Full Judgment
3. Subsequently vide a rectification order passed under Section 154 of the IT Act, 1961, the Assessing Officer holding that the insterest required to be charged under Section 234A not levied due to oversight directed that such interest be charged treating the lapse as a mistake apparent from record.
4. During first appeal, the Id. Dy. CIT(A) took the view that during the course of the assessment since the Assessing Officer failed to reach any conclusion that interest by the assessee was payable under Section 234A, rectification under Section 154 of the Act, was not permissible to rope in the assessee with the liability of payment of interest under this provision. Assessee's plea was, thus, allowed.
Hence the present appeal by the department.
5. Before us, while the learned D.R. contended that the lapse on the part of the Assessing Officer in not charging interest under Section 234A was a mistake apparent from record within the meaning of Section 154 of the I.T. Act, the learned Counsel for the assessee vehemently contended that there being no mention about the chargeability of such interest in the assessment order there was no legal scope under which interest could have been directed to be charged under rectification proceedings. While in support of their case, the Id. D.R. placed reliance on a decision of the Hon'ble Rajasthan High Court in the case of Muleh and Patti Mfg. Co. v. CIT [1995] 215 ITR 746, on behalf of the assessee reliance was placed on a decision of the Hon'ble Gujarat High Court in the case of CIT v. Gordhanbhai Jethabhai[1994] 205 ITR 279.
6. We have considered the matter carefully. At the outset it may be stated that charging of interest under Section 234A is mandatory and it is not at all within the discretion of the Assessing Officer to reduce it much less waive the same. In the event of late filing of a return either under the provisions of Sub-section (1) or Sub-section (4) of Section 139 or in response to a notice under Sub-section (1) of Section 142 after due date or the failure to furnish such return, an assessee is liable to pay simple interest @ 2% for every month or part of a month on the amount of tax on the total income determined as reduced by the advance tax and tax deducted at source, if any. It is, therefore, not correct to say that the lapse on the part of an Assessing Officer to charge interest under Section 234A where it is chargeable (about which there is no dispute in the present case), the mistake is not apparent from record.
7. In Gordhanbhai Jethabhai's case (supra), it was the question of the charging of interest under Section 215 which was not levied by the ITO, the Hon'ble High Court of Gujarat took the view that the Assessing Officer could be presumed to have waived such interest. As stated above, the situation obtainable in the case in hand is altogether different inasmuch as there is no question of any waiver, the levy of interest in the facts and circumstances of the case being mandatory.
This view also find support from the ratio decided by the High Court of Rajasthan in Mulch and Patti Mfg. Co. 's case (supra), wherein almost in similar circumstances where the Assessing Officer had failed to levy interest under Section 139(8) it was held that mistake was rectifiable under Section 154. The present case is at par with the facts of the cited case inasmuch as both under Sections 139(8) and 234A the charging of interest is mandatory. In view of the aforesaid, we are of the considered opinion that the view taken by the learned Dy. CIT(A) is not legally correct. Charging of interst under Section 234A being mandatory and imperative, we are unable to agree with the reasoning advanced by him that the Assessing Officer failed to arrive at any conclusion that such interst was payable. Even at the cost of repetition, it may be stated that there is no discretion left by the Legislature with the Assessing Officer in not charging such an interest if the conditions enumerated in such section exist.
8. In the result, the view taken during first appeal is set aside and the direction given by the Assessing Officer restored.