Interest u/s 234A of Income Tax Act Not Leviable When Return was filed u/s 148: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT), Ahmedabad bench has held that the interest under section 234A of the Income Tax Act, 1961 is not leviable when the assessee has filed return under section 148 of the Act.

The assessee, Ms. Indu Rohitkumar Pathak is an individual deriving income mainly from interest and other sources. The return of income under Section 139 was not filed for the relevant year under bonafide belief that since the assessee has not having any other income from business or profession the assessee does not require to file any return of income.

The Assessing Officer initiated the re-assessment proceedings based on the information gathered from ITBA System wherein it was found that the assessee purchased an immovable property for an amount of Rs. 4,78,71,000/- and received interest of Rs. 25,76,203/-. Accordingly, the income and interest was calculated against the assessee.

The assessee contended that the provisions of Section 234A has no applicability to the facts of the present case as this provision is workable only towards returns filed under Section 139(1) whereas the impugned return was filed in response to 148.

However, the CIT(A) rejected the above plea and confirmed the addition.

Ms. Suchitra Kamble, Judicial Member observed that “It is pertinent to note that Section 234A is a mandatory provision as the wording used by the statute is when the assessee furnished return of income after the due date or is not furnished under sub-Section 1 or sub-Section 4 of Section 139 the assessee shall be liable to pay simple interest at the rate of 1% for every month or part of a month comprising in the period commencing on the date immediately following the due date.”

“Section 234A(1) Explanation 3 categorically states that where in relation to an assessment year is made for the first time under Section 147 the assessment so made shall be regarded as a regular assessment for the purposes of this Section. Here in the Explanation the assessment for the first time under Section 147 is mandatory to be recorded as regular assessment under Section 139 itself,” the ITAT observed.

Relying on the decision of the Bombay High Court,the ITAT held that“the CIT(A) should have taken cognizance of the same. Thus, the CIT(A) was not right in levying interest under Section 234A of the Act when the return was filed under Section 148 itself and therefore, the interest should be charged from the date of notice under Section 148 of the Act itself and not from the date of return filed under Section 139 or it is due date under Section 139.”

To Read the full text of the Order CLICK HERE

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