No Sec. 234B Interest if There Was No Variation in Reassessment Order & Entire Demand Was Paid During Assessment

Case Details: Tata Chemicals Ltd. v. DCIT - [2024] 163 taxmann.com 235 (Mumbai - Trib.)

Judiciary and Counsel Details

• Amit Shukla, Judicial Member & Ratnesh Nandan Sahay, Accountant Member
• Vanish Bhansali for the Appellant.
• Biswanath Das for the Respondent.

Facts of the Case

In the present case, the assessee filed a return of income for AY 2012-13 on 30.11.2022, declaring total income of Rs.582,66,29,700. The said return was subject to scrutiny and assessment u/s 143(3) r.w.s. 144C(13) of the Act. The AO passed the order on 30.01.2017 post persunce of DRP’S direction at an income of Rs. 851,03,41,564.

After the assessment’s completion, the assessee’s case was reopened u/s 147 based on certain information, such as that the assessee had deposited some cash in the account of one M/s. Mandal Traders (Fertilizer Dealer) and an amount of Rs. 1,80,26,123 were transferred through RTGS in the account of the assessee company from the account of M/s. Mandal Traders.

Accordingly, a notice u/s 148 was issued on 31/03/2019. During the reassessment proceedings, the assessee submitted his explanation and replies, along with evidence that there was the genuine purchase made from the party in response to various queries by the AO.

Finally, the AO, after making relevant enquiries from the party, seeking records, explanation of the assessee and verification of the account, no adverse inference was drawn with regard to the alleged escaped income and the assessee’s income, which was determined as per the original assessment order was accepted and there was no variation.

Even though no variation in the income that has been assessed in the present order u/s 147/143(3) and the original assessment order. However, the AO calculated interest u/s 234B from the date of the original assessment order, i.e. 30/01/2017 to 18/12/2019. Thus, the assessee was aggrieved by such a levy of interest u/s 234B.

The matter reached before the Tribunal.

ITAT Held

The Mumbai Tribunal held that the CIT(A) had decided the issue completely on a different footing altogether. There was no liability to pay interest u/s 234B thereafter. The original demand was Rs.52.68 Crores, which was raised via order u/s 143(3) r.w.s. 144C(13) dated 30/01/2017, which was already paid in February 2017.

Thus, the ITAT held that the assessee was not liable for charging interest u/s 234B from the period 30/01/2017 to 16/12/2017. Thus, the interest computed by the ld. AO in the reassessment order was deleted. Accordingly, the assessee’s appeal was allowed.