Interest
and refunds
Sections
234A, 234B & 234C l
Interest
1239. Interest not to
be charged for delay in payment of advance tax for financial year 1992-93 due
to disturbances
In pursuance of the provisions of clause (a)
of sub-section (2) of section 119 of the Income-tax Act, 1961 (43 of 1961), the
Central Board of Direct Taxes hereby orders that on account of disturbances,
curfew, etc., no interest under section 234C of the Act shall be charged from
those assessees who could not pay the second instalment of advance tax by the
due date, i.e., 15th December, 1992, provided they have paid the advance
tax on or before 31st December, 1992.
Notification : [F. No. 275/174/92-IT(B)], dated
11-2-1993.
1240. Extension of
effective period of earlier orders under section 119(2)(a)
In exercise of the powers conferred under clause (a)
of sub-section (2) of section 119 of the Income-tax Act, 1961, the Central
Board of Direct Taxes (hereinafter referred to as the Board) hereby orders that
the Board’s earlier order under section 119(2)(a) in the F. No.
243/6/90-IT (A-II), dated 1-9-1992 and 20-12-1993 shall have effect for one
more assessment year, viz, assessment year 1994-95.
Order : [F. No. 243/6/90-IT(A-II)(PT.)], dated
27-7-1994.
1241. Waiver of interest
chargeable under sections 234A and 234B in respect of assessees in Kashmir
valley for the assessment year 1995-96
In exercise of the powers conferred under clause (a)
of sub-section (2) of section 119 of the Income-tax Act, 1961, the Central
Board of Direct Taxes (hereinafter referred to as the Board), hereby orders
that the Board’s earlier order under section 119(2)(a) in the File No.
243/6/90-ITA, II dated September 1, 1992 and December 20, 1993, shall have
effect for one more assessment year, viz. assessment year 1995-96.
Order : [F.No. 275/14/95-IT(B)], dated
7-8-1995.
1242. Interest under
sections 234A [up to 28-2-1998], 234B and 234C shall not be levied where return
is filed under proviso to section 139(1) for assessment year 1997-98
In exercise of the powers conferred under clause (a)
of sub-section (2) of section 119 of the Income-tax Act, 1961, the Central
Board of Direct Taxes hereby orders that, where a return for the assessment
year 1997-98 is filed under the proviso to sub-section (1) of section 139 of
the Income-tax Act, 1961, interest under section 234A shall not be levied up to
28-2-1998 and no interest under sections 234B and 234C shall be levied.
Notification : No.
F. No. 400/234/95-IT(B), dated 31-7-1997.
1243. Waiver or
reduction of interest
In exercise of the powers conferred under clause (a)
of sub-section (2) of section 119 of the Income-tax Act, 1961, the Central
Board of Direct Taxes hereby direct that in cases where any income accrues or
arises for any previous year due to the operation of any order of a Court,
statutory authority or of the Government (other than an order of assessment,
appeal, reference or revision passed under the provisions of the Income-tax
Act, 1961) passed after the close of the said previous year (such income and
the order hereinafter referred to as the “relevant income” and the “relevant
order” respectively) interest under sections 234A, 234B and 234C shall be
reduced or waived by the Chief Commissioner of Income-tax/Director-General of
Income-tax subject to the conditions, for the period and to the extent
mentioned hereunder, namely :—
(i) Conditions
(a) the relevant
income is disclosed in a return of income furnished for the said previous year
or is otherwise disclosed to the Assessing Officer; and
(b) the tax
attributable to such income has been paid;
(ii) Period
(a) in respect of
interest under section 234A from the date immediately following the due date
for furnishing the return of income for the relevant assessment year till the
end of the month in which the relevant order giving rise to the relevant income
is passed;
(b) in respect of the
interest under section 234B, from the first day of April of the relevant
assessment year till the end of the month in which the relevant order giving
rise to the relevant income is passed;
(c) in respect of
interest under section 234C, for the period mentioned in that section;
(iii) Extent of
interest to be reduced or waived
The quantum of interest to be reduced or waived shall
be the difference between :
(a) the interest
computed for the period mentioned at (ii) above with reference to the
tax on the total income inclusive of the relevant income; and
(b) the interest
computed for the same period with reference to the tax on the total income as
reduced by the relevant income.
2. Waiver or reduction under this order shall
be allowed with reference to the relevant orders passed on or after the 1st day
of April, 1989.
Notification : [F. No.
212/495/92-IT(A-II)], dated 2-5-1994.
1244. Reduction or
waiver of penal interest for late filing of return of income, etc. :
Authorisation of powers to Chief Commissioners and Director-General
(Investigation)
In exercise of the powers conferred under clause (a)
of sub-section (2) of section 119 of the Income-tax Act, 1961, the Central
Board of Direct Taxes hereby direct that the Chief Commissioner of Income-tax
and Director-General of Income-tax may reduce or waive interest charged under
section 234A or section 234B or section 234C of the Act in the classes of cases
or classes of income specified in paragraph 2 of this order for the period and
to the extent the Chief Commissioner of Income-tax/Director-General of
Income-tax deem fit. However, no reduction or waiver of such interest shall be
ordered unless the assessee has filed the return of income for the relevant
assessment year and paid the entire tax due on the income as assessed except
the amount of interest for which reduction or waiver has been requested for.
The Chief Commissioner of Income-tax or the Director-General of Income-tax may
also impose any other conditions deemed fit for the said reduction or waiver of
interest.
2. The class of incomes or class of cases in
which the reduction or waiver of interest under section 234A or section 234B or,
as the case may be, section 234C can be considered, are as follows :
(a) Where during the
course of proceedings for search and seizure under section 132 of the
Income-tax Act, or otherwise, the books of account and other incriminating
documents have been seized and for reasons beyond the control of the assessee,
he has been unable to furnish the return of income for the previous year during
which the action under section 132 has taken place, within the time specified
in this behalf and the Chief Commissioner or, as the case may be,
Director-General is satisfied having regard to the facts and circumstances of
the case that the delay in furnishing such return of income cannot reasonably
be attributed to the assessee.
(b) Where during the
course of search and seizure operation under section 132 of the Income-tax Act,
cash is seized which is not allowed to be utilised for payment of advance tax
instalment or instalments as they fall due after the seizure of cash and the
assessee has not paid fully or partly advance tax on the current income and the
Chief Commissioner or the Director-General is satisfied that the assessee is
unable to pay the advance tax.
(c) Where any income
chargeable to income-tax under any head of income, other than “capital gains”
is received or accrues after the due date of payment of the first or subsequent
instalments of advance tax which was neither anticipated nor was in the
contemplation of the assessee and the advance tax on such income is paid in the
remaining instalment or instalments and the Chief Commissioner or
Director-General is satisfied on the facts and circumstances of the case that
this is a fit case for reduction or waiver of interest chargeable under section
234C of the Income-tax Act.
(d) Where any income
which was not chargeable to income-tax on the basis of any order passed in the
case of an assessee by the High Court within whose jurisdiction he is
assessable to income-tax, and as a result, he did not pay income-tax in
relation to such income in any previous year and subsequently, in consequence
of any retrospective amendment of law or, as the case may be, the decision of
the Supreme Court in his own case, which event has taken place after the end of
any such previous year, in any assessment or reassessment proceedings the
advance tax paid by the assessee during the financial year immediately
preceding the relevant assessment year is found to be less than the amount of
advance tax payable on his current income, the assessee is chargeable to
interest under section 234B or section 234C and the Chief Commissioner or
Director-General is satisfied that this is a fit case for reduction or waiver
of such interest.
(e) Where a return of
income could not be filed by the assessee due to unavoidable circumstances and
such return of income is filed voluntarily by the assessee or his legal heirs
without detection by the Assessing Officer.
3. The Chief Commissioner of
Income-tax/Director-General of Income-tax may order the waiver or reduction of
interest under sections 234A, 234B and 234C under this order with reference to
the assessment year 1989-90 or any subsequent assessment year but shall not so
reduce or waive penal interest in those cases where waiver or reduction of such
interest has been rejected in the past on the merits of the case. If any
petition in the past has been rejected because the Board had not issued this
direction earlier, these may be reconsidered and decided in accordance with
this order.
Notification No. : F.
No. 400/234/95-IT(B), dated 23-5-1996.
Clarification
Prior to 1989, taxpayers who had failed to furnish
the return of income within the specified time-limit or had paid inadequate or
not paid advance tax within the stipulated time-limit were charged penal
interest for such defaults and also subjected to penalty proceedings. The
Direct Tax Laws (Amendment) Act, 1987 inserted new sections 234A, 234B and 234C
in the Income-tax Act from assessment year 1989-90 to provide for penal
interest at higher rates for the defaults in late furnishing of the return of income,
defaults in payment of advance tax and for deferment of advance tax
respectively and omitted separate penalty provisions for these defaults. The
interest payable under these sections was mandatory and there was no provision
for reduction or waiver of the penal interest, as was provided specifically in
this behalf prior to 1989. As a result, several taxpayers faced unintended
hardships in certain circumstances.
2. The Central Board of Direct Taxes, in
exercise of powers, specified in section 119(2)(a) has decided to
authorise Chief Commissioners and Directors-General (Investigation) to reduce
or waive penal interest charged under the aforesaid sections in the following
circumstances, namely:—
(i) where, in the
course of search and seizure operation, books of account have been taken over
by the Department and were not available to the taxpayer to prepare his return
of income;
(ii) where, in the
course of search and seizure operation, cash had been seized which was not
permitted to be adjusted against arrears of tax or payment of advance tax
instalments falling due after the date of the search;
(iii) any income other
than “capital gains” which was received or accrued after the date of first or
subsequent instalment of advance tax, which was neither anticipated nor
contemplated by the taxpayers and on which advance tax was paid by the taxpayer
after the receipt of such income;
(iv) where, as a result
of any retrospective amendment of law or the decision of the Supreme Court after
the end of the relevant previous year, certain receipts which were hitherto
treated as exempt, become taxable. Since no advance tax would normally be paid
in respect of such receipts during the relevant financial year, penal interest
is levied for the default in payment of advance tax;
(v) where return of
income is filed voluntarily without detection by the Income-tax Department and
due to circumstances beyond control of the taxpayer such return of income was
not filed within the stipulated time-limit or advance tax was not paid at the
relevant time.
3. The Chief Commissioners and
Directors-General are being authorised to reduce or waive penal interest under
sections 234A, 234B and 234C with reference to assessment year 1989-90 and any
subsequent assessment year subject to certain specified conditions. This is a
major step taken by the Central Board of Direct Taxes to mitigate the hardships
in deserving cases.
Press Note :
Dated 21-5-1996
Judicial analysis
n CBDT has power
to make relaxation in cases covered by sections 234A, 234B, and 234C and where
assessee makes an application for waiver of interest under said sections, Board
cannot decline assessee’s request by a cryptic order that it was unable to
interfere in matter - Sant Lal v. UOI [1996] 89 Taxman 272/222 ITR 375 (Punj. & Har.)
n EXPLAINED
IN : New Punjab Skin Co. v. Union of India
[2002] 122 Taxman 117 (SC) in following words:
“It is pertinent to mention here
that the Circular dated 23-5-1996, was issued by the Board under section
119(2)(a) of the Act which vests power in the Board to pass general or
special order for waiver of interest under the provisions specified therein
including sections 234A, 234B and 234C of the Act. No such power is vested in
the Board so far as the interest leviable under section 158BFA(1) is
concerned.” (p. 119)
EXPLAINED IN
: Priyanka Overseas Ltd. v. DCIT [2001] 79 ITD 353 (Delhi) in
following words:
“From instructions which were issued by
Board in order No. F. 400/234/95-IT (B), dated 23-5-1996, it is amply clear that
intention of the tax authorities are such that the interest should not be
levied where any amendment came with respective effect.” (p. 356)
1245. Clarification regarding waiver of interest
claimed on the basis of Press Note dated 21-5-1996
1. The Board by an order [vide F.No.
400/234/95-IT(B)] dated 23-5-1996, indicated the class of income or class of
cases in which reduction or waiver of interest under sections 234A, B & C
would be considered by the Chief Commissioner of Income-tax and Director
General of Income-tax. Prior to the issue of the order a Press Note was
released on 21-5-1996 with a view to give wide publicity to the major step
contemplated by the Board towards mitigating hardship in genuine cases.
2. However, the instances have come to the
notice of the Board where certain claims have been made on the basis of para 2(v)
of the Press Note seeking waiver of interest for non-payment of advance-tax.
Para 2(e) of order dated 23-5-1996 contains no such stipulation. It
is hereby clarified the making any claim for waiver of interest based on the
Press Note dated 21-5-1996 is not sustainable. A Press Note is basically
intended to give a broad idea in advance to the public at large regarding a
policy/step under formulation. To treat a Press Note as a final legal document
and to make any claim on the basis of it as against the contents of the final
document is not maintainable.
3. The Board hereby reiterates that all
requests for waiver of interest are to be considered by the Chief Commissioner
of Income-tax and the Director General of Income-tax within the parameters laid
down by Board’s order dated 23-5-1996 read with the order dated 30-1-1997.
Circular : No. 783, dated
18-11-1999.
The Board has issued an order vide F.No. 400/234/95-IT(B), dated
23rd May, 1996, indicating the class of income or class of cases in which
reduction of waiver of interest under section 234A, 234B or 234C as the case
may be could be considered by Chief Commissioner of Income-tax and Director
General of Income-tax. The clause “d” of para 2 of the said order read
as under :
“Where any
income which was not chargeable to income-tax on the basis of any order passed
in the case of an assessee by the High Court within whose jurisdiction he is
assessable to income-tax, and as a result, he did not pay income-tax in
relation to such income in any previous year and subsequently, in consequence
of any retrospective amendment of law or as the case may be, the decision of
the Supreme Court, in his own case, which event has taken place after the end
of any such previous year, in any assessment or re-assessment proceedings the
advance tax paid by the assessee during the financial year immediately
preceding the relevant assessment year is found to be less than the amount of
advance tax payable on his current income, the assessee is chargeable to
interest under section 234B or section 234C and the Chief Commissioner of
Director General is satisfied that this is a fit case for reduction of waiver
of such interest.”
2. In partial modification of this para of the Order, the Central
Board of Direct Taxes has decided that there shall be no condition that the
decision of the High Court or the Supreme Court, as referred to therein, must
be given in the assessee’s own case. Also the condition that any retrospective
amendment of law or the decision of the Supreme Court or the jurisdictional
High Court must have been made after the end of the relevant year stands
withdrawn.
3. If any petition in the past has been rejected because the Board
had not issued this modification, the same may be reconsidered and decided in
accordance with this modification read with the order dated 23rd May, 1996.
Order
: F. No. 400/234/95-IT(B), dated 30-1-1997.
In exercise of the
powers conferred under clause (a) of sub-section (2) of section 119 of
Income-tax Act, 1961, Central Board of Direct Taxes, hereby direct that the
Chief Commissioner of Income-tax and Director-General of Income-tax may reduce
or waive interest charged under section 234A or section 234B or section 234C of
the Act in the classes of cases or classes of income specified in paragraph 2
of this Order for the period and to the extent the Chief Commissioner of
Income-tax/Director-General of Income-tax deem fit. However, no reduction or
waiver of such interest shall be ordered unless the assessee has filed the
return of income for the relevant assessment year and paid the income-tax due
on the income as assessed except the amount of interest for which reduction or
waiver has been requested for. The Chief Commissioner of Income-tax or
Director-General of Income-tax may also impose any other conditions deemed fit
for the said reduction or waiver of interest.
2. The class of incomes or class of cases in
which the reduction or waiver of interest under section 234A or section 234B
or, as the case may be, section 234C can be considered, are as follows :
(a) Where during the course of proceedings for search and seizure under
section 132 of the Income-tax Act or otherwise, the books of account and other
incriminating documents have been seized and for reasons beyond the control of
the assessee, he has been unable to furnish the return of income for the
previous year during which the action under section 132 has taken place, within
the time specified in this behalf and the Chief Commissioner or, as the case
may be, Director-General is satisfied having regard to the facts and
circumstances of the case that the delay in furnishing such return of income
cannot reasonably be attributed to the assessee.
(b) Where during the course of search and seizure operation under
section 132 of the Income-tax Act, cash is seized which is not allowed to be
utilised for payment of advance tax instalment or instalments as they fall due
after the seizure of cash and the assessee has not paid fully or partly advance
tax, the current income and the Chief Commissioner or the Director-General is
satisfied that the assessee is unable to pay the advance tax.
(c) Any income chargeable to income-tax under any head of income, other
than ‘Capital gains’ is received or accrued after due date of payment of the
first or subsequent instalments of advance tax which was neither anticipated
nor was in the contemplation of the assessee and the advance tax on such income
is paid in the remaining instalment or instalments and the Chief Commissioner
or Director- General is satisfied on the facts and circumstances of the case
that this is a fit case for reduction of waiver of interest chargeable under
section 234C of the Income-tax Act.
(d) Where any income which was not chargeable to income-tax on the
basis of any order passed in the case of an assessee by the High Court within
whose jurisdiction he is assessable to income-tax, and as a result, he did not
pay income-tax in relation to such income in any previous year and
subsequently, in consequence of any retrospective amendment of law or as the
case may be, the decision of Supreme Court in his own case, which event has
taken place after the end of any such previous year, in any assessment or
reassessment proceedings the advance tax paid by the assessee during the
financial year immediately preceding the relevant assessment year is found to
be less than the amount of advance tax payable on his current income, the
assessee is chargeable to interest under section 234B or section 234C and the
Chief Commissioner or Director-General is satisfied that this is a fit case for
reduction or waiver of such interest.
(e) Where a return of income could not be filed by the assessee due to
unavoidable circumstances and such return of income is filed voluntarily by the
assessee or his legal heirs without detection by the Assessing Officer.
3. The Chief Commissioner of
Income-tax/Director-General of Income-tax may order the waiver of reduction of
interest under sections 234A, 234B and 234C under this order with reference to
the assessment year 1989-90 or any subsequent assessment year but shall not so
reduce or waive penal interest in those cases where waiver or reduction of such
interest has been rejected in the past on the merits of the case. If any
petition in the caste has been rejected because the Board had not issued this direction
earlier, these may be reconstituted and decided in accordance with this order.
Order : F.No. 400/234/95-IT(B), dated 23-5-1996.