Commissioner
of Income Tax Vs. M/S. Hindustan Bulk Carriers [2002] Insc 549 (17 December 2002)
Arijit
Pasayat Arijit Pasayat, J.
A
question of seminal importance relating to the period for which interest in
terms of Section 234B of the Income Tax Act, 1961 (in short 'the Act') can be
levied when the Settlement Commission (in short 'the Commission') passes an
order under Section 245D of the Act, is the subject matter of adjudication in
these appeals. These appeals are directed against the common judgment of the
Special Bench of the Commission (in Gulraj Engineering Construction Co. In re
and Ors. (1995 (215) ITR ATS 1) which dealt with five situations where such
questions may arise. The situations according to the Special Bench are as
follows:
"(i)
The income is determined under Section 143(1) but no regular assessment under
Section 143(3) or 144 is made with or without there being a notice under
section 143(2) and /or section 142(1).
(ii) A
regular assessment is made under Section 143(3) or section 144 in addition to
the determination of the income under section 143(1) and an appeal is pending
before the first appellate authority.
(iii)
Only a return of income is furnished without or in pursuance of a notice under
section 142(1) or section 148 and the income is neither determined under
section 143(1) nor under section 143(3) or section 144.
(iv)
The assessment made under section 143(3) or section 144 is reopened under
section 147 and neither any return of income is furnished in response to the
notice under section 148 nor is the order of re- assessment made by the
Assessing Officer.
(v) A
reassessment is made under section 147 read with section 143(3) or section 144
and an appeal is pending before the first appellate authority." Per
majority the Special Bench decided as follows:
"Interest
under Section 234B will be chargeable:
In
cases I and III up to the date of the order passed by the Settlement Commission
under section 245D(4).
In
case II up to the date of regular assessment made under section 143(3) or section
144 of the Act by the Assessing Officer.
In
case IV from the date of regular assessment made by the Assessing Officer under
section 143(3) or section 144, to the date of the order made by the Settlement
Commission under section 245D(4).
In
case V to the date of the re-assessment made by the Assessing Officer from the
date of regular assessment under section 143(3)/144".
In
support of the appeals, learned counsel for the revenue submitted that the view
expressed by the Special Bench is clearly unsustainable.
Chapter
XIX-A which was introduced in the Act makes a distinction between income
disclosed by the assessee before the Assessing Officer and undisclosed income
disclosed in an application filed before the Commission.
In the
latter situation, the Commission gets jurisdiction if prescribed conditions are
fulfilled. When an assessee files a petition under Section 245C, there is a
liability to pay the additional tax in respect of the undisclosed income. An
exclusive jurisdiction is conferred on the Commission and its order is
conclusive. The expressions 'regular assessment' or 're-assessment' as
appearing in Sections 234A, 234B and 234C relate to income which was earlier
disclosed before the income-tax authorities. For all practical purposes, the
Commission exercises original jurisdiction and the orders passed under Section 245D(4)
and consequentially under sub-section (6) are in the nature of original orders
determining liability of tax, penalty and interest and quantification thereof.
It has
to be borne in mind that provisions relating to settlement as appearing in
Chapter XIX-A constitute a complete code. Therefore, the view of the Special
Bench with reference to regular assessment as defined under Section 2(40), or
re-assessment under Section 147 has no relevance. The liability to pay interest
under Sections 234A, 234B and 234C, as the case may be, is of mandatory nature
as was observed by a Constitution Bench of this Court in Commissioner of Income
Tax v. Anjum M. H. Ghaswala and Ors. (2001 (252) ITR 1). The starting point of
the terminus for payment of interest is not in dispute. It is only the end
point. The same has to be the date on which the order is passed by the
Commission under Section 245D and not an earlier point of time.
Per
contra, learned counsel for the assessee has submitted that both points of time
terminus have been fixed in the provisions, that is, sub-section (4) of each of
the aforesaid three provisions. With reference to the expression 'an order of
Settlement Commission under sub-section (4) of Section 245D' in these
provisions, it is submitted that sub-section (4) deals with the quantum of
interest chargeable with reference to the fixed terminus points and it cannot
be beyond the date of regular assessment or re- assessment, as the case may be,
for the purpose of Section 234B.
Alternatively,
it is submitted that since no terminus has been provided specifically, there is
no liability to pay interest, more so when there is no charging section.
Reference was also made to Commissioner of Income Tax v. Express Newspapers
Ltd. (1994 (206) ITR 443) to substantiate the stand.
In the
present case, the dispute relates to the period for which interest is
chargeable under Section 234B. Sections 234A, 234B and 234C relate to three
different types of infractions. Under Section 234A, interest is chargeable for
default in furnishing a return of income. Levy is attracted when return of
income for any assessment year under sub-section (1) or sub- section (4) of
Section 139 or in response a notice under sub-section (1) of Section 142 is
furnished after the due date or is not furnished. Levy in terms of Section 234B
to which the present cases relate, is attracted for defaults in payment of
advance tax. The provision reads as follows:
"Section
234B: Interest for defaults in payment of advance tax.
(1)
Subject to the other provisions of this section, where, in any financial year,
an assessee who is liable to pay advance tax under section 208 has failed to
pay such tax or, where the advance tax paid by such assessee under the
provisions of section 210 is less than ninety per cent of the assessed tax, the
assessee shall be liable to pay simple interest at the rate of one and one-half
per cent for every month or part of a month comprised in the period from the
1st day of April next following such financial year to the date of
determination of total income under sub-section (1) of section 143 and where a
regular assessment is made, to the date of such regular assessment, on an
amount equal to the assessed tax or, as the case may be, on the amount by which
the advance tax paid as aforesaid falls short of the assessed tax.
Explanation
1- In this section,
"assessed tax" means, -
(a)
for the purposes of computing the interest payable under section 140A, the tax
on the total income as declared in the return referred to in that section;
(b) in
any other case, the tax on the total income determined under sub-section (1) of
section 143 or on regular assessment, as reduced by the amount of tax deducted
or collected at source in accordance with the provisions of Chapter XVII on any
income which is subject to such deduction or collection and which is taken into
account in computing such total income.
Explanation
2. Where, in
relation to an assessment year, an assessment is made for the first time under
section 147, the assessment so made shall be regarded as a regular assessment
for the purposes of this section.
Explanation
3. In Explanation 1
and in sub-section (3) "tax on the total income determined under
sub-section (1) of section 143" shall not include the additional
income-tax, if any, payable under section 143.
(2)
Where, before the date of determination of total income under sub-section (1)
of section 143 or completion of a regular assessment, tax is paid by the assessee
under section 140A or otherwise, -
(i)
interest shall be calculated in accordance with the foregoing provisions of
this section up to the date on which the tax is so paid, and reduced by the
interest, if any, paid under section 140A towards the interest chargeable under
this section;
(ii) thereafter,
interest shall be calculated at the rate aforesaid on the amount by which the
tax so paid together with the advance tax paid falls short of the assessed tax.
(3)
Where, as a result of an order of re-assessment or re-computation under section
147, the amount on which interest was payable under sub-section (1) is
increased, the assessee shall be liable to pay simple interest at the rate of
one and one-half per cent for every month or part of a month comprised in the
period commencing on the day following the date of determination of total
income under sub-section (1) of section 143 and where a regular assessment is
made as is referred to in sub-section (1) following the date of such regular
assessment and ending on the date of the re-assessment or re-computation under
section 147, on the amount by which the tax on the total income determined on
the basis of the re-assessment or re-computation exceeds the tax on the total
income determined under sub-section (1) of section 143 or on the basis of the
regular assessment aforesaid.
(4)
Where, as a result of an order under section 154 or section 155 or section 250
or section 254 or section 260 or section 262 or section 263 or section 264 or
an order of the Settlement Commission under sub-section (4) of section 245D,
the amount on which interest was payable under sub-section (1) or sub-section
(3) has been increased or reduced, as the case may be, the interest shall be
increased or reduced accordingly, and (i) in a case where the interest is
increased, the Assessing Officer shall serve on the assessee a notice of demand
in the prescribed form specifying the sum payable, and such notice of demand
shall be deemed to be a notice under section 156 and the provisions of this Act
shall apply accordingly;
(ii) in
a case where the interest is reduced, the excess interest paid, if any, shall
be refunded.
(5)
The provisions of this section shall apply in respect of assessments for the
assessment year commencing on the 1st day of April, 1989 and subsequent
assessment years." The levy is attracted where subject to other provisions
in the section in any financial year an assessee who is liable to pay the
advance tax under Section 208, has failed to pay such tax or where advance tax
paid by such assessee under the provisions of Section 210 is less than ninety
per cent of the assessed tax. The beginning point is first day of April next
following the relevant financial year. Different end points are prescribed.
They are (I) up to the date of determination of total income under sub-section
(1) of Section 143; (ii) the date of regular assessment when a regular
assessment is made and (iii) where there is an order of re-assessment or
re-computation under Section 147, or the difference of assessed income on
re-assessment or re- computation and originally assessed income till date of
re-assessment or re- computation, as the case may be. Sub-section (3) provides
the modalities to be adopted.
Section
234C deals with interest for deferment of advance tax.
As noted
above, great emphasis is laid by the assessee on sub-section (4) of Section
245D which, inter alia, provides that where as a result of an order of the
Settlement Commission under sub-section (4) of Section 245D the amount on which
interest was payable under sub-section (1) or sub- section (3) has been
increased or reduced, as the case may be, the interest shall be increased or
reduced accordingly. From this, according to the assessee, the inference to be
drawn has to be that only the quantum of income on which interest is charged
which is varied, but the period remains fixed.
One
basic feature of Chapter XIX is that it relates to income which was not
disclosed before the income-tax authorities. This is evident from Section 245C
which reads as follows:
"Section
245C: Application for settlement of cases.
245C(1):
An assessee may, at any stage of a case relating to him, make an application in
such form and in such manner as may be prescribed, and containing a full and
true disclosure of his income which has not been disclosed before the Assessing
Officer, the manner in which such income has been derived, the additional
amount of income-tax payable on such income and such other particulars as may
be prescribed, to the Settlement Commission to have the case settled and any
such application shall be disposed of in the manner hereinafter provided:
Provided
that no such application shall be made unless, - (a) the assessee has furnished
the return of income which he is or was required to furnish under any of the
provisions of this Act; and (b) the additional amount of income-tax payable on
the income disclosed in the application exceeds one hundred thousand rupees.
(1A)
For the purposes of sub-section (1) of this section and sub-sections (2A) to
(2D) of section 245D, the additional amount of income-tax payable in respect of
the income disclosed in an application made under sub- section (1) of this
section shall be the amount calculated in accordance with the provisions of
sub-sections (1B) to (1D).
(1B)
Where the income disclosed in the application relates to only one previous
year, -
(i) if
the applicant has not furnished a return in respect of the total income of that
year (whether or not an assessment has been made in respect of the total income
of that year), then, except in a case covered by clause (iii), tax shall be
calculated on the income disclosed in the application as if such income were
the total income;
(ii) if
the applicant has furnished a return in respect of the total income of that
year (whether or not an assessment has been made in pursuance of such return),
tax shall be calculated on the aggregate of the total income returned and the
income disclosed in the application as if such aggregate were the total income;
(iii)
if the proceeding pending before the income-tax authority is in the nature of a
proceeding for reassessment of the applicant under section 147 or by way of
appeal or revision in connection with such reassessment, and the applicant has
not furnished a return in respect of the total income of that year in the
course of such proceeding for reassessment, tax shall be calculated on the
aggregate of the total income as assessed in the earlier proceeding for
assessment under section 143 or section 144 or section 147 and the income
disclosed in the application as if such aggregate were the total income.
(1C)
The additional amount of income-tax payable in respect of the income disclosed
in the application relating to the previous year referred to in sub-section
(1B) shall be, - (a) in a case referred to in clause (i) of that sub- section,
the amount of tax calculated under that clause;
(b) in
a case referred to in clause (ii) of that sub- section, the amount of tax
calculated under that clause as reduced by the amount of tax calculated on the
total income returned for that year;
(iii)
in a case referred to in clause (iii) of that sub- section, the amount of tax
calculated under that clause as reduced by the amount of tax calculated on the
total income assessed in the earlier proceeding for assessment under section
143 or section 144 or section 147".
(Underlined
for emphasis) Prior to substitution by Finance Act, 1987 w.e.f. 1.6.1987, the
proviso to sub-section (1) read as follows:
"provided
that no such application shall be made unless the additional amount of income
tax payable on the income disclosed in the application exceeds fifty thousand
rupees." The word fifty thousand rupees in the earlier proviso has been
substituted by the expression "one hundred thousand rupees" by the
Finance Act, 1995 w.e.f. 1.7.1995. Some changes were introduced by Finance Act,
1987 w.e.f. 1.6.1987 in sub section (1B) and (1C) which do not have much
importance for the present appeals.
The
Commission is not bound to proceed with any application filed under Section
245C as is clear from Section 245D. The special provisions so far as relevant
read as follows:
Section
245D: Procedure on receipt of an application under section 245C.
"245D(1)-
On receipt of an application under section 245C, the Settlement Commission
shall call for a report from the Commissioner and on the basis of the materials
contained in such report and having regard to the nature and circumstances of
the case or the complexity of the investigation involved therein, the
Settlement Commission may, by order, allow the application to be proceeded with
or reject the application :
Provided
that an application shall not be rejected under this sub-section unless an
opportunity has been given to the applicant of being heard:
Provided
further that the Commissioner shall furnish the report within a period of
forty-five days of the receipt of communication from the Settlement Commission
in case of all applications made under section 245C on or after the 1st day of
July, 1995 and if the Commissioner fails to furnish the report within the said
period, the Settlement Commission may make the order without such report.
(2) x x
x x x (2A) Subject to the provisions of sub-section (2B), the assessee shall
within thirty-five days of the receipt of a copy of the order under sub-section
(1) allowing the application to be proceeded with, pay the additional amount of
income-tax payable on the income disclosed in the application and shall furnish
proof of such payment to the Settlement Commission.
(2B)
If the Settlement Commission is satisfied, on an application made in this
behalf by the assessee, that he is unable for good and sufficient reasons to
pay the additional amount of income-tax referred to in sub- section (2A) within
the time specified in that sub- section, it may extend the time for payment of
the amount which remains unpaid or allow payment thereof by instalments if the assessee
furnishes adequate security for the payment thereof.
(2C)
Where the additional amount of income-tax is not paid within the time specified
under sub-section (2A), then, whether or not the Settlement Commission has
extended the time for payment of the amount which remains unpaid or has allowed
payment thereof by instalments under sub-section (2B), the assessee shall be
liable to pay simple interest at fifteen per cent per annum on the amount
remaining unpaid from the date of expiry of the period of thirty-five days
referred to in sub-section (2A).
(2D) x
x x x x (3) Where an application is allowed to be proceeded with under
sub-section (1), the Settlement Commission may call for the relevant records
from the Commissioner and after examination of such records, if the Settlement
Commission is of the opinion that any further enquiry or investigation in the
matter is necessary, it may direct the Commissioner to make or cause to be made
such further enquiry or investigation and furnish a report on the matters
covered by the application and any other matter relating to the case.
(4)
After examination of the records and the report of the Commissioner, received
under sub-section (1), and the report, if any, of the Commissioner received
under sub-section (3), and after giving an opportunity to the applicant and to
the Commissioner to be heard, either in person or through a representative duly
authorized in this behalf, and after examining such further evidence as may be
placed before it or obtained by it, the Settlement Commission may, in
accordance with the provisions of this Act, pass such order as it thinks fit on
the matters covered by the application and any other matter relating to the
case not covered by the application, but referred to in the report of the
Commissioner under sub-section (1) or sub-section (3).
(5) x x
x x x (6) Every order passed under sub-section (4) shall provide for the terms
of settlement including any demand by way of tax, penalty or interest] the
manner in which any sum due under the settlement shall be paid and all other
matters to make the settlement effective and shall also provide that the
settlement shall be void if it is subsequently found by the Settlement
Commission that it has been obtained by fraud or misrepresentation of facts.
(6A)
Where any tax payable in pursuance of an order under sub-section (4) is not
paid by the assessee within thirty-five days of the receipt of a copy of the
order by him, then, whether or not the Settlement Commission has extended the
time for payment of such tax or has allowed payment thereof by instalments, the
assessee shall be liable to pay simple interest at fifteen per cent per annum
on the amount remaining unpaid from the date of expiry of the period of
thirty-five days aforesaid." The principles indicated by the Constitution
Bench in Anjum's case (supra) are as follows:
"1.
Commission in exercise of its power under Section 245D(4) and (6), does not have
the power to reduce or waive interest statutorily payable under Sections 234A,
234B and 234C, except to the extent of granting relief under the Circulars
dated 23rd May, 1996 issued by the Board under Section 119 of the Act. While
exercising the power derived under the Circulars of the Board, the Commission
does not act as a subordinate to the Board but will be enforcing the relaxed
provisions of the circulars for the benefit of the assessee in the process of
settlement.
2.
Interest due under the mandatory provisions like Sections 234A, 234B and 234C
has to be included in the settlement.
3.
Wherever the Act contemplated power to waive or reduction of interest to be
exercised by any particular authority in any particular situation it has done
so like in Sections 139(8), 215(4), 216 and Section 220(2A) of the Act.
4.
Prior to Finance Act, 1987, the corresponding sections pertaining to imposition
of interest used the expression 'may' but the change brought about in the
Finance Act, 1987 is a clear indication that the intention of the legislature
was to make the collection of statutory interest mandatory. The expression
'shall' is used deliberately." Sub-section (1) of Section 245C makes it
clear that at any stage of a case relating to him an assessee may make an
application to the Commission disclosing fully and truly his income which has
not been disclosed before the Assessing Officer. (Underlined for emphasis). To
put it differently, an assessee cannot approach the Commission for settlement
of his case in respect of an income which has already been disclosed before the
Assessing Officer. The income disclosed as contemplated is in the nature of
voluntary disclosure of concerned income.
Section
245F dealing with powers and procedure of Settlement Commission provides that
in addition to the powers conferred on the Settlement Commission under Chapter
XIX-A, it has all the powers which are vested in the income-tax authority under
the Act. Sub-section (2) is of vital importance and provides that where an
application made under Section 245C has been allowed to be proceeded with under
Section 245D, the Commission shall until an order is passed under sub-section
(4) of Section 245D, subject to the provisions of sub-section (3) of that
section have exclusive jurisdiction to exercise the powers and perform the
functions of the income-tax authority under the Act in relation to the case. In
essence, the Commission assumes jurisdiction to deal with the matter after it
decides to proceed with the application and continues to have the jurisdiction
till it makes an order under Section 245D. As noted by the Constitution Bench
in Anjum's case (supra), Section 245D(4) is the charging section and sub-
section (6) prescribes the modalities to be adopted to give effect to the
order.
It has
to be noted that the language used in Section 245D is "order" and not
"assessment". The order is not described as the original assessment
or regular assessment or re-assessment. In that sense, the Commission exercises
a plenary jurisdiction. The assessee's stand before the Special Bench of the
Commission was that there is no charging section for levy of interest. Such a
plea did not find acceptance by the Constitution Bench in Anjum's case (supra).
The further plea that there is no requirement to pay interest as no points of
terminus have been fixed is equally untenable because the Constitution Bench
held that the levy is mandatory. Equally, without substance is the plea taken
that terminus has to be as provided in relation to disclosed income. It cannot
be even countenanced that no interest is chargeable for that portion of the
income forming part of the total income as determined by the Commission which
was not earlier disclosed before the Assessing Officer.
The
Commission's power of settlement has to be exercised in accordance with the
provisions of the Act. Though the Commission has sufficient elbowroom in
assessing the income of the applicant and it cannot make any order with a term
of settlement which would be in conflict with the mandatory provisions of the
Act like in the quantum and payment of tax and the interest. The object of the
legislature, as noted by the Constitution Bench, in introducing Section 245C is
to see that protracted proceedings before the authorities or in Courts are
avoided by resorting to settlement of cases. In this process an assessee cannot
expect any reduction in amounts statutorily payable under the Act. Under
Section 245H, the Commission has the power to grant immunity to the assessee
from prosecution and penalty.
The
immunity extends not only to penal provisions of the Act but to offences under
the Indian Penal Code, 1860 (in short 'the IPC'), or under any other Central
Act for the time being in force. Benefit of waiver or reduction in the
imposition of penalty under the Act with respect to the cases covered by the
settlement is extended as provided under Section 245H(1). Here again, the
immunity is not available in cases where the proceedings for prosecution for
the indicated offences have been instituted before the date of receipt of the
application under Section 245C. The immunity granted stands withdrawn in case
of failure to pay sum specified in the order of settlement passed under
sub-section (4) of Section 245D within the specified time or the extended time.
Harmonising
various provisions of the Act and the legislative intent in introducing Chapter
XIX-A, the position is indisputable that the end point of the terminus has to
be the date on which the Commission passes an order under Section 245D(4). Any
other interpretation would lead to absurd result because the assessee who has
concealed income is placed at a more advantageous position vis--vis one who has
declared his income truly and fairly. By way of illustration it would be seen
that a person who has disclosed rupees ten lakhs as income and paid advance tax
correctly is in a way deprived use of the amount paid as advance tax for the
period during which an assessee who has not disclosed the correct income and
has disclosed rupees two lakhs before the Assessing Officer and subsequently
goes before the Commission disclosing rupees eight lakhs makes use of the
amount which was required to be paid as advance tax. It is for this default in
not paying the correct advance tax that interest Section 234B is levied and has
to be till the date of order under Section 245D(4).
A
construction which reduces the statute to a futility has to be avoided. A
statute or any enacting provision therein must be so construed as to make it
effective and operative on the principle expressed in maxim ut res magis valeat
quam pereat i.e. a liberal construction should be put upon written instruments,
so as to uphold them, if possible, and carry into effect the intention of the
parties. (See Broom's Legal Maxims (10th Edition), page 361, Craies on Statutes
(7th Edition) page 95 and Maxwell on Statutes (11th Edition) page 221.) A
statute is designed to be workable and the interpretation thereof by a Court
should be to secure that object unless crucial omission or clear direction
makes that end unattainable. (See Whitney v. Commissioner of Inland Revenue
(1926) AC 37 p.52 referred to in Commissioner of Income Tax v. S. Teja Singh
(AIR 1959 SC 352), Gursahai Saigal v. Commissioner of Income Tax, Punjab (AIR
1963 SC 1062).
The
Courts will have to reject that construction which will defeat the plain
intention of the legislature even though there may be some inexactitude in the
language used. (See Salmon v. Duncombe (1886) 11 AC 627 p.634 (PC), Curtis v. Stovin
(1889) 22 CBD 513) referred to in S. Teja Singh's case (Supra).
If the
choice is between two interpretations, the narrower of which would fail to
achieve the manifest purpose of the legislation we should avoid a construction
which would reduce the legislation to futility, and should rather accept the
bolder construction, based on the view that Parliament would legislate only for
the purpose of bringing about an effective result.
(See Nokes
vs. Doncaster Amalgamated Collieries (1940) 3 All E.R. 549 (CL) referred to in Pye
vs. Minister for Lands for NSW (1954) 3 All ER 514 (PC). The principles
indicated in the said cases were reiterated by this Court in Mohan Kumar Singhania
v. Union of India (AIR 1992 SC 1) The statute must be read as a whole and one
provision of the Act should be construed with reference to other provisions in
the same Act so as to make a consistent enactment of the whole statute.
The
Court must ascertain the intention of the legislature by directing its
attention not merely to the clauses to be construed but to the entire statute;
it must compare clause with other parts of the law and the setting in which the
clause to be interpreted occurs. [See R.S. Raghunath v. State of Karnataka and Anr.
(AIR 1992 SC 81)]. Such a construction has the merit of avoiding any
inconsistency or repugnancy either within a section or between two different
sections or provisions of the same statute. It is the duty of the Court to
avoid a head on clash between two sections of the same Act. [See Sultana Begum
v. Prem Chand Jain (AIR 1997 SC 1006)] Whenever it is possible to do so, it
must be done to construe the provisions which appear to conflict so that they harmonise.
It should not be lightly assumed that Parliament had given with one hand what
it took away with the other.
The
provisions of one section of the statute cannot be used to defeat those of
another unless it is impossible to effect reconciliation between them. Thus a
construction that reduces one of the provisions to a "useless lumber' or
'dead letter' is not a harmonised construction. To harmonise is not to destroy.
Even
though in Section 245D(4) or in section 245D(6), the terminus points for
charging interest have not been specifically provided, they have to be charged
in the spirit of Sections 234A, 234B and 234C. The interests charged under
Sections 245D(2C) and 245D(6A) are for different types of defaults and are not
really relatable to Sections 234A, 234B and 234C.
There
is another way of looking at the issue. Section 243B(3) provides differently
for regular assessment and re-assessment. In a re-assessment, ordinarily income
assessed is more than what was determined originally. If two different periods
are provided to meet such a situation, it is inconceivable that legislature
intended to totally give a go by to interest on the income which for the first
time is disclosed before the Commission. By analogy and harmony, the period has
to be till the date of Commission's order.
To put
it differently, the interests charged in terms of Sections 234A, B and C become
payable on the income already disclosed in the returns filed, together with the
income disclosed before the Commission. The concerned interest as aforesaid
shall be on the consolidated amount of income, i.e. both disclosed and
undisclosed. As indicated above, such interests shall be charged till the
Commission acts in terms of Section 245D.
Thereafter,
the prescription relating to charging of interests etc. becomes operative,
after the Commission allows the application for settlement to be proceeded
with. In such event, there is no further charge of interest in terms of
Sections 234A, B and C. The interest charged in terms of Section 245D is a
separate levy and not in terms of interest chargeable under Sections 234A, B
and C. Therefore, the apprehension that there is scope for charging of interest
on interest is without any basis.
To sum
up, the inevitable conclusion is that interest has to be charged for the period
beginning from the first day of April next following the relevant financial
year up to the date of Commission's order at the rate applicable, on interest
chargeable under Section 234B, when an order under Section 2454(D)(4) is
passed, followed by quantification under Section 245(D)(6) The appeals are
allowed to the extent indicated above.
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