Itta/86/2004 Of Fenoplast Limited v. Deputy Commissioner Of Income-Tax

*THE HON’BLE SRI JUSTICE L.NARASIMHA REDDY AND THE HON’BLE SRI JUSTICE CHALLA KODANDA RAM + I.T.T.A.No.86 of 2004 %Date: 10.12.2014 Fenoplast Limited, Secunderabad. and …appellant. $Deputy Commissioner of Income Tax, Hyderabad. …Respondent.! Counsel for appellant: Sri C.V.Narasimham^ Counsel for Respondent : Sri J.V.Prasad< GIST:> HEAD NOTE:? Cases referred[1] 243 ITR 519 (Kar.)2 [2011] 330 ITR 0470 THE HON’BLE SRI JUSTICE L.NARASIMHA REDDY AND THE HON’BLE SRI JUSTICE CHALLA KODANDA RAM I.T.T.A.No.86 of 2004 JUDGMENT:(Per the Hon’ble Sri Justice L.Narasimha Reddy) The appellant is a Company and it used to file returns underthe Income Tax Act, 1961 (for short ‘the Act’) year after year. For theassessment year, 2001-2002, it filed returns showing ‘Nil’ income. Being a Company, it is governed by the provisions of Section 115JBof the Act, in case the income determined in accordance with theprovisions of the Act for assessment year is below 18.5% of the bookprofit reflected in the books of account maintained under theCompanies Act, the assessable income of the appellant shall be18.5% of the book profits. Being under the impression that the liability to pay tax wouldarise only at the end of the financial year on finalisation of the booksof account, the advance tax need not be paid; the appellant did notmake such payment for the concerned assessment year. Onscrutinising the returns, the Assessing Officer gave an intimationunder Section 143(1) of the Act. While all other facts and figureswere accepted, it was mentioned that the appellant is liable to payinterest under Section 234B of the Act, being a sum of Rs.2,52,107/- and under Section234C of the Act, at Rs.70,076/-. The appellant filed an applicationunder Section 154 of the Act for rectification of those figures. It waspleaded that an intimation under Section143(1) of the Act can beonly on acceptance of facts and figures furnished in the returns andthere was no basis for making demand of the interest under thosetwo provisions. The application was rejected. Thereupon, theappellant approached the Commissioner of Income Tax (Appeals),by way of appeal, and on dismissal of the same, it filedI.T.A.No.121/Hyd/2004, before the Hyderabad Bench ‘B’ of theIncome Appellate Tribunal (for short ‘the Tribunal’). The appeal was In the memorandum of grounds, only the following question was framed: “Whether the appellate Tribunal is correct in law inupholding the levy of interest U/s. 234 B and 234 C whenassessee did not have any taxable income under regularprovisions of the I.T.Act and tax was levied only uponinvoking deemed income created by the legal fiction asper provisions of Sec.115 JB of I.T. Act?” The appellant filed a memorandum with a prayer to permit it toraise additional ground as under: “Whether the Tribunal was correct in law inupholding the levy of interest under Sec.234B and 234 Cin an intimation under Section 143(1), when the issue ofsuch levy of interest in an assessment under Section115JB was a highly debatable issue?” We have heard Sri C.V.Narasimham, learned counsel for theappellant, and Sri J.V.Prasad, learned Standing Counsel for therespondent, at length, both on the permissibility of raising additionalground and on merits. The appellant filed a memorandum with a prayer to permit it toraise additional ground as under: “Whether the Tribunal was correct in law inupholding the levy of interest under Sec.234B and 234 Cin an intimation under Section 143(1), when the issue ofsuch levy of interest in an assessment under Section115JB was a highly debatable issue?” We have heard Sri C.V.Narasimham, learned counsel for theappellant, and Sri J.V.Prasad, learned Standing Counsel for therespondent, at length, both on the permissibility of raising additionalground and on merits. It is, no doubt, true that in a given case, a party to an appeal,can be permitted to raise additional grounds. However, the facts andcircumstances must support it. Various aspects that arise out of areturn, are dealt with by the Assessing Officer, with reference to thefacts and figures mentioned therein as well as relevant provisions oflaw. In the appeals that are filed against the orders of assessment,or the further appeals, the parties are required to ventilate theirgrievance in a pointed manner in the form of grounds. The occasionto raise additional ground would arise, only when any developmentin the form of interpretation of a provision of law or discovery of afact, which was not in the knowledge at earlier stages, take place. An additional ground, which did not constitute any basis for thediscussion in the appeals filed in the hierarchy, cannot be permittedto be raised at a later stage. In the instant case, we find that no circumstance whatever thatjustifies the raising of additional ground is pleaded. Further, theappellant was very much in a position to raise the said ground in theearlier two departmental appeals, and its failure to raise the groundsat that stage, would disentitle it to raise it before us. Hence, we arenot inclined to accede to the request. On merits, the only controversy is as to the entitlement of thedepartment to claim interest under Sections 234B and 234C of theAct. Those two provisions empower the Revenue, to levy interest onthe delayed or non-payment of the advance tax. In the instant case,there is no dispute that the appellant did not pay the advance tax. The justification pleaded by the appellant is that being an assesseecovered by the provisions of Section 115JB of the Act, it could nothave arrived at a conclusion as to the quantum of tax, till the books ofaccount to be maintained under the Companies Act has finalised, on31[st] March of the concerned year, and when the very occasion topay the tax did not arise, there was no question of the appellantbeing exposed to the liability to pay interest under Sections 234Band 234C of the Act. A contention on these lines was very muchaccepted by the Karnataka High Court in Quality Biscuits Co., v. Commissioner of Income Tax[[1]]and the S.L.P. filed against it wasdismissed by the Hon’ble Supreme Court. However, the Supreme Court in Joint Commissioner ofIncome Tax v. Rolta India Ltd.[[2]], took the view that even anassessee covered by the provisions of Sections 115JA and 115 JBof the Act is under obligation to pay advance tax and delay or failure to pay that, would entail in levy of interest. The view taken by theTribunal totally accords with this. Hence, we do not find any basis tointerfere with the order under appeal. Accordingly the appeal is dismissed. There shall be no orderas to costs. The miscellaneous petitions filed in this appeal shall alsostand disposed of. ____________________ L.NARASIMHA REDDY, J. Date:10.12.2014L.R. copy to be marked.GJ _____________________ CHALLA KODANDA RAM, J. [1]243 ITR 519 (Kar.)243 ITR 519 (Kar.) [2][2011] 330 ITR 0470[2011] 330 ITR 0470