Commissioner Of Income Tax vs Ferro Concrete Co. (I) Ltd. on 21 March, 2005

Madhya Pradesh High Court
Commissioner Of Income Tax vs Ferro Concrete Co. (I) Ltd. on 21 March, 2005
Equivalent citations: (2005) 195 CTR MP 615, 2006 282 ITR 448 MP
Author: A Sapre
Bench: A Sapre, A K Tiwari


A.M. Sapre, J.

1. This is an appeal filed by Revenue (CIT) under Section 260A of the IT Act against an order dt. 7th Sept., 2001, passed by Income-tax Appellate Tribunal (hereinafter referred to as Tribunal) in ITA No. 734/Ind/1995. This appeal was admitted for hearing on following substantial question of law :

“Whether, on the facts and in the circumstances of the case and in law, the Tribunal was justified in directing the AO to charge the interest under Section 234B on the basis of tax calculated on the returned income, whereas Section 234B for charging interest clearly speaks of tax on assessed income determined under Section 143(1) or on regular assessment minus tax deducted or collected at source ?”

2. Heard Shri R.L. Jain, learned senior counsel with Ku. V. Mandlik, learned counsel for the appellant/Revenue. None for the respondent/assessee.

3. Having heard learned counsel for the appellant and having perused record of the case, we are inclined to allow the appeal and while setting aside the impugned order, remand the case to the Tribunal to decide the issue involved in this appeal afresh.

4. What we find on perusal of the impugned order of Tribunal is that the issue was decided in favour of assessee simply on the basis of one decision reported as

5. Perusal of decision rendered in Ranchi Club (supra) shows that in that case, the challenge was essentially to the vires of the two sections namely–Sections 234A and 234B of the IT Act. Their Lordships upheld the constitutional validity of these two sections and held them to be intra vires to the Constitution. After recording this finding, their Lordships concentrated more on Section 234A and placing reliance on Expln. 4 to Section 234A held that interest is leviable on the tax on the total income “as declared in the return” and not on the total income as determined.

6. What we notice is that Patna High Court did not consider much less in detail the scope, ambit and extent of Section 234B which is subject-matter of this appeal.

7. With respect, therefore, we are of the opinion that Tribunal ought not to have decided the issue involved in this case solely relying upon the decision of Patna High Court rendered in the case of Ranchi Club (supra) but should have decided the issue keeping in view the requirement of Section 234B.

8. Section 234A deals with the cases where interest is chargeable for default in furnishing return of income by the assessee whereas Section 234B deals with the cases where assessee has committed default in payment of advance tax. They thus operate in different fields in the sense that though they relate to payment of interest yet the nature of default is different. Not only that, even the wordings of both the sections are different. It is clear when both the sections are read analogously. It is, therefore, difficult to hold that interpretation of one section will apply to other in all respects.

9. Since the learned Members of the Tribunal while dealing with the issue involved in this appeal did not apply their mind to this aspect of the matter, nor even referred to the section much less its interpretation and how they are applicable to the facts of the case, we cannot do this exercise as a first Court of appeal. Indeed, the Tribunal did not even refer to the facts of the case so far as the issue in question is concerned. We, therefore, do not know as to what are the facts of the case so far as the question in hand is concerned. It is for all these reasons, the remand is called for.

10. It is the duty of the Tribunal as a last Court of appeal to deal with the issue in detail by taking note of the facts relating to the issue, relevant sections governing the issue and then the submissions of the parties in support of their case and lastly, the conclusion based on decided cases depending upon the facts of each case. As noticed earlier, we do not find this exercise has been done by the Tribunal while deciding the issue sought to be raised by the parties in this appeal. We cannot countenance with such casual approach in deciding the issue. It cannot be said to be legal. It is incapable of being upheld in appeal on merits even. Nor this Court can take up the issue de novo for deciding in the light of what the Tribunal has done.

11. This Court is possessed of power to remand the case. In other words, power to remand is available to this Court while hearing the appeal under Section 260A of the Act. We intend to exercise this power in the interest of justice. It does not cause any prejudice to either.

12. In view of aforesaid discussion, we refrain from going into the merits of the case and while remanding the case to the Tribunal, allow the appeal, and set aside the impugned order. The Tribunal is directed to decide the appeal on merits strictly in accordance with law keeping in view observations made supra. Let this be done within six months as an outer limit. No costs.

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