Section 245D(4)

Section 245D(4) — the law in short

What the courts have decided on section 245D(4), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• Ajmera Housing Corporation v CIT Supreme CourtHelps department
  We filed a settlement application and then, when the Commissioner's report came in, filed a revised annexure with a much higher figure. Does that revision sink the application?
  Yes, it can. The Supreme Court held that a full and true disclosure of undisclosed income and of the manner in which it was derived is a pre-requisite of a valid application under section 245C(1), and that Chapter XIX-A contains no provision for revising an application once filed. Where the applicant raised the disclosure from about Rs. 1.94 crore to Rs. 11.41 crore and then went on adding piecemeal and ad hoc amounts, that was itself proof that the original application was not a full and true disclosure. The appeals were dismissed.
• CIT v Hindustan Bulk Carriers Supreme CourtHelps departmentPartly overruled — read this first
  I went to the Settlement Commission. Up to what date can section 234B interest be charged on the income I disclosed there?
  Up to the date of the Commission's order under section 245D(4), the Supreme Court held. Interest under section 234B runs from 1 April following the relevant financial year to the date of that order, and is charged on the consolidated income, that is the income already returned plus the income disclosed before the Commission. The Special Bench of the Commission had fixed different end points depending on whether a regular assessment or a reassessment had been made; that view was rejected. After the Commission acts under section 245D, the separate interest under that section takes over. The Revenue's appeals were allowed.
• CIT v Anjum M.H. Ghaswala Supreme CourtHelps department
  Can interest under ss.234A, 234B and 234C be waived?
  Not by the authority hearing your case. The levy is mandatory and automatic, and even the Settlement Commission cannot reduce or waive it. The only route to relief is a CBDT circular issued under s.119.
• Statutory position — s.234D: interest on a refund granted under s.143(1) that regular assessment shows should not have been granted — the rate, the period, the reduction under sub-section (2), and Explanation 2 for assessment years commencing before 1 June 2003 CBDT Circulars & InstructionsCuts both ways
  We were given a refund when the return was processed under s.143(1). On scrutiny the Assessing Officer has now raised a demand and has also charged interest under s.234D on the refund. Is that right, for how long does the interest run, and can he do it for an assessment year that is older than the section itself?
  Yes, on the conditions in sub-section (1). Section 234D charges simple interest where a refund is granted to the assessee under s.143(1) and either (a) no refund is due on regular assessment, or (b) the amount refunded under s.143(1) exceeds the amount refundable on regular assessment. The rate is one-half per cent, on the whole or the excess amount so refunded, for every month or part of a month comprised in the period from the date of grant of refund to the date of such regular assessment. The section was inserted by the Finance Act, 2003 with effect from 1 June 2003, and the words "one-half per cent" were substituted for "two-third" by the Taxation Laws (Amendment) Act, 2003 with effect from 8 September 2003 — both recorded in footnotes printed against the section. Sub-section (2) provides that where, as a result of an order under s.154, s.155, s.250, s.254, s.260, s.262, s.263 or s.264, or an order of the Settlement Commission under s.245D(4), the refund granted under s.143(1) is held to be correctly allowed either in whole or in part, the interest chargeable under sub-section (1) shall be reduced accordingly. Explanation 1 makes a first-time assessment under s.147 or s.153A a regular assessment for the purposes of the section. Explanation 2, which the later editions of the section print and the earlier ones do not, reads: "For the removal of doubts, it is hereby declared that the provisions of this section shall also apply to an assessment year commencing before the 1st day of June, 2003 if the proceedings in respect of such assessment year is completed after the said date." Which amending Act inserted Explanation 2, and from what date, is not established here — the editions of the section that print it carry no footnotes, and the editions that carry footnotes do not print it.

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.