee's total tax liability on the assessed income is more than Rs. 5,000 and the assessee is under obligation to pay advance tax. 10. The important aspects that emerge from the provisions referred to above, insofar as they are relevant to the issue before us, can be succinctly culled out as under :- (a) Advance tax is payable by an assessee during any financial year in respect of his total income which would be chargeable to tax in the relevant assessment year. (b) The liability to pay advance tax arises in the context of the current income of the assessee which would be chargeable to tax for the assessment year immediately following the relevant financial year, if the tax payable ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ain the very intention of the Legislature we have to look into the clauses by which the Legislature has brought section 234B to the statute through Direct Tax Laws (Amendment) Act, 1987. In this connection the relevant clause of inserting section 234B is reproduced which is appearing at 168 ITR (Stat.) 343 and the same is reproduced as under:- "Section 234B incorporates the existing provisions of section 215 and section 217 with the difference that the new provisions make the charging of interest mandatory. The existing provisions provide for waiver or reduction of interest under rule prescribed in this regard. The new section does not have any such provision." 12. The interest under section 234B is not penal in nature but one is compensatory and the same is leviable because assessee utilised the public money and payment of interest is for utilization of public money and section 234B is mandatory in nature. Further, if the assessee has hardship on account of this mandatory provision of section 234B, the assessee can avail of the benefit of CBDT Circular No. F. No. 400/234/95-IT(B), dated 23-5-1996 by which it authorized the Chief Commissioner/Director General (Investigation) ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Assessing Officer, which in turn enhances tax effect. 15. Moreover in this case the appeal is filed by the assessee against order passed by the Assessing Officer under section 154 in response to rectification petition filed by the assessee. Section 154 empowers the ITO to rectify any mistake apparent from record. There must be material on record to support the claim of the assessee, that assessee was not liable to levy of interest under section 234B. Unless such material is available on record, the Assessing Officer cannot entertain the grievance of the assessee. In the present case, the Assessing Officer required various material to examine, which were not made available either at the time of assessment or further at the time of entertaining petition filed by the assessee under section 154. The record of income-tax assessment of the assessee for the assessment year under consideration does not contain the details whether assessee was liable to pay advance tax in earlier assessment year or not. The assessee also failed to show that all the materials required for entertaining its petition filed under section 154 was available with the Assessing Officer or not along with assess....