Govind Gulati, New Delhi vs Assessee

Inderjeet Gulati, vs. ACIT House No. 16, Road No. 19, Cent. Circle 23 East Punjabi Bagh, New Delhi. New Delhi 110 026. (PAN AALPG3452F)

AND

ITA No. 5506/Del/2013

Asstt. Year 2005-06

Govind Gulati, vs. ACIT House No. 16, Road No. 19, Cent. Circle 23 East Punjabi Bagh, New Delhi. New Delhi 110 0026. (PAN AALPG3453E)

(Appellant) (Respondent)

Appellant by :Shri V.S. Rastogi, AR Respondent :Shri Satpal Singh, Sr. DR

ORDER

PER J.SUDHAKAR REDDY, ACCOUNTANT MEMBER

Both these appeals are filed by the assessee and are directed against

separate order of the Commissioner of Income Tax (Appeals) XXXIII, New Delhi

dated 7.6.2013 for the asstt. year 2005-06. As the issues arising in both the appeals ITA. Nos.5505,5506/Del/2013

are identical, for the sake of convenience, they are heard together and disposed off

by way of this common order.

2. Facts in brief : the asseseee is an individual and their assessment was

completed u/s 153A read with section 143(3) of the Act. Subsequently, the AO

noticed that interest u/s 234B has been short charged. Therefore he passed an order

u/s 154 charging interest u/s 234B w.e.f. 1.2.2007 till December 2009 i.e for the

period of 35 months . The contention of the assessee was that interest u/s 234B is

payable w.e.f. 1.4.2007 to 18.12.2009 i.e for the period of 33 months and this was

correctly charged in the asstt. order passed u/s 153A read with section 143(3).

3. Both parties agreed that the issue in question is covered by the decision of 'A'

Bench of the Tribunal in ITA No. 5510/D/2013 for the asstt. year 2007-08 in the

case of Business Park Builders Pvt. Ltd. vs. ACIT order dated 14.11.22014. Para 7 to

7.1 held as follows :-

"7. We have heard the rival submissions and perused the material available on record. It is seen that the AO vide his order dated 29.12.2009 passed u/s 143(3)/153(A) charged interest u/s 234B for 14 months initially. Thereafter, the said order was rectified u/s 154 vide order dated 23.3.2012 after show- causing the assessee. As a result thereof interest was charged u/s 234B for 33 months. The assessee is found to have objected before the AO (letter dated 5th March, 2012 on record) relying upon the decision of the Karnataka High Court in the case of Shri Vijay Kumar Saboo (HUF) and others vs. ACIT, Banglore (cited supra) however both the AO and the CIT(A) rejected the arguments of the assessee. Before us it has been canvassed by the Ld. AR that firstly the impugned order is not maintainable as the rectification is not on the basis of any mistake apparent on the fact of the record and secondly the AO erred in not considering the said judgment and the CIT(A) has concurred with the AO's finding relying upon paras 9 & 10 of the said judgment instead of paras 11 & 12 which were directly applicable. These paras read as under :-

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11. "A harmonious reading of the entire provision makes it clear that if no advance tax is paid or what is paid is less than 90% of the assessed tax the assessee is liable to pay interest on the difference in the tax.

For the purpose of levying tax it is computed from first day of April next following, till the date of determination of tax under subsection (1) of section 143 or from that day till the date of regular assessment. If in a given case, there is no determination of tax under subsection (1) of section 143 or regular assessment and the assessment is made for the first time under section 147, such assessment is also treated as a regular assessment and interest is payable from the first day of April next following till the date of assessment order. But if proceedings under section 147 is initiated in a case where there is determination of tax under subsection (1) of section 143 or where a regular assessment order is passed under subsection (3) of section 143, then, the order passed under section 147 is treated as an order of reassessment or recomputation. In the case of order of reassessment or recomputation, the interest is leviable not from the first day of April next following, but from the date of determination of tax under subsection (1) of section 148 or order of regular assessment under section 143(8). Therefore when the assessment order is passed under section 147 and that is made the basis for levying interest, the Assessing Authority has to find out whether it is an order made for the first time under section 147 or is it a ease of reassessment or recomputation under section 147. Depending on that finding, the interest is to b e calculated either from the date of first day of April next following such financial year or from the date of determination of tax under subsection (1) of section 143 or regular assessment under section 143(3).

12. In the instant case, there was a determination of tax under section 143(1)(a) and return filed by the assessee declaring his income as Rs. 30,590/- was accepted by the Department by its order dated 24.6.1991. It is thereafter, proceedings were initiated under section 147 of the Act. In pursuance of the notice issued, revised return was filed on 30.12.1993 declaring the income of Rs. 1,50,590/-. It is on that return, the order came to be passed under section 143(3) on 28.1.1994. Therefore, it is not a case of assessment made for the first time. It is a case of order of reassessment or recomputation under section 147. Therefore, the interest is to be calculated from 24.6.1991, the date on which determination of tax was made under section 143(1)(a) of the Act. To that extent, the order passed by the authorities is illegal and requires to be set aside. Hence the substantial

3 ITA. Nos.5505,5506/Del/2013

questions of law (2) and (4) are answered in favour of the assessee and against the revenue. Appeals are partly allowed.

7.1 It has also been argued that in the matter where two views are possible, one advanced by the AO and the other as considered by the Hon'ble Karnataka High Court. This fact makes the issue debatable and in such circumstances also as per judicial precedent rectification u/s 154 was wrongly been carried out. Considering the material available on record in the light of the above arguments and the decision referred to before us for our consideration, we are of the view that in the peculiar facts and circumstances of the case, the impuged order is not correct and the rectification upheld thereby is not maintainable as the same is beyond the purview of what can be rectified u/s 154 of the Act. Being satisfied by the explanation offered the grounds raised by the assesee is allowed."

4. Consistent with the view taken therein, we allow both the appeals of the

assessee.

In the result, both the appeals of the assessee are allowed.

Order pronounced in the Open Court on 5th January, 2015.

sd/- sd/- (A.T. VARKEY) (J.SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER

Dated: 5th January, 2015 'veena'

Copy of the Order forwarded to:

1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR 6. Guard File

By Order

Deputy Registrar

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