The Income Tax Appellate Tribunal (ITAT), Jodhpur Bench, has recently, in an appeal filed before it, held that no interest under Section 234A is leviable, when an Assessee has filed the return within the time allowed by notice under Section 153A of the Income Tax Act.
The aforesaid observation was made by the Jodhpur ITAT, when an appeal was preferred before it by the Assessee against the order of the CIT(A), Udaipur, dated 26-12-2018, for the assessment year 2014- 15.
The grounds of the assessee’s appeal being that the appellate order dated 26-12-2018, passed by the CIT(A), confirming the order dated 31-10-2017 passed under Section 154 by the ACIT, Central Circle-2, Jodhpur, is bade in law and on facts, and further that the CIT(A) has, in the facts and circumstances of the case ,erred in confirming the action of the AO for charging interest of Rs.7,83,201/- under Section 234A, vide order dated 31-10-2017 passed under Section 154 ,although the return in response to notice under Section 153A was filed in said notice period, the brief facts of the case were that the assessee was required to file an appeal under Section 139(1) of the Income Tax Act, for the assessment year 2014-15 on or before 30-09-2014.
Thereafter, a search was conducted on 8-05-2014, and a notice under Section 153A of the Income Tax Act, was issued on 13-02-2015, requiring the assessee to file ROI for the assessment year 2009-10 to 2014-15 within 30 days of receipt of the notice under Section 153A.
Subsequently, the assessee filed the return of under Section 153A for the A.Y. 2014-15 under consideration, on 12- 03-2015, within the time period allowed by notice under Section 153A. And accordingly, the assessment under Section 153A r.w.s. 143(3) was finalized on 23-12-2016, at a total income of Rs.3,84,500/-.
During the course of assessment proceedings, the AO noted that interest under Section 234A had been undercharged and thereafter a notice under Section 154 was issued to the assessee on 25-10-2017. However, no one appeared in response to the notice under Section 154. And an order under Section 154 of the Income Tax Act was passed on 31-102017, wherein interest under Section 234A was levied for the period 3-09-2014 till 12-03-2015.
Being aggrieved, the assessee preferred an appeal before the CIT (A), who confirmed the levy of interest of Rs.7,83,201/- under Section. 234A, by observing recording his observations in this regard, and it is in this situation that the Assessee has moved the present appeal before the Jodhpur ITAT.
Hearing the opposing contentions of either sides as presented by Shri Rajindra Jain, (CA), on behalf of the assessee, and by Shri S.M. Joshi, the JCIT- DR on behalf of the Revenue, the Jodhpur ITAT observed:
“We have heard both the parties and perused the materials available on record. In this case, it is noted that the search was conducted on 08-05-2014 in the case of the assessee during the assessment year 2014-15. The due date of filing of filing the return of income under Section 139(1) of the Act did not expire.”
“The moment search was conducted, the provisions of Section 153A of the Act comes into action. From going through the provisions of the section, we observe that subsection (1) of Section 153A starts with the word ‘’Notwithstanding anything contained in Section 139…… and thus since search has been conducted and section 153A of the Act comes into operation, the provisions of other sections referred in 153A (1) i.e. section 139 and others as mentioned above loses its operation”, the ITAT added.
‘Notice under Section 153A of the Act was issued on 13-02-2015 requiring the assessee to file ROI for the A.Y. 2009-10 to 2014-15 within 30 days of receipt of the notice. And the assessee had filed the return of income under Section 153A for the A.Y. 2014-15 on 12-03-2015 i.e., with the time allowed by notice under Section 153A of the Act. It may be worthwhile to mention that the limitation for default in filing of the return under Section 153A would start from the expiry of the time allowed by the AO in the notice under Section 153A and the assessee filed the return within the time allowed by notice under Section 153A of the Act and, therefore, there is no delay in filing the return of income by the assessee as provided under Section 153A of the Act,” the ITAT Panel of Kul Bharat, the Judicial Member, and Manish Borad, the Accountant Member noted.
Thus, allowing the assessee’s appeal, the Jodhpur ITAT held:
“No interest is leviableunder Section 234A of the Act. We, therefore, set aside the findings of the ld. CIT(A) findings of the ld. CIT(A) allow the grounds raised by the assessee. In the result, the appeal of the assessee is allowed.”
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