My assessment order under s.143(3) says nothing at all about interest, but Form ITNS 150 issued the same day charges s.234B and s.234C interest. Is the levy good?
On these facts the Tribunal upheld it. Following the Supreme Court's own order in the assessee's case (Civil Appeal No. 1937 of 2007, judgment dated 6 September 2012), it held that where interest is leviable under s.234B or s.234C the levy is mandatory and compensatory in nature, and that the assessee's remedy is not to resist the charge but to apply to the Chief Commissioner for waiver or reduction under the Board's circular.
Decided by the ITAT (T.R. Sood, Accountant Member and Sushma Chowla, Judicial Member) on 2013-08-23, reported as ITA No. 383/Chd/2002, Assessment Year 1996-97 (ITAT Chandigarh Benches 'B'). It bears on section 234B, section 234C, section 234A, section 143(3), section 119(2)(a) of the Income Tax Act 1961, in Assessment & Scrutiny, Demand, Recovery & Stay and Appeals matters.
This is the Revenue side of the 'the order does not charge interest' argument, and it is the side practitioners most often miss. The Supreme Court's sentence — that after Anjum Ghaswala a leviable charge under s.234B/234C is mandatory and compensatory — is what Assessing Officers now cite when the assessment order is silent and only ITNS 150 carries the figure. It does not, on its own, decide whether a bare 'charge interest as per law' is enough: the Allahabad High Court in CIT v. Oswal Exports (1 July 2014) read the same Supreme Court order and held that Ranchi Club still requires the section to be named. Carry both. What this order does settle is the practical route out — waiver by the Chief Commissioner under the Board's circular is a live remedy, and it is discretionary and conditional, so it must be applied for.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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For assessment year 1996-97 the Assessing Officer passed an order under s.143(3) on 28 March 2001. The order made no specific mention of charging interest under s.234B or s.234C. Form ITNS 150, dated the same 28 March 2001, did set out the details of the interest charged under those sections, aggregating Rs.6,53,663. The Tribunal by order dated 31 March 2005 upheld the charge, following the jurisdictional High Court in Vinod Khurana v. CIT 253 ITR 578 (P&H), and the Punjab & Haryana High Court dismissed the assessee's appeal (IT Appeal No. 502 of 2005, judgment dated 20 February 2006) holding that no substantial question of law survived. On the assessee's civil appeal the Supreme Court, by judgment dated 6 September 2012 in Civil Appeal No. 1937 of 2007, held that after the five-Judge Bench decision in CIT v. Anjum M.H. Ghaswala 252 ITR 1 (SC) a leviable charge under s.234B/234C is mandatory and compensatory, observed that the Chief Commissioner has authority to waive interest under the Board's circular F.No. 400/234/95-IT(B) dated 23 May 1996, and set the matter aside to the Tribunal to consider whether the assessee was entitled to waiver under that circular. On the remitted hearing the assessee did not appear and moved no application addressing the circular's conditions.
The Revenue's appeal was allowed and the levy of interest under s.234B and s.234C was upheld, following the Supreme Court's ruling in the assessee's own case that the charge is mandatory and compensatory in nature. The assessee was given liberty to approach the Chief Commissioner for waiver or reduction under the Board's circular dated 23 May 1996 if the conditions listed in paragraph 2 of that circular are fulfilled (paras 5 and 6).
The Tribunal treated the Supreme Court's remand as settling the character of the levy and leaving open only the waiver question. It recorded that although the s.143(3) order made no specific mention of the interest, Form ITNS 150 of the same date set out the computation, and that the earlier Tribunal and High Court orders upholding the charge had been made on that footing. It then read the Supreme Court's direction as confining the remitted enquiry to the Board's circular, examined the circular, found that it empowers the Chief Commissioner to reduce or waive interest under ss.234A, 234B and 234C subject to the conditions in its paragraph 2, and held that since the assessee neither appeared nor placed any material on those conditions, no relief could be given by the Tribunal. The charge was therefore upheld, with liberty reserved to apply to the Chief Commissioner (para 5).
we uphold the levy of interest under section 234B & 234C of the Act in the facts and circumstances of the present case, in-turn following the ratio laid down by the Hon'ble Apex Court in assessee's own case that charging of interest under section 234B or 234C of the Act is mandatory and compensatory in nature.
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Handle my notice → Ask a CA on WhatsAppOn these facts the Tribunal upheld it. Following the Supreme Court's own order in the assessee's case (Civil Appeal No. 1937 of 2007, judgment dated 6 September 2012), it held that where interest is leviable under s.234B or s.234C the levy is mandatory and compensatory in nature, and that the assessee's remedy is not to resist the charge but to apply to the Chief Commissioner for waiver or reduction under the Board's circular. This was decided by the ITAT (T.R. Sood, Accountant Member and Sushma Chowla, Judicial Member) and bears on section 234B, section 234C, section 234A, section 143(3), section 119(2)(a) of the Income Tax Act 1961. It is reported as ITA No. 383/Chd/2002, Assessment Year 1996-97 (ITAT Chandigarh Benches 'B'). This is the Revenue side of the 'the order does not charge interest' argument, and it is the side practitioners most often miss. The Supreme Court's sentence — that after Anjum Ghaswala a leviable charge under s.234B/234C is mandatory and compensatory — is what Assessing Officers now cite when the assessment order is silent and only ITNS 150 carries the figure. It does not, on its own, decide whether a bare 'charge interest as per law' is enough: the Allahabad High Court in CIT v. Oswal Exports (1 July 2014) read the same Supreme Court order and held that Ranchi Club still requires the section to be named. Carry both. What this order does settle is the practical route out — waiver by the Chief Commissioner under the Board's circular is a live remedy, and it is discretionary and conditional, so it must be applied for. If it applies to you, the first step is this: Get a certified copy of the assessment order AND of Form ITNS 150 with its date; if ITNS 150 was signed on the same day as the assessment order, expect the Revenue to say the two are one document.
For assessment year 1996-97 the Assessing Officer passed an order under s.143(3) on 28 March 2001. The order made no specific mention of charging interest under s.234B or s.234C. Form ITNS 150, dated the same 28 March 2001, did set out the details of the interest charged under those sections, aggregating Rs.6,53,663. The Tribunal by order dated 31 March 2005 upheld the charge, following the jurisdictional High Court in Vinod Khurana v. CIT 253 ITR 578 (P&H), and the Punjab & Haryana High Court dismissed the assessee's appeal (IT Appeal No. 502 of 2005, judgment dated 20 February 2006) holding that no substantial question of law survived. On the assessee's civil appeal the Supreme Court, by judgment dated 6 September 2012 in Civil Appeal No. 1937 of 2007, held that after the five-Judge Bench decision in CIT v. Anjum M.H. Ghaswala 252 ITR 1 (SC) a leviable charge under s.234B/234C is mandatory and compensatory, observed that the Chief Commissioner has authority to waive interest under the Board's circular F.No. 400/234/95-IT(B) dated 23 May 1996, and set the matter aside to the Tribunal to consider whether the assessee was entitled to waiver under that circular. On the remitted hearing the assessee did not appear and moved no application addressing the circular's conditions. The matter was decided on 2013-08-23 by the ITAT (T.R. Sood, Accountant Member and Sushma Chowla, Judicial Member). On those facts the ITAT held as follows. The Revenue's appeal was allowed and the levy of interest under s.234B and s.234C was upheld, following the Supreme Court's ruling in the assessee's own case that the charge is mandatory and compensatory in nature. The assessee was given liberty to approach the Chief Commissioner for waiver or reduction under the Board's circular dated 23 May 1996 if the conditions listed in paragraph 2 of that circular are fulfilled (paras 5 and 6).
The Tribunal treated the Supreme Court's remand as settling the character of the levy and leaving open only the waiver question. It recorded that although the s.143(3) order made no specific mention of the interest, Form ITNS 150 of the same date set out the computation, and that the earlier Tribunal and High Court orders upholding the charge had been made on that footing. It then read the Supreme Court's direction as confining the remitted enquiry to the Board's circular, examined the circular, found that it empowers the Chief Commissioner to reduce or waive interest under ss.234A, 234B and 234C subject to the conditions in its paragraph 2, and held that since the assessee neither appeared nor placed any material on those conditions, no relief could be given by the Tribunal. The charge was therefore upheld, with liberty reserved to apply to the Chief Commissioner (para 5). In the words reproduced by the source cited on this page: "we uphold the levy of interest under section 234B & 234C of the Act in the facts and circumstances of the present case, in-turn following the ratio laid down by the Hon'ble Apex Court in assessee's own case that charging of interest under section 234B or 234C of the Act is mandatory and compensatory in nature." The decision followed or applied CIT v. Anjum M.H. Ghaswala 252 ITR 1 (SC) — applied through the Supreme Court's remand order; Karanvir Singh Gossal v. CIT, Civil Appeal No. 1937 of 2007, judgment dated 6 September 2012 (SC) — followed (the assessee's own case); Vinod Khurana v. CIT 253 ITR 578 (P&H) — relied on at the earlier stage.
It was decided by the ITAT on 2013-08-23 and is reported as ITA No. 383/Chd/2002, Assessment Year 1996-97 (ITAT Chandigarh Benches 'B'). Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section 234B, section 234C, section 234A, section 143(3), section 119(2)(a), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the department, and it appears in this library for that reason — you need to know what the Assessing Officer will cite against you. The Revenue's appeal was allowed and the levy of interest under s.234B and s.234C was upheld, following the Supreme Court's ruling in the assessee's own case that the charge is mandatory and compensatory in nature. The assessee was given liberty to approach the Chief Commissioner for waiver or reduction under the Board's circular dated 23 May 1996 if the conditions listed in paragraph 2 of that circular are fulfilled (paras 5 and 6). It arises in Assessment & Scrutiny, Demand, Recovery & Stay and Appeals matters, on section 234B, section 234C, section 234A, section 143(3), section 119(2)(a) of the Income Tax Act 1961, and was decided by T.R. Sood, Accountant Member and Sushma Chowla, Judicial Member. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Do not put the whole case on the absence of a direction — plead in the alternative that the pre-conditions of s.234B (a liability to pay advance tax under s.208, and a failure or shortfall) are not made out on the facts. Where the interest is genuinely leviable, move the Chief Commissioner for waiver or reduction and address each condition in the Board's order separately; the Tribunal here refused relief only because nobody appeared to show the conditions were met. Check which Board order governs your year — the order referred to here is F.No. 400/234/95-IT(B) dated 23 May 1996; a later order under s.119(2)(a) has since occupied the field and its conditions differ, so verify the current one before filing. Keep s.220(2) out of the argument; it is a different charge on a different default and confusing the two loses the point.
Validity check could not be completed. Validity check could not be completed. No later decision considering this Tribunal order was searched for. On the wider question it decides, note that the Allahabad High Court in CIT v. Oswal Exports (1 July 2014), which was read in full on this pass, considered the same Supreme Court order in Karanvir Singh Gossal and held that it does NOT displace the requirement that the Assessing Officer name the section under which interest is charged. The two are not directly in conflict on their facts — here a dated ITNS 150 setting out the computation was on record — but a reader should not treat the mandatory-and-compensatory sentence as answering the 'charge interest as per law' question. The waiver circular referred to (23 May 1996) is legislative history; the current order under s.119(2)(a) governing reduction and waiver of interest under ss.234A, 234B and 234C was not retrieved on this pass and must be checked. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The order is internally inconsistent about which sections were in issue: paragraph 2 says the appeal concerns interest under ss.234A and 234B totalling Rs.6,53,663, while paragraphs 3, 4 and 5 speak throughout of ss.234B and 234C for the same figure. Paragraph 6 is the one-line disposal ("The appeal filed by the revenue is allowed.") and names no section. The Supreme Court's sentence reproduced at paragraph 3 refers to s.234B/234C. The Supreme Court's judgment in Civil Appeal No. 1937 of 2007 dated 6 September 2012 (reported as Karanvir Singh Gossal v. CIT [2012] 349 ITR 692) was NOT retrieved directly on this pass — no copy of it was found on indiankanoon. Its operative sentence is reproduced identically in two independent documents that were read: this Tribunal order at paragraph 3, and the Allahabad High Court's judgment in CIT v. Oswal Exports (ITA No. 386 of 2007, 1 July 2014), which quotes a longer passage. The quote used below is the Tribunal's own words, not the Supreme Court's. Also note the appeal is the Revenue's (ITA No. 383/Chd/2002, ITO as appellant) even though the matter reached the Supreme Court on the assessee's civil appeal. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The Revenue's appeal was allowed and the levy of interest under s.234B and s.234C was upheld, following the Supreme Court's ruling in the assessee's own case that the charge is mandatory and compensatory in nature. The assessee was given liberty to approach the Chief Commissioner for waiver or reduction under the Board's circular dated 23 May 1996 if the conditions listed in paragraph 2 of that circular are fulfilled (paras 5 and 6).
Every entry in this library links to where it was found, so you can check it yourself rather than take our word for it.
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