Income Tax cannot be levied on Income already paid: ITAT dismisses Interest u/S 234 A of Income Tax Act [Read Order]

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has dismissed the imposition of interest under section 234A of the Income Tax Act 1961, stating that income tax cannot be levied on income that has already been paid.

The assessee had challenged the imposition of interest under section 234A of the Income Tax Act, 1961, amounting to Rs. 61,670. The argument presented by the assessee was that the income tax return under section 153A of the Act 1961 had been timely filed, but due to a technical error, the return for the relevant year could not be submitted on time. Consequently, the assessee had raised this issue with the income tax department, the income tax return was eventually filed in March 2020. However, the Commissioner of Income Tax (Appeals) had dismissed the taxpayer’s claim.

The counsel for the assessee H.P. Mahajani had referred to a precedent, specifically the decision of the Delhi High Court in the matter of Dr. Prannoy Roy vs. The cited case had established that interest under section 234A of the Income Tax Act, 1961, could not be imposed if the tax due on income had already been paid, but the assessee was unable to file a return due to circumstances beyond their control. The counsel for the assessee had argued that, similar to the referenced case, a return could be filed despite a technical error, especially when the self-assessment tax had already been paid.

The two member bench of the tribunal comprising Rahul Choudhari ( Judicial member) and Om Prakash Kanth( Account member) concluded that taking into account the assessee’s assertion that the self-assessment tax had already been paid, and considering the failure to file a return due to circumstances beyond the assessee’s control,

The bench hereby remanded the matter of interest imposition under section 234A of Income Tax Act 1961 back to the Assessing Officer. The Assessing Officer was instructed to make a decision in accordance with the applicable laws.

Consequently, the appeal raised by the assessee was allowed for statistical purposes.

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