TaxTMI 
TaxTMI 
2013 (11) TMI 830
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....y any advance tax as the taxes paid by way of TDS were more than 90% of the Assessed tax and hence there was no interest chargeable u/s. 234 B and 234 C. 3. The Assessees crave leave to alter, add or amend the aforesaid Ground of Appeal as and when necessary" Brief history: In this case appellate order was passed on 23-6-2011, wherein it was held that the assessee had deducted TDS and MAT credit which was more than 90% of assessed tax, that there was no shortfall of advance tax, that interest u/s. 234B & 234C was not chargeable. AO vide his letter dated 24-8-11 stated that as per the record, filed by the assessee, there was shortfall of advance tax of Rs. 15, 59, 761/- as against the assessed tax, that the assessee had not paid any advance tax and tax payable was more than Rs. 10, 000/-, that provisions of section 208 were attracted, that interest u/s. 234B & 234C was payable by the assessee. 2. In view of application made by the AO, under section 154 of the Act, First Appellate Authority (FAA) issued a notice of hearing to the assessee for rectifying mistake apparent from the record. After considering the submission of the assessee, FAA, held that there was shortfall o....
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....bjects and Reasons of the Bill shows that one of the objects behind the Bill was to remove the uncertainty in the matter of assessment by cutting down areas of subjective decisions of taxing authorities with a view to ensure uniform treatment to persons similarly placed and to reduce litigation, because it was felt that the existing provisions gave unlimited discretionary powers to the assessing officers to levy different penalties and interest for similar faults. With effect from April 1, 1989, the requirement to pay interest on self-assessment u/s. 140A was made mandatory. The requirement to pay interest with relation to the return u/s. 142 of the Act was introduced by the Finance(No. 2) Act, 1991, with effect from 27. 09. 1991. Here we would like to mention that though, old provisions providing for payment of interest and penalty have been replaced by the provisions of sections 234A, 234B and 234C, but the new system does not get its colour from the old. They have to be interpreted in the light of the language employed therein and the purpose they purport to achieve. 4. 2. Section 234B provides for payment of interest by an assessee, who even though liable to pay advance tax u/s....
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....her than 2% per month. Besides, by prescribing calculation of interest on monthly basis, the provision also cannot be said to have lost its compensatory character. This is true even in regard to Sec. 234C where the interest payable is not for the period for which the amount of tax is actually withheld but for a period of three months. In short, provisions dealing with payment of interest u/s. 234B as well as u/s. 234C of the Act create circumstances for compelling the assessees to discharge their statutory obligation, therefore, same cannot be termed penal. iv). The dates for paying the advance tax are specifically notified by the Act itself, which is spread over various months and liability to pay advance tax arises when the total income of the assessee exceeds an amount which is chargeable to tax provided the tax so payable exceeds stipulated sum. The liability to pay advance tax cannot be denied merely on the ground that the assessee could not visualise that income and, thus could not make an estimate on the basis of which advan -ce tax could be paid. If, despite full knowledge of the date and time when the tax is to be paid, an assessee commits a default, he makes himself li....
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....f the amount of interest by showing proper cause. xi). No notice required to be given to assessee before levy of interests under either of the sub- sections, because the liability to pay interest is automatic and arises by operation of law, as stated earlier. xii). Interest under sections 234A and 234B of the Act is leviable on the tax on the total income as declared in the return and not on the income as assessed and determined by the AO. xiii). If there is no determination of tax under sub-section (1) of section 143 or regular assessment and the assessment is made for the first time u/s. 147 of the Act, such assessment is also treated as a regular assessment and interest is payable from the first day of April next following till the date of assessment order. But if proceedings u/s. 147 of the Act is initiated in a case where there is determination of tax under sections 143(1)/(3)then the order passed u/s. 147 is treated as an order of reassessment or re-computation. In the case of order of reassessment or re-computation, the interest is leviable not from the first day of April next following but from the date of determinati- on of tax u/s. 143(1) or 143(3). xiv). Ther....