Section 234B Interest on 115BBE Income for Senior Citizens
                     Section 234B Interest on 115BBE Income for Senior Citizens
Interest under Section 234B on Assessed Income Taxed under Section 115BBE — Applicability to Senior Citizens 
1. Introduction A recurring controversy arises during assessments where additions under Sections 68 to 
69C are taxed at the special rate under Section 115BBE. Assessing Officers frequently levy interest under 
Section 234B, even in cases involving resident senior citizens with no business income. This article 
examines whether such levy is legally sustainable, considering the statutory exemption from advance-tax 
liability for senior citizens, relevant CBDT clarifications, and judicial precedents. 2. Statutory Framework 2.1 
Section 208 and the Proviso for Resident Senior Citizens Section 208 mandates payment of advance tax 
where tax liability exceeds ₹10,000. The first proviso to Section 207(1) provides: “Provided that an 
individual resident in India, who does not have any income chargeable under the head ‘Profits and Gains of 
Business or Profession’, shall not be liable to pay advance tax.” Hence, a resident senior citizen (≥60 years) 
without business or professional income is statutorily exempt from advance-tax liability. 2.2 Interest under 
Section 234B Section 234B imposes interest for default in payment of advance tax. It arises only if the 
assessee was liable to pay advance tax but failed to do so. Where no such liability exists (e.g., resident 
senior citizen without business income), interest cannot be levied.
2.3 Definition of “Assessed Tax” — Explanation 1 to Section 234B “Assessed tax” means the tax 
determined under Section 143(1) or a regular assessment, after reducing TDS, TCS, and 
eligible reliefs. The levy of Section 234B interest presupposes that the assessee was liable to 
pay advance tax. Where such liability does not exist — as for senior citizens without business 
income — the “assessed tax” computation for 234B cannot be triggered, even if additions 
arise under Section 115BBE. 3. Section 115BBE and Its Implications Section 115BBE taxes 
unexplained credits, investments, or expenditures (Sections 68 to 69D) at a special rate 
(currently 60% plus surcharge and cess). Such income is unanticipated and arises only upon 
assessment. Hence, the advance-tax mechanism cannot retrospectively operate on income 
under Section 115BBE. ITAT rulings consistently hold that interest under Section 234B cannot 
be levied on such income for senior citizens exempt from advance tax
4. CBDT Guidance 4.1 Circular No. 23/2022 (03-11-2022) Clarifies computation of “assessed 
tax” for Sections 234B/234C. Emphasizes interest is linked to actual liability under Section 
208, not assessed income mechanically. 4.2 Departmental FAQs Official FAQs 
(incometaxindia.gov.in) confirm: “A resident senior citizen having no income from business 
or profession is not liable to pay advance tax. Consequently, interest under Sections 234B 
and 234C is not leviable.” 5. Judicial Precedents (a) ITAT Mumbai – Neeta Rohit Patel v. 
DCIT (ITA No. 4010/Mum/2019) Interest under Sections 234B and 234C deleted where 
senior citizen had no business income. (b) ITAT Delhi – Shri Om Prakash Sharma v. ITO (ITA 
No. 2580/Del/2020) Income assessed under Section 115BBE cannot attract 234B interest 
as it was unforeseeable. (c) Madras High Court — 4 August 2016 Case Held that interest 
under Sections 234B/234C cannot be levied on unforeseeable income, such as that arising 
from a judicial pronouncement. Invoked lex non cogit ad impossibilia and referred to 
Revathi Equipment Ltd. Although not involving a senior citizen or 115BBE, the reasoning 
supports limiting 234B interest to foreseeable, advance-taxable income.
6. Analytical Discussion • Section 234B interest requires liability under Section 208. • Senior citizens without 
business income have no such liability. •Additions under Section 115BBE are unanticipated, thus no 
advance-tax default occurs. • CBDT Circular 23/2022 and ITAT decisions support this purposive reading. • 
Madras HC reinforces the principle that interest should not be mechanically applied to income that could 
not have been projected. 7. Practical Implications • File Rectification u/s 154 if CPC/AO levies interest. • 
Alternatively, appeal before CIT(A) citing proviso to Section 207(1), Circular 23/2022, and ITAT precedents. 
• Emphasize legislative intent: senior citizens exempt from advance tax should not be penalized 
retroactively. 8. Limitation / Caveat While the legal reasoning is supported by statute, CBDT guidance, ITAT 
and Madras HC decisions: • No direct Supreme Court or High Court ruling conclusively addresses senior 
citizens + 115BBE + 234B. • CPC may mechanically levy interest; rectification or appeal may be required. • 
Madras HC reasoning is persuasive but not directly binding outside its territorial jurisdiction.
References 1. Income-tax Act, 1961 — Sections 115BBE, 207, 208, 234B 2. CBDT Circular No. 23/2022, 03-11-
2022 3. CBDT FAQ on Advance Tax — www.incometaxindia.gov.in 4. Neeta Rohit Patel v. DCIT, ITAT Mumbai 
5. Om Prakash Sharma v. ITO, ITAT Delhi 6. Madras HC — 4 August 2016 Case 
(thakurani.sgp1.digitaloceanspaces.com) 7. CIT v. Revathi Equipment Ltd., 454 ITR 330 (Madras HC) **** 
Disclaimer:  The views expressed in this article are the personal interpretations of the author based on 
available statutory provisions, CBDT circulars, ITAT, and High Court decisions. This article is intended for 
informational and educational purposes for tax professionals and does not constitute legal advice. Readers 
are advised to seek professional guidance before acting on any information contained herein. The author 
and publisher do not accept any liability for actions taken based on the content of this article. Sponsored 
Tags: CBDT ,Section 115BBE ,Section 154 ,Section 234B, Section 68 ,Section 69C
,
Read more at: https://taxguru.in/income-tax/section-234b-interest-115bbe-income-senior-citizens.html
Copyright © Taxguru.in