E-Verification Deemed as Filing Date: ITAT Chennai Strikes Down Section 154 Rectification Order on Section 234A Interest

Background and Context

A significant ruling has emerged from the Income Tax Appellate Tribunal, Chennai, in the matter of Pavithra Sugichandran Vs DCIT (ITAT Chennai) for Assessment Year 2021-22. The Tribunal examined whether the date of e-verification of a return of income can be treated as the date of filing for the purpose of computing interest under Section 234A of the Income Tax Act, 1961, and whether such a question could at all be the subject matter of a rectification proceeding under Section 154 of the Act.

The ruling carries considerable significance for assessees who filed their returns during the COVID-19 pandemic period, when multiple statutory timelines were relaxed by government authorities and the Supreme Court of India.

Factual Background of the Case

The assessee in this matter is an individual. The following sequence of events forms the factual foundation of the dispute:

  • The assessee filed a return of income on 30.03.2022 for Assessment Year 2021-22, disclosing a total income of Rs. 16,42,820/-, under Section 139(4) of the Income Tax Act, 1961.
  • The said return was e-verified on 23.05.2022.
  • Prior to the filing of this return, search and seizure operations under Section 132 of the Income Tax Act, 1961 had been conducted on 27.11.2020 in the case of the assessee's husband.
  • Consequent to the search, the assessment was completed by the ACIT, Central Circle-1(4), Chennai vide order dated 24.09.2022 under Section 143(3) of the Act, determining the total income at Rs. 46,24,465/-. An addition of Rs. 29,81,644/- was made on account of credits in the bank account treated as unexplained money.
  • In the original assessment order, interest under Section 234A was charged for a period of only three months.

The Rectification Proceedings Under Section 154

Years after the completion of assessment, the Assessing Officer issued a notice dated 19.02.2025 under Section 154 of the Income Tax Act, 1961, proposing to rectify an alleged error in the computation of interest under Section 234A.

The Assessing Officer's position was that:

Since the return of income was e-verified only on 23.05.2022, the date of filing of the return should be reckoned as 23.05.2022, and not 30.03.2022.

Based on this reasoning, the Assessing Officer proposed to increase the interest under Section 234A from Rs. 66,222/- to Rs. 2,20,742/-, which represented a substantially higher charge attributable to a longer computation period.

The assessee filed objections to the proposed rectification, contending that: