Section 140A

Section 140A — the law in short

What the courts have decided on section 140A, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• CIT v Shelly Products Supreme CourtCuts both ways
  My assessment was annulled by the Tribunal and the department cannot make a fresh one. Do I get back everything I paid, including the tax on my own returned income?
  No, not everything. The Supreme Court held that liability to income tax under section 4(1) does not depend on an assessment being made, and that the return itself is an admission of the tax due on the income disclosed. So where an assessment is annulled or set aside and no fresh assessment can be made, the assessee gets a refund of everything paid in excess of the tax chargeable on the returned income, but the department may keep the tax referable to that returned income. Retaining it does not offend Article 265.
• Herald Global Ventures Private Limited v CCIT-1, Ahmedabad High CourtHelps taxpayerNo later treatment found
  My start-up's Inter-Ministerial Board certificate for s.80-IAC was refused, so I switched to s.115BAA and filed Form 10-IC 53 days late for AY 2022-23. There is no blanket circular for that year. Can the delay be condoned?
  Yes. The Gujarat High Court quashed the rejection under s.119(2)(b) and directed the competent authority to accept Form 10-IC for AY 2022-23. Where the assessee was otherwise eligible for s.115BAA, refusing to condone a 53-day delay produced a tax liability of Rs. 50,72,890 at the normal rate, and that financial consequence is itself the genuine hardship s.119(2)(b) is designed to relieve.
• Vilas Babanrao Kalokhe v Principal Commissioner of Income Tax (Central), Pune High CourtHelps taxpayerNo later treatment found
  I filed my return but could not pay the self-assessment tax with it. I paid it a couple of months later. They have prosecuted me under s.276C(2). Can that stand?
  On these facts, no. The Bombay High Court quashed the complaint and the order issuing process, holding that s.276C(2) punishes a wilful attempt to evade payment of tax and not a mere failure to pay, and that the averments in the complaint fell short of any inference of wilfulness where the assessee had pleaded financial difficulty and had in fact paid the tax with interest.
• S.P. Velayutham v ACIT High CourtHelps taxpayerHigh Courts differ
  I admitted the tax in my return but could not pay it. Can that be prosecuted as a wilful attempt to evade payment under s.276C(2)?
  No, not on default alone. The Madras High Court held that a prosecution under s.276C(2) for wilfully attempting to evade payment of tax cannot be launched against an assessee who has merely defaulted in paying tax on time; without mens rea there is no wilful attempt.
• CIT, Kolkata-I v Birla Corporation Ltd High CourtHelps taxpayerHigh Courts differ
  Part of my refund is self-assessment tax I paid under s.140A. The officer says no interest is payable on that. Is he right?
  No. The Calcutta High Court held that s.244A(1)(b) is a residuary clause that covers a refund of excess self-assessment tax paid under s.140A, and that interest runs from the date the tax was paid to the date the refund is granted — a starting point since narrowed by s.244A(1)(aa) for periods from 1 June 2016. The Explanation to clause (b) does not stand in the way, because it operates only where the tax was paid pursuant to a notice of demand under s.156.
• Dr. Prannoy Roy v CIT High CourtHelps taxpayer
  I paid the whole tax before the due date but filed the return eleven months late. The Assessing Officer has still charged interest under s.234A. Can he?
  No, not on tax already in the Revenue's hands before the due date. The Delhi High Court held that s.234A creates a compensatory levy, not a penalty, so where the tax was deposited before the due date of filing the return the Revenue has suffered no loss and no interest under s.234A is payable; interest runs only on tax not deposited before that date.
• Sudhir Sareen v CIT High CourtHelps departmentNo later treatment found
  You never asked the Assessing Officer for more time, the return went invalid for want of proof of tax, and you have gone to the Commissioner under s.264. Will that work?
  No. The Delhi High Court held that the power to extend time and to condone the delay in rectifying a defect under s.139(9) is conferred on the Assessing Officer, and the Commissioner in revision under s.264 is not the forum in which to ask for it for the first time. Where the assessee had not applied to the Assessing Officer at all, no fault could be found with the officer's order or with the Commissioner's refusal.
• Kapoor Industries Ltd v CPC ITATHelps taxpayerNo later treatment found
  You asked for seized cash to be adjusted against your self-assessment tax and the CPC simply refused the credit. Should it have issued a s.139(9) notice instead?
  The Tribunal allowed the appeal and directed that the money lying seized be appropriated towards the self-assessment tax liability. It recorded that no notice under s.139(9) had been issued by either the CPC or the jurisdictional Assessing Officer treating the return as defective, and that the assessee's request having been neither rejected nor decided amounted to acceptance.
• PME Power Solutions India Ltd v DCIT ITATHelps taxpayerNo later treatment found
  The officer declared your return invalid for non-payment of self-assessment tax and then assessed you under s.143(3) starting from the figures in that very return. Can he do both?
  No. The Tribunal held that once a return is treated as defective and invalid under s.139(9), the only recourse legally available to the Assessing Officer is to frame the assessment under s.144. An assessment under s.143(3) built on the income returned in a return the officer has himself declared invalid cannot stand, and the Tribunal quashed it.
• Francisco X. Pacheco v DCIT ITATHelps taxpayerNo later treatment found
  The officer treated some of your s.153A returns as defective for non-payment of self-assessment tax and others as valid, on the same facts. Can the Tribunal put that right?
  The Tribunal directed the Assessing Officer to treat the returns as valid, by condoning the delay, for those years in which the defect had in fact been removed. The proviso to s.139(9) was the source of the direction: where the defect is cured before the assessment is made, the delay can be condoned and the return treated as valid.
• Niranjan Lal Gupta v ITO ITATCuts both waysNo later treatment found
  Neither your original nor your revised return carried the self-assessment tax. The officer ignored that and assessed you on the original return. Is the assessment good?
  No. The Tribunal held that both returns were defective under s.139(9) because the self-assessment tax had not been paid, that the Assessing Officer should have directed the assessee to rectify the defect and had issued no defect notice at all, and that the assessment could not simply be built on the original return. The entire assessment was set aside and the officer directed to pass a fresh order under s.144.
• Bank of Baroda v ACIT ITATHelps taxpayer
  They paid me part of my refund and left the rest outstanding. Do I lose interest because they say the part paid covered the interest?
  The opposite. The Tribunal held that a refund already granted is to be adjusted first against the interest component of the refund and only the balance against the tax component, so that the tax still outstanding continues to carry interest under s.244A until it is actually paid. The rationale is symmetry with the Explanation to s.140A(1), which requires a payment made by an assessee to be adjusted first towards interest and then towards tax.
• Ranchi Club Ltd v CIT (Patna) High CourtHelps taxpayerOverruled
  I filed my return on time and paid the self-assessment tax; the officer then added a disputed item in a best-judgment assessment and charged s.234A interest because I did not comply with a s.142(1) notice. Is that right?
  The Patna High Court said no. Where the return was filed within time with proof of payment, the mere issue of a s.142(1) notice calling for accounts or information does not attract s.234A, because the s.142(1) notice that s.234A speaks of is the notice to FURNISH A RETURN issued to a person who has not filed one — not the notice under clauses (ii) and (iii) calling for accounts or particulars.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.