TaxTMI 
TaxTMI 
2001 (1) TMI 203
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....lectricity Co. Ltd. vs. CIT (1992) 106 CTR (Bom) 78 (FB) : (1993) 199 ITR 351 (Bom) (FB) and Inawo Ltd. vs. CIT (1993) 204 ITR 313 (Bom). They further pointed out that the AO has not given any direction in the assessment order for levy of such interest under s. 234B. In the absence of any specific direction no such interest under s. 234B can be validly charged directly in the demand notice. The learned counsel placed reliance on the judgment of Hon'ble Patna High Court in the case of Uday Mistanna Bhandar & Complex vs. CIT (1997) 137 CTR (Pat) 376 : (1996) 222 ITR 45 (Pat). The learned counsel submitted a copy of the order passed by the Tribunal in the case of Ayush Ajay Construction Ltd. vs. ITO (2000) 69 TTJ (Ind) 579 : (2000) 111 Taxman 261 to support his contention. The learned counsel also submitted that interest charged under similar facts and circumstances has been deleted by the various Benches of the Tribunal (Ahmedabad) in the cases of Nirma Group. Copies of such orders passed by the Tribunal in the cases of Nirma Detergent Ltd., Nirma Chemical Works Ltd., Nirma Ltd., Nirma Management Services Ltd. order of the Tribunal in assessee's own case for asst. yr. 1991-92, orders....
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....TNS-150 and the calculation sheet have been submitted at pp. 40 to 42 of the paper book. 25. The learned counsel submitted that it is not proper for any Bench of the Tribunal to state that the judgment of Hon'ble Patna High Court in the case of Uday Mistanna Bhandar & Complex was wrong in the absence of any contrary view by any other High Court. The learned counsel placed heavy reliance on the judgments reported in 180 ITR 722 (sic), (1983) GLH 273 (SC), CIT vs. L.G. Rama Murthi & Ors. 1977 CTR (Mad) 416 : (1977) 110 ITR 453, CIT vs. Goodlass Nerolac Paints Ltd. (1990) 90 CTR (Bom) 40 : (1991) 188 ITR 1 (Bom) and CIT vs. Sterling Foods (1999) 153 CTR (SC) 430 : (1999) 237 ITR 579 (SC) to explain the rules relating to judicial discipline. Shri Soparkar, the learned Advocate invited our attention to the judgment of Hon'ble Gujarat High Court in the case of CIT vs. Maganlal Mohanlal Panchal (HUF) (1994) 210 ITR 580 (Guj) in which it was held that the Tribunal is bound to follow sole judgment of different High Court. The judgment of Hon'ble Patna High Court in the case of Uday Mistanna Bhandar & Complex is the only judgment on the point in issue that no interest can be charged under....
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....sheet annexed with the said ITNS-150. The copy of this calculation sheet has been submitted by the assessee themselves at p. 42 of the paper book. 29. Shri Dave placed reliance on the decision of the Tribunal in the case of Travancore Titanium Products Ltd. vs. Dy. CIT (1995) 52 TTJ (Coch) 601 : (1996) 37 ITD 16 (Coch) and the decision of the Tribunal in the case of ITO vs. M.M. Subramania Muduliar (1998) 67 ITD 136 (Mad) (SMC) to support the validity of interest charged under s. 234B. 30. Shri Dave submitted a chart in which the relevant facts in the case of Ranchi Club Ltd. vs. CIT, Udai Mistanna Bhandar & Complex and Smt. Tej Kumari vs. CIT have been briefly stated. 31. He pointed out that the case of Ranchi Club Ltd. relates to asst. yr. 1991-92. The assessment order does not mention anything about the levy of interest. It has merely held that a sum of Rs. 1,58,000 described as "entrance fee" to be included in taxable income. In demand notice issued under s. 156 of the Act, the AO, however, included the sum of Rs. 78,322 being interest payable on tax due amounting to Rs. 69,434. The assessee contended that interest under s. 234A and s. 234B can be levied only on the am....
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....f Ranchi Club Ltd. The assessee in that case, thus denied his liability to be assessed in respect of "entrance fee" of Rs. 1,58,000. Moreover, the Hon'ble Patna High Court has categorically held that "on these facts" it cannot be held that the assessee could anticipate that his claim for non-taxability of entrance fee received from the members will be held to be not exempt on the ground of mutuality. 33. In the case of Udai Mistanna Bhandar & Complex vs. CIT the AO had not even mentioned the section under which interest was chargeable. He simply mentioned "charge interest, if any". This is clearly distinguishable with the facts of the present case where the AO has specifically mentioned that ITNS-150 is enclosed. The ITNS-150 along with calculation-sheet annexed therewith not only shows that interest has been charged under s. 234B but it also gives complete details of the mode of calculating such interest. The cases of Ranchi Club Ltd. which were referred to larger Bench in the aforesaid judgment of Hon'ble Patna High Court reported in the case of Udai Mistanna Bhandar & Complex vs. CIT also did not contain the mention of specific section under which the interest was charged. Th....
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....nbsp; Citation Date of Judgment ---------------------------------------------------------------- Vidyapat Singhania vs. CIT (1977) 107 ITR 533 (All) 16-5-1973 National Products vs. CIT 1976 CTR (Kar) 179 : 18-3-1976 (1977) 108 ITR 935 (Kar) Bhikhoobhai N. Shah vs. CIT 1978 CTR (Guj) 172 : 7-9-1977 &nbs....
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....out that levy of interest under ss. 234A, 234B and 234C is a part and process of the assessment. The final assessment order consists of three parts first the assessment order, second ITNS-150 and the third is demand notice. He drew our attention to the judgment of Hon'ble Supreme Court in the case of Kalyankumar Ray vs. CIT (1992) 102 CTR (SC) 188 : (1991) 191 ITR 634 (SC) in which it was held that assessment is one integrated process involving not only the assessment of the total income but also the determination of tax. The latter is as crucial as the former. It may be relevant to reproduce the headnote of the said judgment: "Assessment is one integrated process involving not only the assessment of the total income but also the determination of the tax. The latter is as crucial as the former. The ITO has to determine by an order in writing, not only the total income but also the net sum which will be payable by the assessee for the assessment year in question and the demand notice has to be issued under s. 156 of the IT Act, 1961, in consequence of such an order. The statute does not, however, require that both the computations (i.e. of the total income as well as of the sum p....
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....IT vs. Alkeensons Agencies (2000) 164 CTR (J&K) 605 : (2000) 246 ITR 125 (J&K) and CIT vs. Hotel High Land Park (2000) 164 CTR (J&K) 610 : (2000) 246 ITR 130 (J&K) to further support his contention that if all the three documents forming part of the assessment are taken into consideration, it is amply clear that the AO made a specific mention of interest under s. 234B and also gave complete details of the computation of such interest under s. 234B along with assessment order. In the case of Udai Mistanna Bhandar & Complex even ITNS-150 was not mentioned in the assessment order or the specific section under which such interest was charged was stated. Shri Dave further invited out attention to CIT vs. Shah Services (1994) 73 Taxman 154 (Cal) in which the AO had observed "charge interest as per law". The Hon'ble High Court held that non-mention of specific section is a curable defect. The matter was remanded back to the lower authorities for passing a fresh order. Shri Dave thus strongly urged that order levying interest under s. 234B should be upheld on the facts of the present case. 39. Shri S.N. Soparkar, the learned Advocate, gave his written submission dt. 17th Dec, 2000, in r....
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....ing of interest. We do not think the assessee in the quantum appeal is bound to challenge the charging of interest though he may do so. He can certainly challenge levy of interest in a writ jurisdiction. This objection by the Revenue, therefore, fails'. 2. Argument: As the assessment order refers to INS form 150 which accompanied the assessment order and which contained the complete details of interest calculations, the levy of interest was justified. Our Reply: It is submitted that this issue also stands directly covered by the decision in the case of Uday Mistanna Bhandar. The 3rd and 4th questions considered by the Court and its decision, make it clear that this was the precise issue considered by the Court and has been decided in favour of the assessee. As a matter of fact in that case the facts were much stronger in favour of the Revenue inasmuch as the assessment order specifically stated that charge interest, if any or charge interest as per rules, And yet the Court took the view that interest cannot be charged. In view of the judgment, it is obvious that the controversy stands concluded in favour of the Appellant. If at all there was any doubt that also stand....
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.... to be assessed under the IT Act, 1961 as provided in s. 246A(1)(a). This is the ratio of a number of decisions cited/quoted on behalf of Revenue in the course of arguments. 3. As regards, the attempt made on the part of the learned counsel to wish away ITNS-150 computation form, whose significance has been recognised and approved by Hon'ble Supreme Court in the case of Kalyankumar Ray, it is submitted that determination of such payable envisaged in s. 143(3) of the Act, is an integral and inseparable part of the entire process of assessment provided in Chapter XIV of the Act. The contention that the levy of interest was not the issue for consideration before the Hon'ble Supreme Court in that case appears quite illogical business not only the levy of interest but the entire process of imposition of tax, interest, etc was assailed before the Hon'ble Court. 4. The case of Uday Mistanna Bhandar is distinguishable for the simple reason that there is no mention in that judgment whether ITNS-150 i.e. computation form, was annexed or not with the assessment order which if otherwise enclosed with the assessment order, in accordance with the decision of Hon'ble Supreme Court in the ca....
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.... subsequently in number of cases. I would also like to draw kind attention of various decisions of this Hon'ble Tribunal in a number of cases where the levy of interest has been held to be of consequential in nature. Even in the case of Nirma Detergent (P) Ltd. Hon'ble Members of this Tribunal, have considered the relevance of ITNS-150. 8. To conclude, three issues namely (1) denial of liability in terms of s. 246A(1)(a), (2) appealability in respect of charging of interest under various provisions of the Act, and (3) concept of determination of income and that of sum payable under s. 143(3) require serious consideration." 41. We have carefully considered the submissions made by the learned representatives and have gone through all the judgments cited by them. The following issues requires our consideration: (a) Whether the additional ground relating to deletion of interest charged under s. 234B should be entertained? (b) Whether the levy of interest under s. 234B on the facts of the present case is appealable? (c) Whether interest under s. 234B could be charged without specific direction for charging such interest in the assessment order, in a case where the assessm....
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.... 216, 217 providing for levy of interest for late filing of return, interest for underpayment of advance-tax, interest for deferment of instalment of advance-tax, interest relating to levy of interest for non-payment of advance-tax and the provisions providing for levy of penalty under s. 271(1)(a) for delay or failure to file the return of income, penalty under s. 273 for failure to file the statement/estimate or for filing an untrue statement/estimate of advance tax payable and penalty under s. 140A(3) for failure to pay tax on self-assessment, gave the assessing authorities discretionary powers to charge such interest and also to levy penalties for such defaults. The old provisions were found to be complicated and led to wasteful litigation due to improper exercise of such discretionary powers. (b) With a view to simplify the aforesaid provisions and also to remove the discretion of the assessing authorities, the Direct Tax Laws (Amendment) Act, 1987 w.e.f. 1st April, 1989, as amended by the Direct Tax Laws (Amendment) Act, 1989, introduced ss. 234A, 234B and 234C, which contain a new scheme of payment of mandatory interest for such defaults. The provisions of ss. 234A and 23....
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....n the day immediately following the expiry of the time allowed as aforesaid, and,- (a) where the return is furnished after 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 s. 147, 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-s. (1) of s. 143 or on the basis of the earlier assessment aforesaid. (4) Where as a result of an order under s. 154 or s. 155 or s. 250 or s. 254 or s. 260 or s. 262 or s. 263 or s. 264 or an order of the Settlement Commission under sub-s. (4) of s. 245D, the amount of tax on which interest was payable under sub-s. (1) or sub-s. (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 AO 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 s. 156 ....
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....ed in accordance with the foregoing provisions of this section upto the date on which the tax is so paid, and reduced by the interest, if any, paid under s. 140A towards the interest chargeable under this section; (ii) thereafter, interest shall be calculated at the rate of aforesaid on the amount by which the tax so paid together with the advance tax paid falls short of the assessed tax. (3) Where, as a result of an order of reassessment or recomputation under s. 147, the amount on which interest was payable under sub-s. (1) is increased, the assessee shall be liable to pay simple interest at the rate of one and one-half per cent for every month or part of a month comprised in the period commencing on the day following the date of determination of total income under sub-s. (1) of s. 143 and where a regular assessment is made as is referred to in sub-s. (1) following the date of such regular assessment and ending on the date of the reassessment or recomputation under s. 147, on the amount by which the tax on the total income determined on the basis of the re-assessment or recomputation exceeds the tax on the total income determined under sub-s. (1) of s. 143 or on the basis o....
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....n a financial year under s. 208 has failed to pay such tax or where the advance tax paid by such assessee under the provisions of s. 210 is less than 90 per cent of the assessed tax shall be liable to pay simple interest @ 2 per cent (reduced to 1-1/2 per cent w.e.f. 1st June, 1999) 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 regular assessment, on the assessed tax, where no advance tax has been paid and in cases where the advance tax paid is less than 90 per cent of the assessed tax, on the difference between the assessed tax and the advance tax paid. Explanation 1 to s. 234B gives the meaning of expression "assessed tax" used in s. 234B. It clarifies that "assessed tax for purposes of computing interest payable under s. 140A, shall mean the tax on the total income as declared in the return, and in any other case it means the tax determined under s. 143(1) or on regular assessment, as reduced by the amount of tax deducted at source from any income included such total income. Sub-s. (2) of s. 234B provides for the mode of computation of interest, where before the date of determination o....
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....ich can legitimately be said to be public revenue which although payable by the assessee, has actually not been paid by him. Levy of interest on such amount which the assessee withholds and makes use of cannot be said to be anything but a compensatory measure meant to offset the loss which the Revenue suffers on account of non-payment of the said amount. This becomes evident also from the fact that the sections contain specific provisions in regard to the period for which this additional liability is imposed on the defaulting assessees." (b) The Hon'ble Karnataka High Court in the case of Union Home Products Ltd. vs. Union of India (1995) 129 CTR (Kar) 217 : (1995) 215 ITR 758 (Kar) has held as under: "The old provisions providing for payment of interest any penalty have been replaced by the provisions of ss. 234A, 234B and 234C, but the new system does not get its colour from the old. The new provisions will have to be interpreted in the light of the language employed therein and the purpose they purport to achieve. One of the objects behind the introduction of the Direct Tax Laws (Amendment) Bill, 1987, was to remove uncertainty in the matter of assessments by cutting down ....
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.... where a statute either by express words or by necessary implication excludes the grant of a hearing to the assessee concerned." (c) Similar view upholding the constitutional validity of these provisions that they are mandatory, automatic and compensatory have been upheld by various other High Courts such as in the following cases: (i) Sant Lal vs. Union of India & Ors. (1996) 134 CTR (P&H) 581 : (1996) 222 ITR 375 (P&H); (ii) Dr. S. Reddappa & Ors. vs. Union of India & Ors. (1998) 149 CTR (Kar) 521 : (1998) 232 ITR 62 (Kar); (iii) Nemichand Jain vs. Union of India (1998) 145 CTR (MP) 79 : (1998) 234 ITR 764 (MP); and (iv) A.M. Sainalabdeen Musaliar vs. Union of India & Ors. (1999) 155 CTR (Kar) 647: (2000) 242 ITR 400 (Ker). It is clear from the aforesaid judgments that constitutional validity of these provisions have been upheld by all the Hon'ble High Courts and these provisions have been held to be mandatory, automatic and compensatory in nature. 46. We have carefully gone through all the judgments/decisions cited by the learned counsels in relation to binding nature of precedents, judicial discipline and judicial propriety and have made out humble attempt ....
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....case of Uday Mistanna Bhandar & Complex the assessment order does not contain the fact that ITNS-150 is annexed with the assessment order, nor the section under which interest was charged, was specifically mentioned in the assessment order. However, in the present case, the AO has specifically mentioned in the assessment order itself that ITNS-150 is enclosed. The assessee has itself submitted a copy of ITNS-150 along with calculation sheet of interest in the compilation. The ITNS-150 clearly shows that interest of Rs. 12,39,696 was charged under s. 234B. The accompanying calculation sheet gives full details of the manner and period for which such interest amounting to Rs. 12,39,696 was calculated. The assessee does not dispute that fact that such ITNS-150 and calculation-sheet were received along with the assessment order in which "ITNS-150 enclosed" was mentioned and were duly signed/initialled by the AO. 48.1 We may now refer to the judgment of Hon'ble Supreme Court in the case of Kalyankumar Ray vs. CIT. The headnote of the said judgment has been reproduced at pp. 18 and 19 of this order. It has been held that ITNS-150 annexed with the assessment order is an internal part of....
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....upreme Court by a brief order means that the order of the Hon'ble Patna High Court has merged with that of the Hon'ble Supreme Court. The judgment of Hon'ble Patna High Court affirmed by the Hon'ble Supreme Court is, therefore, binding on all subordinate Courts/Tribunals/appellate authorities. 50. We will, therefore, proceed to understand the facts and decision rendered by the Hon'ble Patna High Court in the case of Ranchi Club as affirmed by the Hon'ble Supreme Court. 50.1. The relevant extracts from the judgment of Hon'ble Patna High Court are reproduced hereunder: "It is clear that the additional liability to pay interest arises only on account of delayed/non-filing of the return and/or payment of advance tax. In the instant case, interest has been levied on the tax payable after assessment and not on the tax payable as per the return. It is relevant to state here that the petitioner had filed return showing an income of Rs. 9,080 on 19th Aug., 1992, along with proof of payment of self-assessed/advance tax of Rs. 5,418. The return was also accompanied by a written statement that although the club had received a sum of Rs. 1,58,000 as entrance fee from new members the am....
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....Supreme Court, while considering the provisions in regard to leviability of interest in the context of the Rajasthan ST Act, 1954, made the following observation: "Therefore, so long as the assessee pays the tax which according to him is due on the basis of information supplied in the return filed by him, there would be no default on his part to meet his statutory obligation under s. 7 of the Act and, therefore, it would be difficult to hold that the 'tax payable' by him 'is not paid' to visit him with the liability to pay interest under cl. (a) of s. 11B. It would be a different matter if the return is not approved by the authority but that is not the case here. It is difficult, on the plain language of the section to hold, that the law envisages the assessee to predict the final assessment and expect him to pay the tax on that basis to avoid the liability to pay interest. That would be asking him to do the near impossible." Although as stated above, the context in which the observations were made was somewhat different but the principle laid down by their Lordships, in my opinion, would squarely cover cases of the present nature. The assessee is not supposed to pay interest....
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.... the demand notice the sum of Rs. 78,322 has, however, been mentioned, as the interest payable on taxable income i.e., Rs. 69,434. The counsels for both the sides, however, made their submissions on the basis of provisions of ss. 234A and 234B of the Act. 51.1. It is clear from the facts of the case that there was no default in filing the return and payment of self-assessed/advance tax. The interest has been charged in respect of tax on addition of Rs. 1,58,000 received as entrance fee from new members, which was claimed to be not liable to tax on the principle of mutuality. Such dispute has been coming on since asst. yr. 1981-82 (since last 10 years). If the 'entrance fee' is not included in the taxable income, the levy of entire amount of interest will automatically go. The Hon'ble Patna High Court in the case of CIT vs. Ranchi Club Ltd. (1991) 100 CTR (Pat)(FB) 295 : (1992) 196 ITR 137 (Pat)(FB) (in assessee's own case) had decided the claim of non-taxability of such income on the principle of mutuality in favour of the assessee. The relevant extracts from the said judgment is reproduced hereunder: "Held, that merely because the assessee-company had entered into transactio....
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....proper to regard a word, a clause or a sentence occurring in a judgment of the Supreme Court, divorced from its context, as containing a full exposition of the law on a question when the question did not even fall to be answered in that judgment." 52.1. The Hon'ble Supreme Court in the case of Mahendra Mills Ltd. vs. AAC 1975 CTR (SC) 82 : (1975) 99 ITR 135 (SC) at p 143 has held as under: "It must be remembered that a decision is a precedent on its own facts. Each case presents its own features. The IT authorities and Tribunals are supposed to apply the ratio of a decision in the facts of particular cases with due care and discernment bearing in mind the restricted scope of their jurisdiction under s. 35 and the object for with it is conferred." 53. The Hon'ble Full Bench of Patna High Court in the case of Smt. Tej Kumari vs. CIT has simply followed the judgment of Hon'ble Supreme Court in the case of CIT vs. Ranchi Club Ltd. and has also applied the principles laid down in the case of J.K. Synthetics Ltd. vs. CIT. The Hon'ble Patna High Court in the case of Ranchi Club Ltd. (1996) 217 ITR 72 (Pat) affirmed by the Hon'ble Supreme Court also observed that the judgment in t....
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....hich would render it otiose or sterile." 12. We are, therefore, not adopting a construction which would upset or even impair the purpose is introducing s. 10A in the Act. The return to be filed by the dealer is the full and correct return as referred to in s. 10 and on failure to furnish such a return the liability to pay interest from the prescribed date would arise when assessment is completed. 13. Learned counsel next contended alternatively that in view of the decision of the Constitution Bench in J.K. Synthetics Ltd. vs. CTO (1994) 119 CTR (SC) 222 : (1994) 94 STC 422 (SC) : (1994) 4 SCC 276, the appellants cannot be mulcted with interest on the tax amount since they were bona fide contending and contesting the validity of s. 68 of the Act. This contention warrants serious consideration. 14. The ratio laid down in the aforesaid decision is that the provision in a taxing statute providing for levy of interest on failure of the dealer to pay tax due under the particular Act should not be strictly construed but should be so construed as to effectuate and not 'defeat the object and purpose of the Act. The Constitution Bench was called upon to decide the case on a referenc....
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....ble' in s. 11B can only mean the full amount of tax which becomes due under sub-s. (2) and (2A) of the Act when assessed on the basis of the information regarding turnover and taxable turnover furnished or shown in the return. Therefore, so long as the assessee pays the tax which according to him is due on the basis of information supplied in the return filed by him, there would be no default on his part to meet his statutory obligation under s. 7 of the Act and, therefore, it would be difficult to hold that the 'tax payable' by him 'is not paid1 to visit him with the liability to pay interest under cl. (a) of s. 11B. It would be a different matter if the return is not approved by the authority but that is not the case here. It is difficult on the plain language of the section to hold that the law envisages the assessee to predict the final assessment and expect him to pay the tax on that basis to avoid the liability to pay interest. That would be asking him to do the near impossible.' Thus, the majority view expressed in Associated Cement Co. Ltd. case (1981) 48 STC 466 (SC) was overruled and the minority view therein was upheld by the Constitution Bench. 15. But the positio....
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....ourt on a variety of considerations, one among being the strained financial position of the person approaching the Court. Merely because the Court granted interim orders it cannot be inferred that Court was then satisfied of a strong prima facie case for the appellants. On the contrary, it is well-nigh settled that there is always a presumption in favour of constitutionality of a legislative act. The presumption cannot be the other way around." 55. The old provisions of s. 11B were substituted by the new provisions of s. 11B w.e.f. 7th April, 1979 in Rajasthan ST Act, which provides a new scheme for levy of interest under that provision. The new s. 11B inter alia provides that difference between the tax quantified on assessments/reassessment under s. 7A, 7B, 10, 10A, 12, etc. and the tax shown as payable in the returns shall be divided proportionately amongst the periods for which he was required to pay tax under the provisions of this Act and the amount so determined shall be deemed to be the amount of the tax payable for such period (quarterly/monthly) and the dealer shall be liable to pay interest @ 2 per cent per month on the aforesaid amount from the date by which the tax w....
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....of these provisions, namely ss. 234A, 234B and 234C, simultaneously for the same period. For example if an assessee has filed return late and also not paid advance tax or it falls short of assessed tax, he may be liable to pay interest for delay in filing of the return under s. 234A @ 2% p.m. (reduced to 1-1/2 p.m. w.e.f. 1st June, 1999) and simultaneously he will also be liable to pay interest @ 2% p.m. (reduced to 1-1/2 p.m. w.e.f. 1st June, 1999) for short payment of advance-tax under s. 234B on the same amount and for the same period of default of delay in filing of the return of income. It was argued on behalf of the taxpayers in various cases while challenging the constitutional validity of s. 234A, 234B, 234C that such liability to pay interest for the overlapping period @ 2 per cent p.m. under ss. 234A and 234B amounts to double levy and cannot be treated as compensatory, as compensation by way of interest can be charged only once and not twice for the same period and on the same amount. It may be recalled that higher rate of interest @ 2 per cent p.m. was originally prescribed in ss. 234A and 234B to compensate not only interest for moneys withheld, but also to some extent....
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....e following the judgment of Hon'ble Supreme Court in the case of J.K. Synthetics at p. 77 of 217 ITR has specifically mentioned that context in which the quoted observations were made by the Hon'ble Supreme Court was somewhat different but the principle laid down in that case would cover cases of the present nature. The facts of J.K. Synthetics case have also been extracted in earlier part of this order, which also shows that it was impossible to expect M/s J.K. Synthetics to include the amount or freight in its turnover at the time of filing the quarterly return of turnover under the provisions of Rajasthan ST Act, as various judgments till that date were in favour of the assessee's contention that freight separately collected and paid was not includible in turnover. The controversy was resolved by the Hon'ble Supreme Court in Hindustan Sugar Mills' case (1979) 43 STC 13 much after the filing of returns of M/s J.K. Synthetics. The assessee cannot be held liable to pay advance tax on these disputed items of income/additions, which could not be anticipated, foreseen or predicted by any person of ordinary prudence by any stretch of imagination, at the contemporary period, when he was....
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....r in the specified manner. The Hon'ble Supreme Court held that there was always a presumption in favour of constitutionality of a legislative act. The presumption could not be the other way. Thus where the assessee could by exercise of due diligence anticipate his liability to pay such disputed tax, will also attract liability for levy of interest for non-payment of advance-tax. It is needless to say that assessee will certainly be liable to pay interest under s. 234B in respect of tax liability, which could be foreseen or anticipated, or tax levied on income concealed or additions made in the declared income, which are clearly liable to tax. Only those items of income/addition in the declared income can be excluded for purposes of levy of interest under s. 234B which were impossible to have been anticipated or foreseen by the assessee at the contemporary period, when advance tax was payable. 60. We, therefore, respectfully following the judgment of Hon'ble Patna High Court in the case of Ranchi Club, as affirmed by the Hon'ble Supreme Court hold that the assessee will not be liable to pay interest under s. 234B of the Act on the amount of tax on these items of additions in t....