COMMISSIONER OF INCOME TAX Vs. HINDUSTAN HOTELS LTD. AND THE INCOME TAX APPELLATE TRIBUNAL, PANAJI BENCH

JUDGEMENT

(1.) The revenue is in appeal, challenging order of the Income Tax Appellate Tribunal, (ITAT) Panaji Bench dated 1.10.2001 holding that under Section 143(1)(a) of the Income Tax Act the Assessing Officer could not have levied interest under Section 234C in the mode and manner as in dispute between the parties before us. The ITAT observed that it could have been done in the same manner as computed by the assessee himself while working out tax or interest payable on self assessment under Section 140A.

(2.) The assessment year concerned is 1996-1997 and the respondent assessee filed a return of income declaring total income of Rs. 6,83,78,520/-. In intimation under Section 143(1)(a), the Assessing Officer on 5.6.1997 levied interest under Section 234C amounting to Rs. 9,98,652/-. The assessee sought rectification and moved an application under Section 154 of the Act which came to be rejected and it was challenged before the Commissioner of Income Tax (Appeals) (CITA) by the assessee. The appellate authority found that the assessee sold the property on 19.6.1995 and, therefore, the order of Assessing Officer maintaining that the entire amount of tax payable in respect of capital gains became due on 15.9.1995 as per proviso (1) of Section 234C(b)(ii) was not proper. CITA appeals also observed that the said proviso was mitigating and if the assessee paid the entire capital gains as part of installment immediately following the date of transfer, he gets the benefit and otherwise interest under Section 234C(1) is chargeable in normal course. In view of this position, it held that rejection of Section 154 application by the Assessing Officer was unjustified. The Revenue then approached the ITAT in appeal and as already mentioned above, ITAT found that interest as charged by the Assessing Officer could not have been levied in intimation under Section 143(1)(a).

(3.) In this background, on 12.8.2002, this Court has admitted the appeal on following two questions :