The main legal point established in the judgment is that interest under Section 234B(2A) of the Income Tax Act should be calculated only on the additional amount of income tax after providing the set off of the prepaid taxes already paid by the petitioner.

JUDGMENT :

SONIA GOKANI, J.

1. The petitioner is before this Court seeking to challenge the order dated 29.01.2021 passed by the respondent under Section 245(D) of the Income Tax Act for the Assessment Year 2012-13 to 2018-19 as the interest under Section 234B(2A) of the Act has been levied without allowing the credit of prepaid taxes.

2. The petitioner has prayed the following prayers :

“7. The petitioner, therefore, prays that this Hon’ble Court be pleased to issue a writ of mandamus or a writ in the nature of mandamus or a writ of certiorari or a writ in the nature of certiorari or any other appropriate writ, direction or order and be pleased to;

(a) quash and set aside the computation of interest under Section 234B(2A) in the impugned order at Annexure-’A’ to this petition and the same may be made giving effect to the prepaid taxes;

(b) pending the admission, hearing and final disposal of this petition, to direct the respondent No.2 not to recover the settled amount to the extent of interest under Section 234B(2A).”

3. A survey under Section 133A of the Income Tax Act was carried out by the Income Tax Department on 15.03.2018 and 16.03.2018 at the premises of the petitioner group.

The notice under Section 143(2) was issued on 28.09.2018. The petitioner preferred an application for settlement before respondent No.1 under Section 245C(1) on 09.12.2019, which was later withdrawn.

After, the order of the Principal Commissioner of Income Tax, Rajkot under Section 264 was passed on 19.03.2020, the second application for settlement before the respondent No.1 under Section 245C(1) was filed on 21.08.2020.

The respondent No.1 allowed the said application to proceed further.

The final report under Rule 9 was called for from the Principal Commissioner of the Income Tax and respondent No.1 finally passed an order under Section 245D(4) on 29.01.2021, providing the terms of settlement including the interest under Section 234B(2A) of the Act, inter alia with other aspects of the matter.

The petitioner is aggrieved by the order only to the extent of the computation of interest under Section 234B(2A) of the Act.

4. According to the petitioner, the interest is to be levied only on the additional amount of income tax after reducing the taxes already paid by the petitioner, thus, this controversy.

The respondent authority has calculated the interest on the entire additional income offered without providing the set off of the prepaid taxes already paid. Thus, according to the petitioner, it would amount to charging double interest on the same amount.

5. The reply affidavit has been filed by respondent No.2 urging that under Section 234B(2A)(a), where the application under Section 245C(1) is made, the petitioner is liable to pay interest at the rate of 1% for every month or part thereof for the period commencing on 1st April of the assessment year and ending on the date of making the application on additional amount of income. Also taken note of the various provisions of Section 211, 234B, 234B(2A)(a), 234(2A)(b), 234(2A)(3) and 234(2A)(4) of the Income Tax Act to urge that conjoint reading would make it clear that the petitioner is liable to pay interest on increased amount of tax. The purpose and intent of the legislation is to charge interest on the taxes, for the income which was not disclosed by the assessee. The decisions relied upon are on different facts according to the respondent which will not apply in the case of the petitioner.

6. We have heard Mr.S.N. Soparkar, learned senior advocate assisted with Mr. B.S. Soparkar, learned advocate for the petitioner and Mr. Varun K. Patel, learned senior standing counsel with Mr. Dev Patel, learned advocate for the respondents – Authorities. Rule. Learned advocate Mr.Patel waives service of notice of rule on behalf of the respondents.

7. Section 234B of the Income Tax Act speaks of the interest for defaults in payment of advance tax. Section 234B(2A) provides thus :

“234B(2A). (a) where an application under sub