Order
1. Heard the learned counsel on both sides.
2. The short point involved in the present case is whether levy of interest under Section 234-A/234-B of the Income Tax Act, 1961 (for short “the Act”), is mandatory or not.
3. At one point of time there was a doubt on the nature of interest payable by the assessee under Section 234-A/234-B of the Act. That controversy stood finally settled by a five-Judge Bench decision of this Court in CIT v. Anjum M.H Ghaswala (2002) 1 SCC 633, (2001) 252 ITR 1. This judgment is binding on us. In the said judgment, this Court held in unequivocal terms that interest under Section 234-B/234-C is mandatory in nature. In view of the said decision, we are of the opinion that there was no need for the assessing officer to specifically recite in the order of assessment that penalty proceedings should be initiated, as contended on behalf of the assessee.
4. It is true that at one point of time, prior to the decision in Anjum Ghaswala case (2002) 1 SCC 633, (2001) 252 ITR 1, there was a conflict of opinion amongst various High Courts in India. One such case was the judgment of the Patna High Court in Ranchi Club Ltd. v. CIT (1996) 222 ITR 44 (Pat). Against the judgment of the Patna High Court, the civil appeal(s) was dismissed by this Court in CIT v. Ranchi Club Ltd. (2013) 15 SCC 545, (2001) 247 ITR 209 (SC) However, that dismissal is by a three-Judge Bench, whereas the judgment of Anjum Ghaswala case (2002) 1 SCC 633, (2001) 252 ITR 1 is of a five-Judge Bench of this Court. Be that as it may, the position that emerges after the judgment of this Court in Anjum Ghaswala case (2002) 1 SCC 633, (2001) 252 ITR 1 is that if interest is leviable in a given case under Section 234-B/234-C, then in such a case that levy is mandatory and compensatory in nature. The recitation by the assessing officer directing institution of penal proceedings is not obligatory and penal proceedings could be initiated for such default without a specific direction from the assessing officer.
5. In this particular case we have to follow the judgment in Anjum Ghaswala case (2002) 1 SCC 633, (2001) 252 ITR 1 in toto. In the said judgment it has been held that in appropriate cases, the Chief Commissioner has an authority to waive the interest. We quote hereinbelow the relevant portion of the judgment in Anjum Ghaswala case (2002) 1 SCC 633, (2001) 252 ITR 1, which reads as under:
“34. The learned Solicitor General has pointed out that by virtue of the power vested in the Board under Section 119(2)(a) of the Act, the Board has issued circulars by Notification No. F. No. 400/234/95-IT(B) dated 23-5-1996. As per this circular, it has empowered that the Chief Commissioner of Income Tax and Director General of Income Tax may waive or reduce interest charged under Sections 234-A, 234-B and 234-C of the Act in the class of cases or class of incomes specified in para 2 of the said order for the period and on conditions which are enumerated therein. He submitted that in view of the said circular, the same authority can be exercised by the Commission since the said circular would amount to relaxation of the rigour of Sections 234-A, 234-B and 234-C of the Act. We are in unison with this submission of the learned Solicitor General. This Court in a catena of cases has held that the circulars of the Central Board of Direct Taxes are legally binding on the Revenue. (See UCO Bank v. CIT (1999) 4 SCC 599, (1999) 237 ITR 889.) Since these circulars are beneficial to the assessees, such benefit can be conferred also on the assessees who have approached the Settlement Commission under Section 245-C of the Act on such terms and conditions as contained in the circular. In our opinion, it is for this purpose that Section 245-F of the Act has empowered the Settlement Commission to exercise the power of an income tax authority under the Act. We must clarify here that 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.
35. For the reasons stated above, we hold that the Commission in exercise of its power under Sections 245-D(4) and (6) does not have the power to reduce or waive interest statutorily payable under Sections 234-A, 234-B and 234-C except to the extent of granting relief under the circulars issued by the Board under Section 119 of the Act.”
6. In the present case, the assessee is placing reliance on the circular issued by CBDT, which has been referred to and mentioned in the above extracted portion in Anjum Ghaswala case (2002) 1 SCC 633, (2001) 252 ITR 1. This aspect has not been considered in the present case by the High Court in its impugned order ITA No. 502 of 2005. It has not been considered even by the Tribunal.
7. For the above reasons, we set aside the impugned orders of the Tribunal as also of the High Court ITA No. 502 of 2005. We direct the Tribunal to consider whether the assessee would be entitled to waiver of interest under the circular bearing No. 400/234/95-IT(B) dated 23-5-1996, which has been referred to by this Court in Anjum Ghaswala (2002) 1 SCC 633, (2001) 252 ITR 1. To this limited extent, the civil appeal stands allowed and the matter is remitted to the Tribunal to decide the question of applicability of the said circular to the facts of this case.
8. No order as to costs.