Sec 234A,234B, 234C and Penalty

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This query is : Resolved

CA AJAY SONI (Querist)

05 June 2011 One of my assessee filed his return of Income by paying Tax which was payable by him and he has not paid Interest. Whether Interest shall be first adjusted against Payment of Interest or Tax(Assessee has filled complete amount in Tax Column in CHallan). Under which of the provision or Sec. or Case Law this is mentioned that Interest is to be first adjusted and then Tax. Assessee has filled belated Return.After initiation of Demand on account of Non-Payment of Interest amount, assessee was served a show cause notice why Penalty u/s 271(1)(c) shall not be invoked. Please suggest me, how my assessee can come out of this difficulty.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

05 June 2011 On the Return Filing Date :
Tax Liability = Tax+ Interest
If you have paid any thing short it will be tax liability only.

The methodology has been provided by the department just to show that " we are charging only interest and not the compound interest."
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SO it is provided that interest will be adjusted first.
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The way out is payment of the tax.
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An application, mentioning the fact that the assessee has duly paid the tax and due to oversight interest thereon has remained to be unpaid. The assessee has not done so willfully......etc..etc.. after paying the dues will solve the matter.
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