TaxTMI 
TaxTMI 
TaxTMI 
2019 (1) TMI 1090
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.... in number, had filed an application under Section 245 C (1) of the Act before the Settlement Commission on 14th May, 2015, which application was allowed to be proceeded with vide order dated 28th May, 2015 under Section 245 D (1) of the Act. The petitioners at the time of filing of the application had paid tax and interest payable on the additional or undisclosed income as mentioned in the applications. 4. The Settlement Commission by its final order dated 29th November, 2016 under Section 245 D (4) settled the case and had directed levy of interest on the enhanced amount under sub-section (2A) to Section 234 B of the Act. W.P.(C) No. 10313/2016 [Orchid Infrastructure Developers Pvt. Ltd.] 5. Petitioner had filed an application for settlement under Section 245 C (1) of the Act before the Settlement Commission on 30th April, 2015. The said application was admitted by the Settlement Commission vide order dated 8th May, 2015 under Section 245 D (1) of the Act. As noticed above, sub-section (2A) to Section 234 B was enacted and inserted in the statute by Finance Act, 2015 with effect from 1st June, 2015. The Settlement Commission vide its order dated 16th September, 2016 under Secti....
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..... We begin first by referring to the provisions of Section 234 B of the Act, which reads as under: "234B. (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 simple interest at the rate of one per cent for every month or part of a month comprised in the period from the 1st day of April next following such financial year to the date of determination of total income under sub-section (1) of section 143 and where a regular assessment is made, to the date of such regular assessment, on an amount equal to the assessed tax or, as the case may be, on the amount by which the advance tax paid as aforesaid falls short of the assessed tax. Explanation 1.-In this section, "assessed tax" means the tax on the total income determined under sub-section (1) of section 143 and where a regular assessment is made, the tax on the total income determined under such regular assessment as reduced by the amount of,- ....
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....n under sub-section (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, on the amount by which the tax on the total income determined on the basis of such order exceeds the tax on the total income disclosed in the application filed under sub-section (1) of section 245C; (c) where, as a result of an order under sub-section (6B) of section 245D, the amount on which interest was payable under clause (b) has been increased or reduced, as the case may be, the interest shall be increased or reduced accordingly; (3) where, as a result of an order of reassessment or recomputation under section 147 or section 153A, the amount on which interest was payable in respect of shortfall in payment of advance tax for any financial year under sub-section (1) 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 next following such financial year and e....
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....mely Section 234A and Section 234C of the Act. Examining the three sections as well as the power of settlement as contemplated in Chapter XIX-A of the Act, a Constitution Bench of the Supreme Court in Commissioner of Income Tax Vs. Anjum M.H. Ghaswala & Ors. (2001) 252 ITR 1 held that Settlement Commission had not been expressly or impliedly conferred the power to waive or reduce the mandatory interest contemplated under Section 234 A, Section 234 B and Section 234 C of the Act. Reduction of interest under the said Section is outside the purview of the Settlement Commission. Reliance placed by the assessee on Sub-Section (6) to Section 245-B was rejected by the Supreme Court observing that the said provision was only procedural in nature since it provides fixing of the terms by which the amount settled in terms of Sub-Section (4) to Section 245D will have to be paid. The said Sub-Section did not empower the Settlement Commission to either waive or reduce the interest either under Sub-Sections 234 A, 234 B or 234 C of the Act. The mandate of Sub-section (4) to Section 245 D requires the final settlement order should be in conformity with the Act and not contrary to/or in conflict wi....
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.... in point of time had held that levy of interest under the three sections was mandatory. It is in this context we have reproduced paragraph 2 of the judgment passed in Brij Lal and Ors. (supra), in which the Supreme Court had specifically and carefully recorded the questions posed and answered them. We have quoted Section 234 B and Sub-Section 4 to the said Section as originally enacted, which states that increase or reduction of interest subsequent to an order of Settlement Commission under Section 235 D (4) would be made, depending upon the increase or reduction of amount of tax payable. 12. The legal issue and question posed in paragraph 2 and answer being confined to the legal issue was subsequently again noticed by the Supreme Court in paragraph 16 in their judgment in Brij Lal and Ors. (supra), which reads as under : "16. On the other hand, interest for defaults in payment of advance tax falls under Section 234B, apart from Sections 234-A and 234-C, in Part F of Chapter XVII. Thus, levy of interest is incidental to the liability and computation of advance tax. It is interesting to note that Section 234-A(4) in turn refers to the increase or reduction of interest subsequent ....
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....sment collection. Interest on default in payment of advance tax comes under Sections 234-A, 234-B, 234-C, which fall in Chapter XVII which deals with collection and recovery of tax. It is important to note that interest follows computation of additional payment of income tax under Sections 245-C(1-B) and (1-C). This is how Sections 234-A, 234-B and 234-C get engrafted into Chapter XIX-A at the stage of Section 245-D(1). 36. The question is - what happens in cases where 90% of the assessed tax is paid but on the basis of the Commission's order under Section 245-D(4) the advance tax paid turns out to be less than 90% of the assessed tax as defined in the Explanation to Section 234-B(1)? 37. As held hereinabove, under Section 245-C(1) read with Section 245-C(1-B)(ii) and Section 245-C(1-C)(b), the additional amount of income tax payable is to be calculated on the aggregate of total income returned and the income disclosed in the settlement application as if such aggregate is the total income. Thus, the scheme of the said sections is based on computation of total income and in that sense we have stated that such application for settlement is akin to a return of income. The said....
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....ommences only after an order is passed under Section 245-D(1). That, after making an application for settlement the applicant is not allowed to withdraw it [see Section 245-C(3)]. Once the case stands admitted, the Settlement Commission shall have exclusive jurisdiction to exercise the powers of the Income Tax Authority." 13. In view of the aforesaid discussion we hold that in Brij Lal and Ors. (supra), the Supreme Court has laid down that the terminal point for levy of interest would be the order under Section 245 D(1) of the Act. However, the Supreme Court in this decision did not deal with the issue in question namely on the quantum of tax on which interest would be paid. The Supreme Court did not therefore hold that the quantum of tax would not determine the interest. This would necessarily follow from sub-section (6) to Section 245 D under which the computation sheet is made following the order under Section 245 D (4) of the Act. The computation-sheet under Sub-Section (6) to Section 245 D has to separately compute the tax payable which could in a given case include the enhanced amount as well as interest due on the said amount. 14. Counsel for the petitioner is correct in i....
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.... the best of the dealer's knowledge and belief without he being guilty of wilful omission. If the dealer has furnished full particulars in respect of his business, without wilfully omitting or withholding any particular information which has a bearing on the assessment of tax, which he honestly believes to be "correct and complete", it would be difficult to hold that the dealer had not acted "bona fide" in depositing the tax due on that information before the submission of the return. Of course the tax so deposited is to be deemed to be provisional and subject to necessary adjustments in pursuance of the final assessment. Section 7-AA empowers levy of penalty if the assessing authority is satisfied that any dealer has "without reasonable cause" failed to furnish the return under Section 7(1) within the time allowed. The use of the words "without reasonable cause" clearly implies that if the dealer can show reasonable cause for his lapse he cannot be visited with the penalty prescribed by Section 7-AA. To put it differently if reasonable cause is shown by the dealer for the lapse, he cannot be visited with penalty under this provision. This is also suggestive of the fact that th....
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..... Legislature in this case did not amend the Statute with retrospective effect to change the law with retrospective effect [See National Agricultural Cooperative Vs. Union of India & Anr., (2003) 260 ITR 458 (SC)]. 16. This brings us to the moot question; whether the amendment inserted by the legislature through Finance Act, 2015 enacting sub-section (2A) to Section 234B would be applicable to pending proceedings before the Settlement Commission. Law in this regard appears to be well settled. We would begin by referring to the decision of the Constitution Bench in Mohanlal Jain Vs. His Highness Maharaja Shri Sawai Mansinghji, AIR 1962 SC 73, which had examined the question whether Section 87B inserted by Section 12 of the Code of Civil Procedure (Amendment) Act, 1951, stating that provisions of Section 85 and Sub-sections (1) and (2) of Section 86 of the Code would apply to the rulers of former Indian States would apply prospectively or would even apply to pending suits. On principles discernible on the question of retrospectivity of law, reference was made to United Provinces Vs. Atiqa Begum's case 1940 F.C.R. 1102 to observe that when vested rights are affected amended law shoul....
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....1943) FCR 39] or Garikapatti Veeraya v. N. Subbiah Choudhury [(1957) SCR 488]. If the language of Section 86 read with Section 87-B were applicable only to the initiation of a civil suit, these cases might have been helpful; but since the words "may sue" include not only the initiation of a suit but its continuation also, it is manifest that neither the suit could be filed nor maintained except with the consent of the Central Government. In Atiqa Begum case [(1940) FCR 110] Varadachariar, J., referred to the two principles applicable to cases where the question of retrospectivity of a law has to be considered. They are that vested rights should not be presumed to be affected, and that the rights of the parties to an action should ordinarily be determined in accordance with the law, as it stood at the date of the commencement of the action. But, the learned Judge pointed out that the language of the enactment might be sufficient to rebut the first, and cited the case of the Privy Council in K.C. Mukherjee v. Mst Ram Ratan Kuer [(1935) ILR 15 Pat 268]. Here, the matter can be resolved on the language of the enactment. The language employed is of sufficient width and certainty to incl....
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....es their Lordships pointed out that if any saving were to be implied in favour of pending proceedings, then the provisions of the statute would largely be rendered nugatory. Those observations apply with full force to the present case, inasmuch as if any saving were to be implied in favour of cases pending on the date of the amendment, the words "all elections to the office of the president or Vice-President, held on or after the said date and before the coming into force of this Act, shall be deemed to be valid" could not be given their full effect. As there are no such saving clauses in express or implied terms, it must be held that the amendment was clearly intended by the legislature to apply to all cases of election of president or VicePresident, whether or not the matter had been taken to court. It is the duty of courts to give full effect to the intentions of the legislature as expressed in a statute. That being so, it must be held that the amending Act had the effect of curing any illegality or irregularity in the elections in question with reference to the provisions of Section 19 of the Act." 19. Similarly, in Lakshminarayan Guin & Ors. Vs. Niranjan Modak AIR 1985 SC 11....
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....ly to pending proceedings, unless there is something in the words to prevent our doing so. Mr. Greene argued that this sub-section cannot apply to pending proceedings, because it refers to the conduct of the parties under the foregoing provisions which can only relate to matters after the Act comes into operation; but I think we must treat those words as referring to the conduct of the parties under the preceding provisions, when and so far as the previous provisions are applicable. I think, therefore, that the sub section is applicable to pending proceedings, and that we have jurisdiction under it, unless the fact of this being an appeal prevents our having it." 20. We would now turn to the sub-section (2A) to Section 234B and examine whether same states that it would be applicable to pending proceedings. Clause (a) of the said Sub-Section states that where an application under Sub-Section 245C for any assessment year has been made, the assessee shall be liable to pay simple interest at the rate specified for every month or part of the month comprised in the period commencing on 1st day of April of the assessment year and ending with the date of making such application. This refe....