TaxTMI 
TaxTMI 
2024 (5) TMI 292
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....ned therein, the appellant was facing a very 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 there....
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....ate of commencement of the period of interest, as prescribed, 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, o....
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....er the expiry of the time aforesaid, ending on the date of furnishing the return; or (b) where no return has been furnished, ending on the date of completion of the reassessment or recomputation 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 dema....
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....nt and ending on the date of the reassessment or re-computation under section 147 or section 153A, on the amount by which the tax on the total income determined on the basis of the reassessment or re-computation exceeds the tax on the total income determined under sub-section (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 refu....
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..../12/2010, since set aside, as the assessee contends, or the second assessment/s dated 31/7/2014, as does the Revenue. That is, is the interest chargeable only u/s. 234A(1) / 234B(1), or is the same to be, though charged thereunder in the first instance, further modified u/s. 234A(4) / 234B (4) - the provisions 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: ....
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.... the default of non-filing the return had, with sufficient justification, received a closure in law on the assessment being made and, consequently, a demand, even if nil, being raised thereat. This demand, it argued, is not obliterated on the assessment being subject to appeal/revision, though may undergo a change pursuant 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 5....
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.... be said to be due; the relevant part of the dissenting judgment reading as: 'There would be only one exception to this rule, i.e., when the order of assessment is wholly set aside. But that is not a real exception, for against the assessee no steps can be taken because there is no debt due by him.' (pg. 558) That is to say, and even 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 asid....
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.... v. P.N. Krishna Kumar [2002] 254 ITR 31 (Ker) that the Tribunal was, in appeal, to decide the question of the validity of the impugned order notwithstanding that the final assessment had been made inasmuch as there cannot be two assessments and, two, the appeal proceedings are only a continuation of the assessment proceedings. We can multiply 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 (s....
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....ss. The refund to the assessee of such excess, it explained, is of the tax. This change in character was not stand altered on the assessment being subsequently set aside. The interest to the assessee would thus, irrespective of fate of the assessment, only be up to this date, which of course is subject to increase or decrease corresponding to the 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 m....
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.... impugned order. No specific time limit, as u/s. 153, is stated as provided therein for an assessment made pursuant to the directions by an appellate authority qua an assessment u/s. 153A. How, we wonder, could this argument be raised in the instant proceedings, which also explains non-consideration of the said argument adopted in Santhimadom Herbal City Trust (supra), to which 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....