No Addition in Assessment but there is a Demand of Interest u/s 234B and 234C

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This query is : Resolved

Viral (Querist)

07 August 2024 Dear Members,

I have a query for the facts as under:
# Return was Originaly filed within due date for AY 2018-19.
# Notice u/s 148 was issued on 11.05.2022 to file Revised Return, Return was filed with same figures as per the Original Return.
# Later Replied Filed for Notice u/s 142(1).
# Assessment Order passed u/s 147 rws 144B by Assessment Unit under Faceless Scrutiny and No Addition of Income was done.
# Income and Tax in the Computation Sheet as per the Order vis-a-vis Original/Revised Return are same.
# Credit of TDS and Advance Tax is properly given

But in the Computation Sheet for Order there is Interest u/s 234B and 234C shown as payable for an amount of Rs. 1,15,901/-. Though the Advance Tax was paid correctly (above 90%) and no default was there, still there is a demand of Interest.

Query:
What is the recourse for the Demand.. As there is no Addition of Income.. Can we file an Appeal in this matter ??
Request Guidance of Seniors and anybody aware of such a matter.

Thanking You.
Viral Vora
9702556399

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)

13 August 2025 Legal Position:
🔹 Section 234B and 234C are interest provisions, not penalty provisions. They are:
234B: For shortfall in advance tax
234C: For deferment of advance tax installments
➡️ But these interests are computed based on assessed tax, and are automatically recalculated in reassessment orders (even if income remains unchanged), unless protected explicitly.
🔍 Why Did Interest Reappear in the Reassessment Order?
System-Generated Order (Faceless/ITBA system):
The system automatically recomputes 234B/234C in the assessment order
It does not consider interest already paid under the original return unless manually adjusted
Missing reference to earlier paid interest:
If AO did not adjust or exclude earlier 234B/234C already paid, system may duplicate the demand
✅ You Have a Strong Case Because:
There is no change in tax liability
Interest was already paid under the original processing
No fresh default of advance tax arises
Courts have repeatedly held that duplicate interest demand cannot be created if no enhancement of assessed income is made
🧾 Judicial Precedent (in your favor):
📌 CIT vs. Ranchi Club Ltd. (Jharkhand HC):
Once interest has been paid under original assessment and there is no enhancement of assessed income in reassessment, no further interest u/s 234B can be charged.
📌 What Should You Do?
✅ Option 1: File a Rectification Application u/s 154
Since this is an apparent mistake of law, you can file Rectification Request online under Section 154.
Grounds: Duplicate levy of interest under 234B/234C despite no change in income or tax in reassessment
✅ Option 2: File Appeal before CIT(A)
You can file an appeal within 30 days of the order
Grounds: Interest wrongly computed; not payable as per settled law since income remains unchanged
This may take more time but secures your right to contest

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