TaxTMI 
TaxTMI 
2024 (5) TMI 292
X X X X Extracts X X X X
X X X X Extracts X X X X
....difficult situation, with his office ransacked, resulting in the service of the impugned order on his Chartered Accountant, the learned counsel before us, on 15.07.2022. It was braving this hostile situation that the assessee filed the appeal albeit with a delay of 27 days. We find the reasons as genuine and bona fide and, accordingly, condoning the delay, admit the appeal for being decided on merits. 3. It was, at the outset, submitted by Shri Joseph, the learned counsel for the assessee, that only the grounds of appeal in relation to levy of interest u/ss. 234A and 234B of the Act are being pressed. And toward which he would take us through the appeal memo for each of the years under appeal, specifying the Grounds being not pressed, viz. Grounds 1 to 3, for AY 2005-06. The issue, he would continue, which stands discussed by the ld. CIT(A) at paras 5.6 through 5.14 of his order, is covered by the Tribunal's order in a group case (Santhimadom Herbal City Trust v. Asst. CIT, in ITA Nos. 920 & 921/Coch/2022, dated 14.11.2023). Though the same is w.r.t. sec. 234A only, the issue is common, the provision of s. 234B r/w Explanation 2 thereto being pari materia. Smt. Devi, the ld. Sr. D....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., on which there is no dispute, is chargeable up to December, 2010, i.e., on the basis of the date of the original assessment (28.12.2010). The Revenue's stand, on the contrary, is that the same exists no longer and, therefore, interest, leviable up to the date of regular assessment, is upto July, 2014. 4.3 Next we may visit the relevant provisions of law, which read as under: Interest for defaults in furnishing return of income. 234A. (1) Where the return of income for any assessment year under sub- section (1) or sub-section (4) of section 139, or in response to a notice under sub-section (1) of section 142, is furnished after the due date, or is not furnished, 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 date immediately following the due date, and,- (a) where the return is furnished after the due date, ending on the date of furnishing of the return; or (b) where no return has been furnished, ending on the date of completion of the assessment under section 144, on the amount of the tax on the total income as determined under sub-section (1) of section 143, a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n under section 147 or reassessment under section 153A, on the amount by which the tax on the total income determined on the basis of such reassessment or recomputation exceeds the tax on the total income determined under sub-section (1) of section 143 or on the basis of the earlier assessment aforesaid. Explanation.-[* * *] (4) Where as a result of an order under section 154 or section 155 or section 250 or section 254 or section 260 or section 262 or section 263 or section 264 or an order of the Settlement Commission under sub-section (4) of section 245D, the amount of tax on which interest was payable under sub-section (1) or sub-section (3) of this section has been increased or reduced, as the case may be, the interest shall be increased or reduced accordingly, and- (i) in a case where the interest is increased, the Assessing Officer shall serve on the assessee a notice of demand in the prescribed form specifying the sum payable, and such notice of demand shall be deemed to be a notice under section 156 and the provisions of this Act shall apply accordingly; (ii) in a case where the interest is reduced, the excess interest paid, if any, shall be refunded. (5) The prov....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion (1) of section 143 or on the basis of the regular assessment aforesaid. (4) Where, as a result of an order under section 154 or section 155 or section 250 or section 254, or section 260 or section 262 or section 263 or section 264 or an order of the Settlement Commission under sub-section (4) of section 245D, the amount on which interest was payable under sub-section (1) or sub-section (3) has been increased or reduced, as the case may be, the interest shall be increased or reduced accordingly, and- (i) in a case where the interest is increased, the Assessing Officer shall serve on the assessee a notice of demand in the prescribed form specifying the sum payable and such notice of demand shall be deemed to be a notice under section 156 and the provisions of this Act shall apply accordingly ; (ii) in a case where the interest is reduced, the excess interest paid, if any, shall be refunded. (5) The provisions of this section shall apply in respect of assessments for the assessment year commencing on the 1st day of April, 1989, and subsequent assessment years." 4.3 The terms of the provisions are plain. Section 234A provides for levy of interest for not filing the return....
X X X X Extracts X X X X
X X X X Extracts X X X X
....visions being cited together as the same are pari materia. The issue arises as the second assessment/s is only consequent to the directions by the Tribunal, directing fresh assessment/s upon setting aside the impugned/first assessment/s. Interest, in either case, is to be charged only up to the date of the regular assessment, which may though, in appeal/revision, undergo a change pursuant to change in the assessed tax, the principal sum on which the compensatory interest gets computed, i.e., to factor in the change in the tax, plus or minus, as determined earlier per regular assessment. The issue, thus, boils down to ascertaining the date of the 'regular assessment'. 4.5 The issue came up, in the context of s. 234A, before this Bench in Santhimadom Herbal City Trust (supra), wherein, after noting the primary facts, which are in agreement with the instant case, it held as: '5.3 The primary facts are not in dispute. No return/s was furnished under any provision of the Act, with that on 31.12.2010 being non-est. There has accordingly been no processing of return/s u/s. 143(1), or even assessment/s u/s. 143(3). The assessment/s dated 28/12/2020 is the first assessment/s, which accor....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt thereto. Evidently, the basis of it's decision is the regular assessment, which marks the termini point up to which interest could be levied, with further changes therein being only w.r.t. a change/s in demand. There is, thus, an underlying presumption as to an assessment and, concomitantly, a demand, even if nil, subsisting pursuant to it being set aside. That is, an assessment, despite it being set aside, continues to be a valid assessment in law, with a defined demand attributable thereto. No case law, or judicial precedents, stand adverted to, or drawn strength from, by the Tribunal in issuing it's decision, even as it refers to the decision in Mahesh Investments v. Asst. CIT [2021] 123 taxmann.com 6 (Kar) [277 Taxman 161 / [2020] 429 ITR 284 (Kar)) as being supportive of the assessee's case. 4.6 The Apex Court in ITO v. Seghu Buchiah Setty [1964] 52 ITR 538 (SC) held that there was not much difference between annulment and set aside of an order inasmuch as both wipe out the original order; in it's words:(pg. 544) 'There is not much difference between annulling an order and setting it aside; both wipe out the original order.' In the facts of the case the issue was as to w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n as the majority view would hold, there was no difference of opinion as to an annihilation of the assessment, and the consequent demand, on a complete set aside, as obtains in the instant case. Reference, next, may be made to another larger bench decision by the Apex Court in Kunwar Trivikram Narain Singh v. State of Uttar Pradesh [1965] 57 ITR 17 (SC). In the facts of the case, an assessment, quashed in appellate proceedings for want of jurisdiction, was restored, directing the assessing authority to assess in accordance with law, on a review of the appellate order in pursuance to an application moved in terms of the amending Act changing retrospectively the definition of the assessing authority, so that the assessment as made was by a competent authority, and not jurisdictionally infirm. The result of a review of his order and its set aside by the Collector, the Hon'ble Court observed, was that the proceedings before the Additional Collector were restored. The effect, like-wise, of the review of the appellate order by the Tribunal vide it's order dated 10/7/2013, is that the said order is set aside, and the assessment proceedings restored before the AO, who is to accordingly pro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....examples; the case law in the matter being legion, but it is not necessary in view of the law being well-settled that the original assessment (order) on it's set aside obtains no longer. Why, the Tribunal in some cases has gone to the extent of saying that in the absence of specific directions while setting aside, the assessing authority cannot proceed further in the matter of assessment (Dy. CIT v. Jaya Publications [2010] 123 ITD 53 (Chenn); Jaya Prakash v. ITO [2022] 192 ITD 316 (Bang)). .As such, whether accompanied by a direction/s by the appellate authority for fresh assessment or otherwise, the original order, since set aside, obtains no longer, and neither can any demand, consequently, be attributed thereto, which could be said to have been modified in appeal. 4.7 We may at this stage advert to the decision in Mahesh Investments (supra), relied upon by the Revenue before us (refer para 5.12 of the impugned order), even as the assessee had in Santhimadom Herbal City Trust (supra), found opposite by the Tribunal. The said decision, as its reading shows, states that even where set aside and, thus, effaced, it is 'the original assessment' that shall be regarded as "the regular....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... change in the assessee's tax liability consequent to rectification, reassessment, revision or appeal (s. 214(1A)). The interest being compensatory, it argued, he could not be penalized for the delay in 'assessment'. That is to say, the advance-tax stands mutated to tax on regular assessment, and subsequent changes therein would only alter the quantum of the tax that would stand to be paid to or, as the case may be, recovered from the assessee, with interest. The Hon'ble Court traversed the provisions of law to find the same as indicative of only the first assessment as being regular assessment for the purpose of Chapters XVII (Collection and recovery of tax) and XIX (Refunds) of the Act. 4.8 The matter, however, does not end here. Sections 214 and 215, providing for interest payable to and by the assessee on excess or, as the case may be, shortfall of advance tax, are operative only upto AY 1988-89. Section 234A provides for interest on delay in furnishing the return of income, either absolutely or belatedly, and ss. 234B and 234C for shortfall in the aggregate/individual installments of advance-tax, stand inserted under Part F (Interest chargeable in certain cases) in Chapte....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ich one of us is a party. The AO, after all, is, in framing the assessment/s on 31/7/2014, only complying with the direction/s by the Tribunal, which has since attained finality (refer: Bhopal Sugar Industries Ltd. v. ITO [1960] 40 ITR 618 (SC)). The challenge, therefore, ought to be to the Tribunal's order dated 10/7/2013 vide which directions for fresh assessment were made. This is as in that case no such directions could be given on 10/7/2013 inasmuch as the notice u/s. 153A r/w s. 153C for all the years under reference was issued on 19/3/2010. Further, would that therefore mean that the assessment/s, made on 31/7/2014, and in fact accepted on quantum, is valid if the interest u/ss. 234A/B is charged up to December, 2010! That apart, even assuming no specific time limit in s. 153B for such a contingency, that may not by itself imply that the ensuing assessment is barred by time. Reference in this context be made to CIT v. National Traders [1980] 121 ITR 535 (SC). The impugned assessments are thus valid in law, and the only issue that therefore survives is the period of interest u/ss. 234A/B. In Sum: 4.10 The issue in the instant case pertains to the termini point for reckoning....