KARANVIR SINGH GOSSAL Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) Heard Learned Counsel on both sides.

(2.) The short point Involved in the present case is whether levy of interest under Sections 234A/234B of the Income Tax Act, 1961 (for short, 'the Act'), is mandatory or not. At one point of time there was a doubt on the nature of interest payable by the Assessee under Sections 234A/234B of the Act. That controversy stood finally settled by a Five-Judge Bench decision of this Court in the case of CIT v. Anjum M.H. Ghaswala and Ors., 2001 252 ITR 1. This judgment is binding on us. In the said judgment, this Court held in unequivocal terms that interest under Sections 234B/234C is mandatory in nature. In view of the said decision, we are of the opinion that there was no need for the AO to specifically recite in the order of assessment that penalty proceedings should be initiated, as contended on behalf of the Assessee.

(3.) It is true that at one point of time, prior to the decision in Anjum M.H. Ghaswala's case , there was a conflict of opinion amongst various High Courts in India. One such case was the judgment of Patna High Court in the case of Ranchi Club Ltd. v. CIT, 1996 222 ITR 44. Against the judgment of the Patna High Court, the civil appeal was dismissed by this Court in the case of CIT v. Ranchi Club Ltd., 2001 247 ITR 209. However, that dismissal is by a Three-Judge Bench, whereas the judgment of Anjum Ghaswala's case is of a Five-Judge Bench of this Court. Be that as it may, the position that emerges after the judgment of this Court in Anjum Ghaswala's case is that if interest is leviable in a given' case under Sections 234B/234C, then in such a case that levy is mandatory and compensatory in nature. The recitation by the AO directing institution of penal proceedings is not obligatory and penal proceedings could be initiated for such default without a specific direction from the AO. In this particular case we have to follow the judgment in Anjum Ghaswala's case in toto. In the said judgment it has been held that in appropriate cases, the Chief CIT has an authority to waive the interest. We quote hereinbelow the relevant portion of the judgment in Anjum Ghaswala's case , which reads as under: