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Judgment
Ferdino I. Rebello, J.—The petitioner by the present petition had raised the following contentions:
(1) That the interest u/s 23B can be claimed upto the date of intimation u/s 143(1) or regular assessment u/s 143(3).
(2) Whether the interest u/s 243B can be charged along with interest u/s 220.
(3) As interest by its very nature is compensatory whether charging of interest for late filing of returns being arbitrary is consequently unconstitutional.
A few facts may now be set out. 1st April, 1989 and 31st March, 1990 is the Previous Year for the assessment year 1990-91. The petitioner paid some advance tax by installments on 14th September, 1989, 14th December, 1989 and 31st March, 1990. The due date for filing the return was 30th November, 1990. The return was filed on 31st March, 1992.
In terms of Section 143(1)(a) interest payable u/s 234B is at the rate of 2% from 1st April, 1990 to 31st March, 1992 Notice was issued on 7th May, 1992 and served on the petitioner on 2nd June, 1992. An order of assessment u/s 143(3) came to be passed on 29th March, 1993 determining the total income at Rs. 28,55,201/-. On 3rd November, 1993 an order came to be passed u/s 154 rectifying the assessment order and determining the total income of Rs. 25,56,836./- and inter alia charging interest u/s 234B at the rate of 2% on varying amounts from 1st April, 1990 to 31st March, 1993 in the sum of Rs. 8,97,924/-. The petitioner between 16th September, 1992 has and 31st June, 1992 paid the full tax and interest in installments, totaling Rs. 27,03,996/-.
On 15th March, 1994 the petitioner applied for rectification of the interest charged in the assessment year. On 6th May, 1994 the petitioner received letter from 2nd respondent informing that full interest u/s 220(2) of Rs. 5,02,000/-was payable from 1st July, 1992 to 31st March, 1994. By letter of 30th July, 1994 the petitioner requested for rectification of interest calculated u/s 220(2).The petitioner received an undated order on 10th May, 1994 rejecting the application for rectification. The petitioner received an order dated 25th March, 1994 on 9th May, 1994 holding that no action u/s 140A(3) would lie against the petitioner. The petitioner preferred an Appeal. The Appeal was dismissed on 10th August, 1994 on the ground that no Appeal lies and alternatively the error sought to be corrected was not a mistake apparent on the face of the record. The Revision Application was preferred by the petitioner before the 1st respondent which came to be rejected on 28th December, 1994 and consequently the present petition.
We now consider the first contention as to whether interest should be charged upto the date of intimation u/s 143(1) or regular assessment u/s 143(3). The language of Section 234B, in our opinion, is devoid of any ambiguity. u/s 234B(1) an assessee who is liable to pay advance tax has and failed to pay such tax or the advance tax paid is less than ninety per cent of the assessed tax, shall be liable to pay simple interest at the rate of one per cent 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. It is, therefore, clear that wherever regular assessment is made u/s 143(3) then mere intimation under Sub-section (1) of Section 143 would be of no consequence and the interest be paid based on such regular assessment. Therefore, it is not the date of intimation u/s 143(1) but the date regular assessment is made u/s 143(3) which is relevant. The Assessing Officer was, therefore, within the jurisdiction in levying the interest for the period between 1st April, 1990 and 31st March, 1993.
We than come to the second question whether after having paid interest u/s 234B interest is still payable u/s 220 of the IT Act. The interest payable u/s 220 is distinct and different from the interest payable for default in payment of advance tax u/s 234B. In fact the language of Section 220 itself makes it clear that any amount otherwise than by way of advance tax specified as payable in notice of demand u/s 156, shall be paid within 30 days of the service of notice at the place and on the person mentioned in the notice. Therefore, u/s 220 what is payable is interest in terms of the demand made u/s 156 and on failure by the assessee to pay the said amount within 30 days of the service of notice. This is unconnected to the demand or failure to pay advance tax as contemplated u/s 234B. Therefore, the interest payable being payable under two different heads, it is not possible to accept the contention sought to be advanced on behalf of the assessee that once interest is paid u/s 234B no interest is payable u/s 220 of the IT Act. The second contention must, therefore, be rejected.
On facts here, we find that the petitioner has paid interest u/s 220 from 1st April, 1990 to 31st Mach, 1993. Considering the language of Section 220 tax would only be payable after the notice is served u/s 156 and after a period of one month thereafter. The learned Counsel has been unable to place before us the correct date on which the notice u/s 156 had been served on the petitioner. At any rate considering the demand made atleast from 1st April, 1990 to 31st March, 1993 is without justification as no tax was leviable u/s 220 of the Act. In view of the order to be passed the A.O. to consider this aspect while refixing the interest u/s 220 of the I.T. Act. We make it clear that the notice u/s 156 is notice issued after regular assessment u/s 143(3) and not after the intimation u/s 143(1) of the Act.
We than finally come to the last contention namely as to whether the provisions of Section 234A are unconstitutional. In our opinion the issue is already covered by a judgment of the Division Bench of this Court in Umesh S. Bangara Vs. Union of India (UOI), . As earlier set out the interest is chargeable on different heads. They are independent of each other and on failure to comply with the provisions of the Act. It is open to Parliament or to the Legislature, where there being default to charge interest for the said period, considering that such interest is compensatory. This was within the competence of Parliament. Considering the above and considering the judgment of this Court in Umesh S. Bangera (supra) the contention as urged is devoid of any merits.
For the aforesaid reasons we uphold the demand except to the extent u/s 220 of the I.T. Act. The A.O. to recompute the interest from the date of service of notice u/s 156 and after a period of one month thereafter. The learned Counsel has placed on record that as on 31st March, 1994 the entire amount has been paid. The A.O. to take into consideration this aspect while working out interest u/s 220. Rule to that extent is made partly absolute. No order as to costs.