IN INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B (SMC), HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. No. 759/HYD/2015 Assessment Year: 2003-04 Income Tax Officer, Rao Subba Rao (HUF) Ward-14(1), Vs HYDERABAD HYDERABAD [PAN: AAKHR7236R] (Appellant) (Respondent) C.O. No. 26/HYD/2016 (in ITA No. 759/Hyd/2015) Assessment Year: 2003-04 Rao Subba Rao (HUF) Income Tax Officer, HYDERABAD Vs Ward-14(1), [PAN: AAKHR7236R] HYDERABAD (Cross-Objector) (Respondent) For Revenue : Shri K.J. Rao, DR For Assessee : Shri K.C. Devadas, AR Date of Hearing : 09-09-2016 Date of Pronouncement : 23-09-2016 ORDER This is appeal by Revenue against order of Commissioner of Income Tax (Appeals)-4, Hyderabad dated 27-02-2015 and Cross-Objection by assessee against said order. Cross-Objection was filed with delay of 131 (One Hundred and Thirty One) days. While filing Cross-Objection, assessee had filed affidavit indicating reasons for delay that he left for USA and while he was away from India, authorised his I.T.A. No. 759/Hyd/2015 :- 2 -: C.O. No. 26/Hyd/2016 son to be General Power of Attorney [GPA] holder including tax matters and he could not attend due to business commitments and when he returned, son ceased to be GPA and on arriving India, he was bed-ridden. When he came to know that Cross- Objection is to be filed against appeal filed by Revenue, he has preferred same with delayand requested for condonation. After considering submissions in this regard, I hereby condone delay and allow Cross-Objection. 2. facts leading to present appeals are that assessee has filed his return of income voluntarily on 29-12-2006 for various years including impugned AY. 2003-04. There were search and seizure operations in residential premises of Shri Rao Subba Rao on 24-08-2005. Thereafter, notices were issued in individual capacity, whereas assessee-HUF voluntarily filed returns in that capacity. For impugned assessment year, assessee returned income of Rs. 42,75,000/- and agricultural income of Rs. 11,50,000/-. While filing return, assessee, however, calculated tax wrongly, as highest marginal rate was calculated at 20% as against 30%. Assessee also calculated interest u/s.234A at Rs. 58,960/- on tax so determined at Rs. 7,37,000/- and 234B at Rs. 4,05,350/-. Thus, assessee calculated total interest payable under two sections at Rs. 4,64,310/- and total tax paid was Rs. 12,01,310/- on admitted income including agricultural income for rate purposes. 2.1. AO however, in assessment, made additions by treating agricultural income as income from other sources and cash credits to extent of Rs. 51,96,722/- as unexplained . Thus, I.T.A. No. 759/Hyd/2015 :- 3 -: C.O. No. 26/Hyd/2016 total income was determined at Rs. 1,06,21,720/-. On appeal, Ld.CIT(A) confirmed additions made in assessment order. same was challenged before ITAT on two grounds viz., on ground of jurisdiction and on merits. ITAT vide its order dt. 31-01-2013 held that AO has not recorded satisfaction and therefore, there is jurisdictional defect. Accordingly, assessment in impugned year framed in respect of HUF was quashed. However, ITAT directed that whatever admitted tax by assessee in all these assessment years is to be forfeited in view of judgment of Supreme Court in case of CIT Vs. Shelly Products and Another [261 ITR 367] (SC). In consequential order giving effect to order of ITAT, AO raised demand of Rs. 16,19,773/- accepting total income at Rs. 42,75,000/-. In that order, AO charged tax correctly at 30% being highest marginal rate on income as per provisions of Act and while determining interest, he accepted interest u/s. 234A at Rs. 58,960/- as admitted by assessee. However, interest u/s. 234B was enhanced to Rs. 7,22,777/- being consequential effect in view of increased tax and further levied interest u/s. 234C at Rs. 58,622/-. Assessee has challenged demand raised in consequential order. Ld.CIT(A) has allowed appeal by stating as under: 7. As Hon'ble ITAT has quashed assessment made by AO and directed that tax admitted be forfeited relying on decision of Hon'ble Supreme Court as above, it is clear that no further demand can be raised against assessee. Accordingly, demand raised is not as per law laid down by Hon'ble Supreme Court followed by Hon'ble ITAT and is deleted. Assessee s ground no. 1 & 2 are treated as allowed . I.T.A. No. 759/Hyd/2015 :- 4 -: C.O. No. 26/Hyd/2016 3. Revenue is aggrieved on above and raised following grounds: 2. Whether facts and circumstances of case, CIT(A) is correct in deleting demand raised by AO as per consequential order when same is passed after duly giving effect to ITAT order. 3. Whether in facts and circumstances of case, CIT(A) is correct in ignoring fact that demand raised in consequential order is on account of calculation of tax and interest on incomes admitted by assessee in its return of income only and not on account of any additions made by AO . Ground Nos. 1 & 4 are general in nature. 4. Ld. DR submitted that assessee has filed return voluntarily much before notice u/s. 153C was issued and he has paid self-assessment less than required under law to be paid. Since there is short computation of self-assessment tax, AO has raised demand in consequential order and no further demand was raised on assessee violating orders of Hon'ble Supreme Court. It was further submitted that calculation is as per rates of Finance Act. Therefore, there is liability to pay Income tax chargeable u/s. 4(1) of Act as prescribed under law. 5. Ld. Counsel while agreeing that there is mistake in calculation of self-assessment tax, however, objected that further demand u/s. 234C cannot be raised as there is no computation of interest u/s. 234C in assessment order itself. Therefore, interest u/s. 234C cannot be levied in consequential order. It was also further submitted that interest u/s. 234A is not levied in assessment order. Therefore, AO cannot levy interest u/s. I.T.A. No. 759/Hyd/2015 :- 5 -: C.O. No. 26/Hyd/2016 234A in consequential order. Coming to interest u/s. 234B, it was submission that no further demand can be made in consequential order, other than what was voluntarily admitted by assessee. 6. I have considered rival contentions and perused record. As seen from record, it is assessee who filed returns voluntarily in HUF status, admitting total income at Rs. 42,75,000/- and agricultural income of Rs. 11,50,000/- was admitted for rate purposes. However, while calculating taxes, assessee has taken exemption of first Rs. 50,000/- and for next Rs. 50,000/-, he calculated tax at 10% and next Rs. 90,000/- was calculated at 20% and on balance, wrongly taken at Rs. 52,75,000/- calculated 20% again arriving at that tax at Rs. 10,55,000/-. However, correct tax liability on above amount is at Rs. 16,01,500/- and after agricultural rebate, same would result at Rs. 13,30,875/-. As against this, assessee arrived tax liability at Rs. 7,37,000/-. Thus, there is shortfall in self-assessment tax itself which is collectable as same is liability admitted by assessee. liability is to pay income tax chargeable u/s. 4(1) of Act thus, does not rest on assessment being made. As soon as Finance Act prescribes rate on income for any assessment year, liability to pay tax arises. Assessee is required to compute his total income and pay income tax thereon, which involves process of self-assessment. Since all this is done under authority of law, shortfall thereon is certainly liable to be collected. Since in assessment completed is held to be bad in law, original returned income is being accepted. However, shortfall in tax calculations made by I.T.A. No. 759/Hyd/2015 :- 6 -: C.O. No. 26/Hyd/2016 assessee is certainly tax due to Government under authority of law. Therefore, AO to that extent is correct in raising demand. However, I am not in position to appreciate levy of interest u/s. 234A and 234C which were not originally levied in order u/s. 143(3). Consequently, levy of interest in consequential order is not proper. However, since assessee has admitted interest under Section 234A originally in computation, same is directed to be accepted. 6.1. As far as interest u/s. 234B is concerned, corrct tax liability enhances liability and same is also leviable as per provisions of Act. Therefore, partially allowing Cross- Objections raised by assessee, I direct AO to modify tax calculations accordingly, accepting 234A as offered by assessee in return and modify interest u/s. 234B to extent of difference in tax calculated. Interest u/s. 234C, however should not be levied. With these directions, order of CIT(A) is modified and AO is directed to collect difference in tax on admitted income and interest as directed above. 7. In result, appeal of Revenue is allowed and Cross-Objection raised by assessee is partly allowed. Order pronounced in open Court on 23rd September, 2016 Sd/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER Hyderabad, Dated 23rd September, 2016 TNMM I.T.A. No. 759/Hyd/2015 :- 7 -: C.O. No. 26/Hyd/2016 Copy to : 1. Income Tax Officer, Ward-14(1), Hyderabad. 2. Sri Rao Subba Rao (HUF), Plot No. 44, Road No. 7 of 72, Jubilee Hills, Hyderabad. 3. Commissioner of Income Tax(Appeals)-4, Hyderabad 4. Commissioner of Income Tax-VI, Hyderabad. 5. D.R. ITAT, Hyderabad. 6. Guard File. Income Tax Officer, Ward-14(1), Hyderabad v. Rao Subba Rao (HUF)