HARI NARAIN SONI v. INCOME TAX OFFICER & ANR
[Citation -2008-LL-0313]

Citation 2008-LL-0313
Appellant Name HARI NARAIN SONI
Respondent Name INCOME TAX OFFICER & ANR.
Court ITAT
Relevant Act Income-tax
Date of Order 13/03/2008
Assessment Year 1990-91
Judgment View Judgment
Keyword Tags default in payment of advance tax • best judgment assessment • taxability of income • payment of interest • specific direction • specific provision • additional income • levy of interest • tax computation • demand notice • entrance fee • tax due
Bot Summary: Secondly, even in the order dated April 11, 2001, passed as a consequence of order passed by the Tribunal, it has been revealed that the interest is being charged under sections 234A, 234B and 234C of the Act. Thirdly, since Form ITNS-150 clearly mentions the provisions of law under which the interest is being charged, and since the said Form is attached with the assessment order, it should be read as a part and parcel of the assessment order itself. Lastly, in the case of Kalyankumar Ray 1991 191 ITR 634; AIR 1992 SC 159, the hon'ble Supreme Court was specifically seized with the issue whether Form ITNS-150 is deemed to be part and parcel of the assessment order or not In that case, the assessment order was under challenge. A bare look at the assessment order dated March 31, 1993, clearly reveals that Form ITNS-150 had accompanied the assessment order. Since the said Form was attached to the assessment order, since the said Form was signed by the Income-tax Officer, relying on the case of Kalyankumar Ray 1991 191 ITR 634; AIR 1992 SC 159, this court has no hesitation in holding that the assessment order had specified all the provisions of law, under which the interest was leviable and the amount of interest to be charged from the assessee. The impugned order dated April 11, 2001, was passed in consequence of order passed by the learned Tribunal. The contention of learned counsel for the assessee that the specific provisions of law and the amount to be charged as interest, have not been revealed in the assessment order dated March 31, 1993 and in the order dated April 11, 2001, is without force.


JUDGMENT R. S. Chauhan J.-Mr. Hari Narain Soni, petitioner ("the assessee", for short) has challenged orders dated March 31, 1993, and April 11, 2001, passed by Deputy Commissioner of Income-tax, respondent No. 1. By former order, dated March 31, 1993, respondent No. 1 had computed taxable income of assessee and had charged interest under sections 234A, 234B and 234C of Income-tax Act, 1961 (in short, "the Act"). By latter order, dated April 11, 2001, respondent No. 1 had revised total taxable income of assessee and had created demand of Rs. 37,795. computation sheet attached with order dated April 11, 2001, reveals that interest was levied under sections 234A, 234B and 234C of Act. brief facts of case are that assessee was carrying on business of manufacturing of jewellery. According to assessee, he was regularly submitting his returns to Income-tax Department. For assessment year 1990-91, assessee had declared his income as Rs.45,000. However, on September 17, 1989, his residential premises were searched by officers of Income-tax Department and certain documents were recovered. On basis of documents, notice under section 143(2) of Act was issued to assessee. assessee had appeared before respondent No. 1 from time to time. However, vide order dated March 31, 1993, respondent No. 1 had computed taxable income of Rs. 12,09,130. Respondent No. 1 computed tax at Rs. 6,30,142 and charged interest at Rs. 4,99,175. However, according to assessee, in order dated March 31, 1993, no specific direction was given indicating that interest was being charged under sections 234A, 234B and 234C of Act. order merely directed, "charge interest as per law". Since assessee was aggrieved by order dated March 31, 1993, he filed appeal before Commissioner of Income-tax (Appeals). Vide order dated February 18, 1994, certain relief was granted by Commissioner of Income-tax (Appeals) to assessee. Against order dated February 18, 1994, assessee as well as respondent-Department preferred appeals before learned Income-tax Appellate Tribunal, Jaipur Bench, Jaipur (in short, "the learned Tribunal"). Vide order dated February 12, 2001, learned Tribunal partly allowed appeals of both parties. Consequently, respondent No. 1 passed order dated March 21, 2001 and created additional income of Rs. 1,43,888 along with interest. assessee moved application under section 154 of Act and in pursuance of which respondent No. 1 passed order on April 11, 2001, under section 143(3)/250/154/253/254 of Act and computed total revised income at Rs. 3,19,000 and created demand of Rs. 37,795. Further, case of assessee is that in order dated April 11, 2001, no specific direction has been given to charge interest under sections 234A, 234B and 234C of Act. However, assessee admits that in computation sheet attached to said order it is clearly mentioned that interest at Rs.11,958, Rs. 1,02,462 and Rs. 233 is being charged under sections 234A, 234B and 234C of Act respectively. Thereafter, on September 7, 2001, assessee moved application before respondent No. 1 and requested that interest which is wrongly levied/charged under sections 234A, 234B and 234C of Act should be cancelled/deleted/waived. Since, respondent No. 1 did not pay any heed to said application, assessee has filed present petition before this court challenging orders mentioned above. Mr. J. K. Ranka, learned counsel for assessee, has raised following contentions before this court: Firstly, orders dated March 31, 1993, and April 11, 2001, are non-speaking orders. For, orders do not specifically mention that interest is being levied under sections 234A, 234B and 234C of Act. Secondly, neither of these two orders reveals "satisfaction" of respondent No. 1 for levying interest under aforementioned sections of Act. Thirdly, it is not sufficient in eyes of law for orders to merely read "charge interest as per law". According to learned counsel, requirement of law is that specific provisions of Act have to be mentioned and interest has to be computed and mentioned in order itself. Fourthly, in case, orders do not mention specific provision of law under which interest is being levied, then interest cannot be levied by Department. In order to buttress his contentions, learned counsel for assessee has relied upon cases of Ranchi Club Ltd. v. CIT [1996] 217 ITR 72 (Patna), CIT v. Ranchi Club Ltd. [2001] 247 ITR 209 (SC), Smt. Tej Kumari v. CIT [2001] 247 ITR 210 (Patna) [FB], CIT v. Autolite (I) P. Ltd. [2002] 256 ITR 303 (Raj) and Zakir Hussain v. CIT [2006] 202 CTR 40 (Raj). On other hand, Mr. J. K. Singhi along with Mr. Anuroop Singhi, learned counsel for respondents, have contended that in facts and circumstances counsel for respondents, have contended that in facts and circumstances of case, interest could be charged only under sections 234A, 234B and 234C of Act. Therefore, when Assessing Officer directed "charge interest as per law", naturally he was referring only to provisions mentioned above. Moreover, order dated March 31, 1993, was accompanied with income- tax computation Form ITNS-150, which clearly reveals that interest payable by assessee is under sections 234A, 234B and 234C of Act. said form also shows amount to be paid by assessee by way of interest as being Rs. 4,99,175. Therefore, not only provision of law, under which interest was being charged, was specifically mentioned, but even amount of interest being charged, was computed and mentioned in assessment order. Secondly, even in order dated April 11, 2001, passed as consequence of order passed by Tribunal, it has been revealed that interest is being charged under sections 234A, 234B and 234C of Act. Therefore, again provision of law and amount chargeable as interest has been mentioned. In order to buttress their contentions, learned counsel has drawn attention of this court to annexures 1 and 2 of writ petition. Hence, merely non- mentioning of sections would not absolve assessee from paying interest. Thirdly, since Form ITNS-150 clearly mentions provisions of law under which interest is being charged, and since said Form is attached with assessment order, it should be read as part and parcel of assessment order itself. Likewise, in order dated April 11, 2001, words "charged accordingly" have been mentioned and in attached form not only provisions of law, but also amount of interest has been mentioned. Therefore, requirement of law has been met. In order to support their contentions, learned counsel have relied upon case of Kalyankumar Ray v. CIT [1991] 191 ITR 634 (SC); AIR 1992 SC 159. Fourthly, according to learned counsel, sections 234A, 234B and 234C of Act use word "shall". Therefore, these are mandatory provisions which do not leave any discretion to Assessing Officer. Hence, if requirements of these provisions are satisfied, then interest is to be charged as indicated in said provisions. In order to buttress his contention, learned counsel has relied upon case of CIT v. Anjum M. H. Ghaswala [2001] 252 ITR 1 (SC). Fifthly, learned counsel have distinguished present case from cases relied upon by learned counsel for assessee. Learned counsel has contended that case of Ranchi Club Ltd. v. CIT [1996] 217 ITR 72 decided by Patna High Court and, subsequently, upheld by hon'ble Supreme Court in case of CIT v. Ranchi Club Ltd. [2001] 247 ITR 209, did not deal with assessment order, but with demand notice. Moreover, in case of Ranchi Club Ltd. v. CIT [1996] 217 ITR 72 (Patna), assessment order did not reveal fact that interest would be charged. Yet still, demand notice was issued where interest was charged. However, in present case, assessment order clearly mentions that interest shall be charged. Therefore, decision rendered in case of Ranchi Club Ltd. v. CIT [1996] 217 ITR 72 by Patna High Court is distinguishable from present case. Similarly, other cases, namely, Autolite (I) P. Ltd. [2002] 256 ITR 303 (Raj), Zakir Hussain [2006] 202 CTR 40 (Raj) and Smt. Tej Kumari [2001] 247 ITR 210 (Patna), demand notice and not assessment order was under challenge. Hence, on factual matrix, cases are distinguishable. Lastly, in case of Kalyankumar Ray [1991] 191 ITR 634; AIR 1992 SC 159, hon'ble Supreme Court was specifically seized with issue whether Form ITNS-150 is deemed to be part and parcel of assessment order or not? In that case, assessment order was under challenge. apex court had held said form to be part of assessment order. Therefore, present case is squarely covered by case of Kalyankumar Ray v. CIT [1991] 191 ITR 634; AIR 1992 SC 159. We have heard learned counsel for parties, have perused impugned orders and have examined documents available on record. following legal issues arises for consideration by this court: whether it is requirement of law that specific provision under which interest is to be charged should be mentioned in assessment order or not? Whether it is sufficient for Assessing Officer merely to state in assessment order that "the interest be charged in accordance with law"? Whether, if relevant provision of law is not indicating in assessment order, can Income-tax Department still charge interest under sections 234A, 234B and 234C of Act or not? Whether Form ITNS-150, where provision of law is clearly indicated and interest amount is clearly computed, provision of law is clearly indicated and interest amount is clearly computed, attached to assessment order, should be read as part of assessment order or not? Interestingly as these legal issues may well be, but they are no longer res integra. For, these issues have already been answered by hon'ble Supreme Court. Of course, learned counsel for assessee has heavily relied upon case of Ranchi Club Ltd. [1996] 217 ITR 72 decided by Patna High Court, upheld by apex court and subsequently followed in case of Autolite (I) P. Ltd. [2002] 256 ITR 303 (Raj) and Zakir Hussain [2006] 202 CTR 40 (Raj) by this court. But, cases cited by him, at Bar, are not applicable to present case. Learned counsel has strenuously argued that judgment of Patna High Court in Ranchi Club Ltd. v. CIT [1996] 217 ITR 72 was subsequently upheld by hon'ble Supreme Court as apex court had dismissed civil appeal in limine arising from decision of Patna High Court. In case of Smt. Tej Kumari [2001] 247 ITR 210, position with regard to dismissal of said civil appeal by apex court was duly explained. Thus, it seems that case of Ranchi Club Ltd. [1996] 217 ITR 72 decided by Patna High Court is bedrock of entire contention of learned counsel for assessee. Therefore, let us turn to case of Ranchi Club [2001] 247 ITR 209 (SC). Ranchi Club Ltd. was company registered under Companies Act. It had challenged validity of assessment order and consequential demand notice under Act for assessment year 1991-92, so far as it related to levy of interest. It had also challenged vires of sections 234A and 234B of Act. However, we need not be concerned with vires of said two sections, as said issue is not involved in present case. Although, with respect, factual matrix of case is unclear, but it seems that Ranchi Club had filed return for assessment year 1991-92 on August 19, 1992. It had clearly declared that it had collected Rs. 1,58,000 by way of "entrance fee". However, it had denied its liability to pay any tax on said amount on principle of mutuality. Subsequently, best judgment assessment was made under section 144 of Act after petitioner failed to file revised return under section 139(4) of Act. assessment order, however, did not mention anything about levy of any interest. Interestingly, neither did demand notice mention "as to under which provision of Act interest has been levied". Yet, in demand notice, under section 156 of Act, sum of Rs. 78,322 was mentioned as interest payable on tax due, i.e., Rs. 69,434". issue which arose before High Court was "whether levy of interest on tax assessed to best of judgment under section 144 after assessee has filed return under section 139 of Act is legally sustainable or not?" court noticed that Ranchi Club had filed return showing income of Rs. 9,080 on August 19, 1992, along with proof of payment of self- assessed/advance tax of Rs. 5,418. return was also accompanied by written statement that although club had received sum of Rs. 1,58,000 as entrance fee from new members amount was not liable to be included within taxable income as being exempt from taxation on principle of mutuality. According to petitioner, dispute had been coming (sic) on since assessment year 1981-82 in this regard and in that view petitioner could not have submitted fresh return showing aforesaid sum of Rs. 1,58,000 within taxable income which would have virtually amounted to renouncing its claim. From these facts, court held that: "it is clear that there was no default in filing return and payment of self-assessed/advance tax... Thus, it cannot be said to be case of suppression or concealment of income". court further observed, "where assessee fails to file return of income either under section 139(1) or (4) or section 142(1), pursuant to notice issued thereunder, or files same after due date in terms of section 234A he is no doubt liable to pay interest. He is also liable to pay interest if he commits any default in payment of advance tax under provisions of section 234B. Where, however, return is filed within time but particular item of income is in dispute as being includible within taxable income or not, mere issue (sic) of notice under section 142 will not confer jurisdiction upon authority to levy interest". Lastly, court held, "in my considered opinion, therefore, necessary conditions as required under section 234A are not made out in instant case and, therefore, levy of interest is not justified". case of Ranchi Club (supra) is inapplicable on present case. For, there are material differences between two cases. Firstly, in Ranchi Club case (supra), assessee had clearly mentioned that point of taxability of case (supra), assessee had clearly mentioned that point of taxability of income generated under heading of "entrance fee" is questionable proposition. Although it had clearly mentioned generation of Rs. 1,58,000 as amount generated from "entrance fee" but it had argued that same is not taxable on principle of mutuality. Moreover, since issue was still alive between assessee and Revenue, assessee did not want to concede this point before Revenue. But, in present case, there is not single item that is debatable between assessee and Revenue. Secondly, in Ranchi Club's case (supra), assessment order did not mention about levy of any interest. Moreover, even demand notice did not mention as to under which provision of Act interest has been levied. However, in demand notice under section 156 of Act, sum of Rs. 78,322, was mentioned as interest payable on tax due, i.e., Rs. 69,434. However, in present case, ITNS-150 Form accompanied assessment order. said Form not only revealed fact that interest was chargeable under sections 234A, 234B and 234C of Act but also computed amount charged as interest under specific provisions. Thus, unlike Ranchi Club's case (supra) in present case, provision and amount leviable as interest are unequivocally mentioned in assessment order. Similarly, in demand notice specific provision of law as well as amount leviable as interest are mentioned. This was not situation in Ranchi Club case (supra). Lastly and most importantly, in Ranchi Club's case (supra) condition for applicability of section 234A of Act was not fulfilled. However, in present case, conditions for applicability of section 234A of Act have been fulfilled. Hence, Ranchi Club's case (supra) is distinguishable on basis of factual and legal matrix. Of course, apex court had upheld decision of Ranchi Club's case (supra) in case of CIT v. Ranchi Club Ltd. [2001] 247 ITR 209 (SC). However, as decision of Patna High Court is inapplicable to present case, therefore, confirmation of said decision by apex court does not come to rescue of assessee. Although, decision in Ranchi Club (supra) has been followed by this court in cases of Autolite (I) P. Ltd. [2002] 256 ITR 303 (Raj) and Zakir Hussain [2006] 202 CTR 40 (Raj), but these two judgments have overlooked existence of decision of hon'ble Supreme Court in case of Kalyankumar Ray [1991] 191 ITR 634; AIR 1992 SC 159. In fact, case of Kalyankumar Ray [1991] 191 ITR 634; AIR 1992 SC 159, covers present case. In Kalyankumar Ray's case [1991] 191 ITR 634; AIR 1992 SC 159, assessee had contended that assessment order itself should contain calculation of tax, interest, etc., and of net sum payable/leviable. According to him, these details could not be relegated to demand notice. Furthermore, since these statutory requirements were not complied with, assessee had argued that assessment order should be held to be void and consequently annulled. However, dismissing contention raised by petitioner, hon'ble Supreme Court has held as under (page 638 of 191 ITR): "The statute does not, however, require that both computations (i.e., of total income as well as of sum payable) should be done on same sheet of paper, sheet that is superscribed `assessment order'. It does not prescribe any form for purpose. It will be appreciated that once assessment of total income is complete with indications of deductions, rebates, reliefs and adjustments available to assessee, calculation of net tax payable is process which is mostly arithmetical but generally time consuming. If, therefore, Income-tax Officer first draws up order assessing total income and indicating adjustments to be made, directs office to compute tax payable on that basis and then approves of it, either immediately or some time later, no fault can be found with process, though it is only when both computation sheets are signed or initialled by Income- tax Officer that process described in section 143(3) will be complete." hon'ble Supreme Court further observed that Form ITNS-150 is also form for determination of tax payable and when it is signed or initialled by Income-tax Officer, it is certainly order in writing by Incometax Officer determining tax payable within meaning of section 143(3) of Act. hon'ble Supreme Court further held that (page 639): "We are unable to see why this document, which is also in writing and which has received imprimatur of Income-tax Officer, should not be treated as part of assessment order in wider sense in which expression has to be understood in context of section 143(3). There is no dispute in present case that Income-tax Officer has signed Form ITNS- 150. We, therefore, think that statutory provision has been duly complied with and that assessment order was not in any manner vitiated". bare look at assessment order dated March 31, 1993, clearly reveals that Form ITNS-150 had accompanied assessment order. said income- tax computation form was duly signed by Income-tax Officer. said Form clearly reveals that interest payable by petitioner-assessee was under sections 234A, 234B and 234C of Act and amounts payable under provisions were also clearly mentioned. total amount of interest to be paid was also unequivocally mentioned. Since said Form was attached to assessment order, since said Form was signed by Income-tax Officer, relying on case of Kalyankumar Ray [1991] 191 ITR 634; AIR 1992 SC 159, this court has no hesitation in holding that assessment order had specified all provisions of law, under which interest was leviable and amount of interest to be charged from assessee. Moreover, impugned order dated April 11, 2001, was passed in consequence of order passed by learned Tribunal. said order also reveals that interest is being charged under sections 234A, 234B and 234C of Act and also reveals amount of interest to be charged. Thus, it cannot be held that assessment order did not reveal specific provision of law under which interest is to be charged. Similarly, impugned order dated April 11, 2001, also clearly revealed specific amount to be charged as interest. Therefore, contention of learned counsel for assessee that specific provisions of law and amount to be charged as interest, have not been revealed in assessment order dated March 31, 1993 and in order dated April 11, 2001, is without force. Prior to Finance Act, 1987, sections 234A, 234B and 234C of Act had used word "may". However, in 1987, word "shall" was substituted for word "may". Since, word "may" has been substituted by word "shall", such substitution clearly indicates that intention of Legislature was to make payment of interest mandatory in nature and not merely directory. This view has been confirmed in case of Anjum M. H. Ghaswala [2001] 252 ITR 1 view has been confirmed in case of Anjum M. H. Ghaswala [2001] 252 ITR 1 (SC). Therefore, once conditions of sections 234A, 234B and 234C of Act are satisfied, Assessing Officer has no option but to charge interest at rate mentioned in said provisions. Therefore, contention of learned counsel for assessee that Assessing Officer must indicate his "satisfaction" in assessment order for charging interest is without force. Lastly, assessee had challenged assessment order before Commissioner of Income-tax (Appeals) and had raised issue about charging of interest. same issue was also raised before learned Tribunal. However, both Commissioner of Income-tax (Appeals) and learned Tribunal have rejected his contentions and according to our opinion, rightly so. For reasons stated above, this writ petition has no merit and it is hereby dismissed. No order as to costs. *** HARI NARAIN SONI v. INCOME TAX OFFICER & ANR.
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