I-T - Whether liability to pay interest u/s 234A & 234B can be fastened till date of recovery of tax dues, if such interest was partly waived by Sec 119 order on assessee's plea for adjustment of dues against bank a/c attached - NO: HC
By TIOL News Service:
CHANDIGARH, DEC 16, 2016: THE ISSUE IS - Whether an assessee can be made liable to pay interest u/s 234-A & 234-B for the delayed payment of advance tax till the recovery of tax dues, when such interest was partly waived by an order u/s 119(2)(a) on account of assessee's representation calling upon the ITO to adjust the dues against the bank a/c attached by him. NO IS THE VERDICT.
Facts of the case:
The assessee is an individual. It owned land which was acquired under the Land Acquisition Act, 1894, for which an award was given. Assessee applied for enhancement of compensation u/s 18 of the Land Acquisition Act. By an order, the Additional District Judge enhanced the compensation. Later on, assessee's account was attached u/s 281-B. This resulted in attachment of a Fixed-Deposit Receipt (FDR) in the name of asssesee for a sum of Rs.20 lacs, the attachment was made to recover the tax dues of only Rs. 11 lacs. A TDS certificate was issued by the Land Acquisition Officer in respect of the interest components on the enhanced compensation. Assessee was advised by CIT to pay the tax on the amount received from the Land Acquisition Officer spread over various dates of receiving the award. Assessee, then in accordance with the advice/instruction of CIT filed returns u/s 139 for AYs 1991-92 to 1999-2000.
On appeal, the HC held that,
++ As a matter of fact the assessee was liable to file returns only upon the receipt of the amount on account of enhanced compensation which was on 03.10.1998. Thus the petitioner was liable to file his return for AY 1999-2000 by 31.07.1999. The assessee infact filed the returns for all the years on 08.01.1999 which the respondents accepted and acted upon. It would be unfair now for the respondents to raise a contention that those returns are non-est. The question, therefore, of the petitioner being liable to pay interest u/s 234-A does not arise;
++ Interest u/s 234B has also been waived till 30.09.1998. It is important to note that waiver of interest u/s 234-C in its entirety and partial waiver u/s 234-A and 234-B was pursuant to the petitioner's representation to the CCIT, Haryana u/s 119(2)(a). The partial waiver is purportedly in exercise of powers u/s 119(2)(a). Again the interest could be charged at the highest only upto 23.12.1998 the date on which the respondents received the petitioner's letter calling upon the respondents to recover the tax due from the account attached on 13.10.1998. Infact the advance tax was payable only in the year of the receipt of the amount and by 15.12.1998. The advance tax in that event would have been payable only by 15.12.1998. Accordingly the petitioner's liability to pay the interest u/s 234-B would be only from 15.12.1998 to 23.12.1998;
++ No appeal has been filed against the assessment order. However, assessee made a representation for waiver of interest in view of these facts which was partially accepted. Further orders on the representation are purportedly u/s 119(2)(a) against which an appeal is not maintainable. The only question is whether it ought to have been accepted in full or not. In these circumstances, we are inclined to exercise our extra ordinary writ jurisdiction under Article 226 of the Constitution of India. In the circumstances, the impugned order is set aside/modified by providing that the petitioner's liability to pay interest is restricted only u/s 234-B and only for the period 15.12.1998 to 23.12.1998.
(See 2016-TIOL-3020-HC-P&H-IT)
