Suchitra Kamble ORDER
Suchitra Kamble, Member (J)
1. The appeal filed by the assessee is against the order passed by the Ld. CIT(Appeals), National Faceless Appeal Centre (in short "NFAC"), Delhi on 31.10.2022 for A.Y. 2015-16.
2. The grounds of appeal raised by the assessee are as under:
"1.1 The order passed u/s 250 dated 31-10-2022 for A.Y. 2015-16 by CIT(A) - NFAC, Delhi upholding the invocation of provisions of S.234A and imposing interest of Rs.4,55,538/- towards late filing of return of income is wholly illegal, unlawful and against the principles of natural justice.
1.2 The Ld. CIT(A) has grievously erred in law and on facts in invoking provisions of S.234A and imposed interest of Rs.4,55,538/- towards late filing of return of income without providing an opportunity of hearing so that there is gross violation of principles of natural justice. There is no mention in the assessment order nor in any of the notices/show cause notice regarding charging of interest u/s 234A.
2.1 The Ld. CIT(A) has grievously erred in law and/or on facts in invoking provisions of S.234A of the Act.
2.2 The Ld. CIT(A) has grievously erred in law and/or on facts in invoking provisions of S.234 which has no applicability to the facts of this case in as much as that this provisions is workable only towards returns filed u/s 139(1) whereas the impugned returned was filed in response to 148.
3.1 Without prejudice to the above and in alternative, the Ld CIT(A) has grievously erred in law and/or on facts in not appreciating that appellant cannot be charged interest for the period for which he cannot file any ROI i.e. after the expiry of due date u/s 139(1) to notice u/s 148 and not for the entire period.
3.2 The Ld CIT(A) ought to have appreciated that there is no mechanism under the law which permits appellant to file ROI after due date prescribed u/s 139(1) so that it cannot be asked to pay interest for that period.
It is, therefore, prayed that interest u/s 234A of Rs.4,55,538/- upheld by Ld CIT(A) deserved to be deleted."
3. The assessee is an individual and derives 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 information was gathered from ITBA System of Department for F.Y. 2014-15 where it was observed that the assessee purchased an immovable property for an amount of Rs. 4,78,71,000/- and received interest of Rs. 25,76,203/-. The assessee was reopened under Section 147 of the Act by issuing notice under Section 148 of the Act on 31.03.2021 after taking necessary approval from the competent authority as per provision of Section 151 of the Act and served on the assessee through her registered e- mail, requesting her to file return in the prescribed form for the said Assessment Year. In response the assessee filed here return for A.Y. 2015-16 on 01.05.2021 disclosing total income of Rs. 35,53,830/-. Subsequently, notices under Section 143(2) and 142(1) of the Act alongwith questionnaire were issued and served on the assessee at his registered e-mail address for upon which the assessee filed various documents and responses. The assessee revealed that during F.Y. 2014-15 the source of assessee's income was family pension and interest income as the assessee received family pension amounting to Rs. 7,91,828/- interest on FDs of Rs. 25,76,205/- and interest on Savings account of Rs. 2,10,801/-. The Assessing Officer observed that the assessee had taxable income during F.Y. 2014-15 and did not file her return of income disobeying the provision of Section 139(1) of the Act. Proceedings under Section 147 compelled her to file her return and disclose the above return and to pay tax on the income. The Assessing Officer assessed the total income at Rs. 35,53,830/- under Section 143(3) r.w.s. 147 of the Act and also made calculation of tax as per ITBA module thereby charging interest under Section 234A, 234B and 234C as per the Act.
4. Being aggrieved by the assessment order the assessee filed appeal before the CIT(A). The CIT(A) dismiss the appeal of the assessee.
5. The Ld. A.R. submitted that imposing interest of Rs. 4,55,538/- by invocation of provisions of Section 234A towards late filing of return of income is wholly illegal, unlawful and against the principles of natural justice. The Ld. A.R. further submitted that towards late filing of return of income there is no mention in the assessment order nor in any of the notices/show cause notice regarding charging of interest under Section 234A. The Ld. A.R. submitted that 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. The Ld. A.R. further submitted that without prejudice to the above the alternate submissions of the assessee that the CIT(A) did not appreciate that the assessee cannot be charged interest for the period for which she has not filed any return of income that the expiry due date under Section 139(1) to notice under Section 148 and not for the entire period. There is not mechanism under the law which permits assessee to file return of income so that it cannot be asked to pay interest for the period.
6. The Ld. D.R. submitted that the interest for defaults in furnishing return of income under Section 139 is a mandatory as per the provisions of Section 234A. The Ld. D.R. further submitted that the interest is leviable in all instances when return of income is filed within the due date. In the present case no return of income was filed by the assessee under Section 139(1) of the Act despite having taxable income. The provisions of sub-Section 3 of Section 234A are not applicable as no regular return was filed by the assessee and no assessment was made under Section 143(1)/143(3). Therefore, the CIT(A) has rightly rejected the contention of the assessee and confirm the interest under Section 234A.
7. Heard both the parties and perused all the relevant material available on record. 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 Ld. A.R. relied upon the decision of Hon'ble Jodhpur Bench in case of ITO vs. Amar Chand Boarad MANU/IO/0084/2012 : (2013) 33 taxmann.com 683 the Tribunal has observed that the Hon'ble Bombay High Court in case of Priti Pithawala vs. ITO MANU/IU/5061/2003 : (2003) 129 taxmann 79 (Mumbai) has decided the issue and granted the relief to the assessee therein to after going through the decision of Hon'ble Bombay High Court it appears that in that case the belated return which cannot be submitted after the expiry of one year than the assessment made for the first time under Section 147, the assessee cannot be made liable to pay interest for the period during which it was not possible on the part of the assessee to file return till issuance of notice under Section 148 of the Act. Thus, following the ratio laid down by the Hon'ble Bombay High Court 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.
8. In result, the appeal of the assessee is partly allowed.
This Order pronounced in Open Court on 19/04/2023
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