TaxTMI 
TaxTMI 
2017 (7) TMI 1245
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....hy;section (2A) of Section 234B of the Income Tax Act, 1961 (hereinafter referred to as "IT Act") is effective prospectively from 01.06.2015 only and shall accordingly by applicable to the applications filed under Section 245C(1) after this date and to further hold that the interest under Section 234B of the IT Act in cases of application filed under Section 245C(1) prior to 01.06.2015 will be charged on additional income tax declared in such applications upto the order under Section 245D(1) of the IT Act in accordance with the decision of the Hon'ble Supreme Court in the case of Brij Lal and Others vs. Commissioner of Income Tax reported in 328 ITR 477 (SC) and not on additional income tax determined in the order under Section 245D(4) and to direct the respondent No.1 to accept the interest computed and accordingly paid by the petitioners in their applications filed under Section 245C(1) of the IT Act. Special Civil Application Nos.7112/2017 to 7124/2017 [3.0] Special Civil Application Nos.7112/2017 to 7124/2017 have been preferred by the respective petitioners for an appropriate writ, direction and order to quash and set aside the impugned order dated 24.08.2016 (Annexure&s....
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....;11 to 2014­15 13. M/s. Gajkeval Developers 2010­11 to 2014­15 14. M/s. Nirman Associates 2014­15 That in the respective applications the respective applicants disclosed additional income assessment year­wise, the particulars of which are as under: Sr. No Name of Applicants Assessment Years (Rs. in lakhs) 2008­09 2009­10 2010­11 2011­12 2012­13 2013­14 2014­15 Total 1 Girish S. Shah 62.00 206.17 278.39 654.97 312.75 130.10 325.00 1,647.64 2 Girishchandra J. Patel 62.00 132.37 154.40 416.87 322.07 91.20 3.25 1,181.18 3 Ravikant Thakkar 5.40 10.21 28.99 106.72 49.58 24.99 1.10 227.01 4 Navdurga Developers 48.63 270.49 91.35 0.50 0.50 411.48 5 Shivam Associates 20.22 20.40 64.07 80.20 64.30 61.36 0.25 310.83 6 Taksh Realty 103.75 140.01 2.27 0.30 0.30 246.63 7 Nirman Associates 12.08 49.14 30.34 48.76 52.85 11.52 204.72 8 Gajkev....
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....ourse of the hearing before the Settlement Commission, the applicants placed on record a written submission vide letter dated 10.08.2016 with regard to the offer of further income as follows alongwith the working of further income offered in the hands of each applicant and assessment year­wise. a) on account of error in adopting sale consideration - Rs. 1,82,381/- b) on account of revision of on­money - Rs. 3,26,91,128/- c) on account of additional 1% of total on money - Rs. 2,13,11,602/- [5.2] The applicants prayed that the immunity may be granted to them, its partners and officers from all penalty and prosecution under the IT Act. The applicants also prayed that time upto 31.12.2016 may be granted to make payment of further sum due as per order under Section 245D(4). That thereafter considering the above and the applications made on behalf of the applicants, the Settlement Commission passed the final order under Section 245D(4) as under: "11. Decision We have carefully considered the issues put forth in PCIT Rule 9 report, Applicant's rejoinder and oral arguments from both sides. We find that the applicants in true spirit of....
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..... Waiver of Interest The applicants have prayed for waiver of interest chargeable under Section 234A, 234B and 234C of the Act. In view of the Hon'ble Supreme Court's decision in the case of CIT v. Anjum M.H. Ghaswala and others (2001) 252 ITR 1 (SC), the Settlement Commission is not empowered to grant waiver / reduction of interest chargeable under Section 234A and 234C of the Act. The said interest shall be charged in accordance with the provisions of the Act. Vide circular F.No.1/158/Tech./2013/SC dated 02.05.2016, the Addl. DIT (Inv.) Income Tax Settlement Commission, 4th Floor, Lok Nayak Bhawan, Khan Market, New Delhi - 110 003 has circulated Central Board of Direct Taxes letter F.No.299/78/2015­IT (Inv.III/623 dated 18.04.2016 addressed to the Chairman, Income Tax Settlement Commission, New Delhi. In this letter, it is inter­alia stated that there is no ambiguity in so far as applicability of the provisions of Sec.234B(2A) is concerned and that the amendment of the provisions of Sec.234B was made subsequent to judgment of the Apex Court in the case of Brijlal and Calcutta High Court in the case of G.M. Foods. It is further stated since the applicabil....
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....r have given false evidence. Thereupon, the applicant may be tried for the offence for which immunity was granted, or for any other offence for which the applicants appear to have been guilty in connection with the settlement, and the applicants shall also become liable to the imposition of any penalty under the Act to which the applicants would have been liable had such immunity not been granted." [5.3] At this stage it is required to be noted that before the learned Settlement Commission the applicants prayed for waiver of interest chargeable under Sections 234A, 234B and 234C of the IT Act, however considering the provisions of Section 234B(2A) of the IT Act and the amendment of the provision of Section 234B of the IT Act, which came into force with effect from 01.06.2015, the Settlement Commission passed an order to charge the interest under Section 234B of the IT Act after taking into consideration the provisions of Section 234B(2A) also. [5.4] Feeling aggrieved and dissatisfied with the impugned order passed by the learned Settlement Commission insofar as charging the interest under Section 234B while taking consideration the subsection (2A) of section 234B of the IT Ac....
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....ear indication in the provision as explained by memorandum that it will be application on the applications filed. And since amendment is made effective from 1st June 2015, it will be applicable to the applications filed on or after 1st June 2015.On the contrary, there is no indication, direct or implied, in the provision or in the memorandum explaining the clauses that the amendment can also be applied to the applications filed prior to 1st June 2015. e. Clause (a) of sub­section (2A) of section 234B imposes a liability of interest and provides for computation mechanismly way of providing rate of interest, the quantum of income tax on which and period for which, interest is to be calculated. This computation mechanism is to be applied "where an application under sub­section 1 of section 245C for any assessment year has been made." When such computation mechanism was not provided earlier, it clearly indicates that this new computation mechanism would be applicable prospectively and cannot be applied on applications which have been made prior to 1st June 2015." [7.2] It is submitted that despite the above, however considering the office memorandum dated 20.03.2016....
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....rder under section 245C(1). It is submitted that despite the law laid down by the Hon'ble Supreme Court in the case of Brij Lal (Supra) by which the Hon'ble Supreme Court held that the interest under Section 234B has to be charged upto the order under Section 245C(1), taking recourse of sub­section (2A) of section 234B and applying the same retrospectively, the Settlement Commission has passed an order to charge the interest in the order under Section 245D(4) of the IT Act. It is submitted that therefore the impugned order is in teeth of the order passed by the Hon'ble Supreme Court in the case of Brij Lal and Others (Supra). [7.6] It is further submitted by Shri Soparkar, learned Counsel appearing on behalf of the petitioners that there is no explanation attached or introduced in section 234B(2A), like that which was inserted in section 234D by the Finance Act, 2012 with retrospective effect from 01.06.2003, clarifying that sub­section (2A) will also be applicable to pending cases of settlement. [7.7] It is further submitted by Shri Soparkar, learned Counsel appearing on behalf of the petitioners that as such in the memorandum to the clauses issued at the time of int....
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....ra), the Parliament has not extended the provisions and the liability to pay interest beyond the date of application for settlement. It is submitted that in the case of Brij Lal and Others (Supra), the Hon'ble Supreme Court held that the order of Settlement Commission under Section 245D(4) is not an order of assessment and the interest has to be charged only upto the stage of admission of the case under Section 245C(1), then the quantum of tax on which interest can be charged will be taxed as per the application of section 245C(1). Making above submissions and relying upon the following decisions, it is requested to allow the present petitions and grant the reliefs as prayed for. 1. Brij Lal and Others vs. Commissioner of Income Tax 328 ITR 477 (SC) 2. J.K. Synthetics Limited vs. Commercial Taxes Officer (1994) 4 SCC 276 3. Tata Teleservices vs. Union of India (2016) 66 Taxmann.com 157 (Gujarat) 4. Commissioner of Income Tax vs. Smt. Sushma Saxena (1997) 223 ITR 395 (P&H) 5. Commissioner of Income Tax vs. Ram Kumar Agarwalla & Ors. (1980) 122 ITR 322 (Calcutta) 6. Star Television News Ltd. vs. Union of India (2009) 317 ITR 66 (Bombay)....
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....er as it thinks fit. It is submitted that thus when the Settlement Commission takes up the matter after 01.06.2015 necessarily it will have to take note of the existing provisions relating to the interest payable on defaults on advance tax, which would also encompass the provision of section 234B(2A) of the IT Act. [8.4] It is submitted that the contention of the assessee that the same provision of section 234B(2A) of the IT Act shall be applicable only to the applications filed after 01.06.2015 is absolutely misconceived. It is submitted that the legislature intended to charge interest on default on advance tax. It is submitted that had the intention of of legislature been, as contended by the assessee, subsection (2A) of section 234B of the IT Act would be worded as "necessary application under sub­section (1) of section 245C for any assessment year has been made on or after 01.06.2015, the assessee shall be liable to pay simple interest...". It is submitted that as per the settled proposition of law the provision of the Statute is required to be read as it is and neither any word can be added nor can be removed from the Statute. It is submitted that if the contention of t....
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....rest liability for the period between the application under Section 245C(1) and the order under Section 245D(4) of the IT Act. It is submitted that such cannot be the intention of the legislature. It is submitted that therefore the impugned order/s are absolutely just and proper and the same are not required to be interfered with by this Court. [9.0] Heard learned Counsel appearing for the respective parties at length. The short question which is posed for consideration of this Court is whether in the facts and circumstances of the case the learned Settlement Commission, while passing an order under Section 245D(4) of the IT Act is justified in charging the interest on the difference of the amount disclosed at the time of making application under Section 245C(1) of the IT Act and the amount determined while passing the order under Section 245D(4), under Section 234B of the IT Act after taking into consideration, the provisions of section 234B(2A) or not? [9.1] It is the case on behalf of the petitioners that as section 234B(2A) was enacted and came into force with effect from 01.06.2015, the same shall not be applicable retrospectively and shall not be applicable to the ap....
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....st day of April, of such assessment year and ends on the date of making application before the Settlement Commission under section 245C(1) and Clause (b) of section 234B(2A) of the IT Act requires payment of interest on the additional income which exceeds the disclosure under Section 245C(1) of the IT Act. Therefore, it is the case on behalf of the Revenue that when the Settlement Commission passes the order under section 234B(4) determining the exact amount and the additional amount determined by the Settlement Commission which exceeds disclosure under Section 245C(1), the Settlement Commission is absolutely justified in directing to compute the interest under Section 234B of the IT Act considering the provisions of section 234B(2A) of the IT Act. [10.0] Having heard learned Counsel appearing for respective parties and on thoughtful consideration of the issue for the reaosns stated hereinbelow, we are of the opinion that the learned Settlement Commission is absolutely justified in directing to compute the interest under Section 234B of the IT Act after considering the provisions of section 234B(2A) of the IT Act. [10.1] At the outset it is required to be noted that as such w....
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....ions filed on or after 01.06.2015 only and the submission on behalf of the petitioners that the charge of interest under section 234B of the IT Act considering section 234B(2A) shall be contrary to the decision of the Hon'ble Supreme Court in the case of Brij Lal and Others (Supra) is concerned, the aforesaid has no substance. It is required to be noted that as such the charge of interest under Section 234B is mandatory as held by the Hon'ble Supreme Court in the case of Anjuman H Ghaswal (Supra). However, because of the decision of the Hon'ble Supreme Court in the case of Brij Lal and Others (Supra), the legislature thought it fit to clarify and therefore, section 234B(2A) of the IT Act was brought into Statute. Sections 234B and 234B(2A) of the IT Act reads as under: "234B.Interest for defaults in payment of advance tax. (1) Subject to the other provisions of this section, where, in any financial year, an assessee who is liable to pay advance tax under section 208 has failed to pay such tax or, where the advance tax paid by such assessee under the provisions of section 210 is less than ninety per cent of the assessed tax, the assessee shall be liable to pay simp....
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...., paid under section 140A towards the interest chargeable under this section; (ii) thereafter, interest shall be calculated at the rate aforesaid on the amount by which the tax so paid together with the advance tax paid falls short of the assessed tax. 234B (2A)(a) Where an application under sub­section (1) of section 245C for any assessment year has been made, the assessee shall be liable to pay simple interest at the rate of one per cent for every month or part of a month comprised in the period commencing on the 1st day of April of such assessment year and ending on the date of making such application, on the additional amount of income­tax referred to in that sub­section; (b) where as a result of an order of the Settlement Commission under sub­section (4) of section 245D for any assessment year, the amount of total income disclosed in the application under sub­section (1) of section 245C is increased, the assessee shall be liable to pay simple interest at the rate of one per cent for every month or part of a month comprised in the period commencing on the 1st day of April of such assessment year and ending on the date of such order....
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....bility under Section 234B of the IT Act, which is mandatory was already there which further came to be clarified with respect to the application before the Settlement Commission by way of section 234B(2A) of the IT Act. Therefore, the submission on behalf of the petitioners that the new liability would be created by way of section 234B(2A) of the IT Act and therefore, the same cannot be made applicable restrospectively has no substance. At the cost of repetition, as observed hereinabove, section 234B of the IT Act was very much there, however considering the decision of the Hon'ble Supreme Court in the case of Brij Lal and Others (Supra), the things were required to be clarified and that is why the legislature came out with section 234B(2A) of the IT Act, which requires payment of interest on the additional amount determined by the Settlement Commission which exceeds the disclosure under Section 245C(1) of the IT Act. [10.4] At this stage it is required to be noted that under Section 234B(2A) of the IT Act, the interest has been bifurcated into two parts i.e. (1) upto the stage of section 245C(1) application and (2) in the event of any additional determination of income of the d....
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....ndment shall be applicable prospectively. Under the circumstances, the said decision shall not be applicable to the facts of the case on hand. Similarly, decision of this Court in the case of Tata Teleservices (Supra) and decision of Punjab & Haryana High Court in the case of Sushma Saxena (Supra) and the decision of the Calcutta High Court in the case of Ram Kumar Agarwalla & Bros (Supra) shall not be applicable to the facts of the case on hand more particularly when, as observed hereinabove, the charge of interest under Section 234B is mandatory as held by the Hon'ble Supreme Court in the case of Anjuman H. Ghaswal (Supra). [10.6] At this stage the decision of the Hon'ble Supreme Court in the case of Commissioner of Income Tax, Mumbai vs. Damani Brothers reported in (2003) 3 SCC 86 is required to be referred to. One of the question before the Hon'ble Supreme Court was whether the Settlement Commission is empowered to waive or reduce the interest under Section 234A read with Section 220(2) of the IT Act while exercising its jurisdiction under Section 245D(4) of the IT Act? After considering the entire scheme and the procedure to be followed by the Settlement Commission under Se....