AI Insights
The case involves M/s Biesse India Pvt. Ltd., which sought judicial intervention to obtain a refund that had been unlawfully adjusted against a non-existing tax demand for the Assessment Year 2012-13. The petitioner argued that the Deputy Commissioner of Income Tax had failed to pass an order giving effect to the ITAT's decision within the statutory time limit, leading to an unlawful adjustment of Rs.4,73,27,390 against a non-existing demand. The High Court found that the respondent had indeed failed to comply with the statutory time limits and had unlawfully adjusted the refund, thus meriting the quashing of the order and the granting of the refund along with applicable interest.
Appeal Details
Counselvise Citation
[2024] 140 COUNSELVISE.COM (IT) 765008 (HC-KARNATAKA)
Assessee PAN
Bench
Appeal Number
CRN Number
Appellant
Respondent
Appeal Type
Others
Pronouncement Date
05-02-2024
Assessment Year
misc
Judgement Text
" - 1 - NC: 2024:KHC:4832 WP No. 16223 of 2023 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 5TH DAY OF FEBRUARY, 2024 BEFORE THE HON'BLE MR JUSTICE S.R.KRISHNA KUMAR WRIT PETITION NO. 16223 OF 2023 (T-IT) BETWEEN: M/S BIESSE INDIA PVT. LTD., (FORMERLY KNOWN AS BIESSE MANUFACTURING COMPANY PVT. LTD.) (REPRESENTED BY ITS DIRECTOR SRI PRASHANTH K V AGED ABOUT 51 YEARS, S/O SRI K B VIRUPAKSHAIAH) SY NO 32, NO 469, JAKKASANDRA VILLAGE, SONDEKAPPA ROAD, NELAMANGALA TALUK, BENGALURU RURAL DISTRICT 562123. …PETITIONER (BY SRI. K.K. CHAITANYA, SENIOR ADVOCATE FOR SRI. TATA KRISHNA.,ADVOCATE) AND: THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 1(1)(2), BMTC BUILDING, 80FT ROAD, 6TH BLOCK, KORAMANGALA, BENGALURU 560 095. …RESPONDENT (BY SRI.E.I. SANMATHI.,ADVOCATE) THIS W.P IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYER TO DIRECT THE RESPONDENT TO GRANT REFUND OF RS. 4,73,27,390 UNLAWFULLY ADJUSTED AGAINST A NON EXISTING DEMAND OF RS 4,02,20,200 FOR THE AY 2012-13 AS STATED IN THE REFUND APPLICATION AS ENCLOSED IN ANNX-A AND ETC. THIS PETITION, COMING ON FOR ORDERS, THIS DAY, THE COURT MADE THE FOLLOWING: Digitally signed by Vandana S Location: HIGH COURT OF KARNATAKA - 2 - NC: 2024:KHC:4832 WP No. 16223 of 2023 ORDER In this petition, petitioner seeks for the following reliefs:- “ (A) Issue as far as the Petitioner is concerned an appropriate writ or order in the nature of Mandamus or otherwise, directing the Respondent to grant refund of Rs.4,73,27,390/- unlawfully adjusted against a non existing demand of Rs. 4,02,20,200/- for the AY 2012-23 as stated in the refund application as enclosed in Annexure-A; (B) Issue as far as the Petitioner is concerned an appropriate writ or order in the nature of Mandamus or otherwise, directing the Respondent to grant interest on refund of Rs. 1,57,62,280/- as stipulated under Sections 244A(1) (b) for the AY 2012-13; (C) Issue as far as the Petitioner is concerned an appropriate writ or order in the nature of Mandamus or otherwise, directing the Respondent to grant interest on refund of Rs. 80,45,656/- as situated under Section 244A(1A) for the AY 2012-13; (D) Grant such other reliefs as this Honourable High Court may think fit including the costs of this writ petition. AND (E) Quash as far as the petitioner is concerned by an appropriate writ or order in the nature of Certiorari or otherwise, the order giving effect to the order of the Tribunal passed under Section 254 r.w.s. 143(3) dated: 23.08.2023 passed by the Respondent vide DIN No.ITBA/GEA/M/254/2023-24/1055377988 for the AY 2012- 13, enclosed as Annexure-P.” - 3 - NC: 2024:KHC:4832 WP No. 16223 of 2023 2. Heard learned Senior counsel for the petitioner and learned counsel for the respondent and perused the material on record. 3. The petitioner is a private limited company engaged in manufacturing and trading of wood working machine, components and related services. On 30.11.2012, the petitioner filed its returns declaring its total income as ‘nil’ for the assessment year 2012-13, pursuant to which, the respondent passed a final assessment order under Section 143(3) r/w 144-C(13) of the Income Tax Act, 1961 (for short ‘the I.T.Act’) dated 31.01.2017 and raised a demand under Section 156 of the I.T.Act. Aggrieved by the same, the petitioner filed an appeal before the ITAT which passed an order on 07.07.2017 by partly allowing the appeal and restoring the matter to the file of the respondent with a direction to work out the ALP and TP adjustment after excluding the said 5 companies selected by the TPO and also the claim of working capital adjustment and capacity under utilization adjustment. 3.1 Against the said order of the ITAT, petitioner filed a Misc.petition on 06.11.2017 before the ITAT on the premise that certain grounds had not been adjudicated by the Tribunal. So also, - 4 - NC: 2024:KHC:4832 WP No. 16223 of 2023 to the extent the ITAT’s order was prejudicial to it, the petitioner preferred an appeal before this Court in ITA No.851/2017. Further, the respondent also challenged the order of the Tribunal to the extent they were aggrieved by preferring ITA No.1085/2017 before this Court. On 15.12.2017, the aforesaid Misc.petition filed by the petitioner was dismissed by the ITAT, which was challenged by the petitioner in ITA No.321/2018. 3.2 By order dated 05.07.2018, ITA No.1085/2017 filed by the respondent was dismissed by this Court, thereby upholding the order of the ITAT. Thereafter, vide common order dated 29.01.2021, this Court permitted the petitioner to withdraw both ITA No.851/2017 and ITA No.321/2018 and remitted the matters back to the ITAT with a direction to dispose of the aforesaid Misc.Petition filed by the petitioner. In pursuance of the same, the petitioner withdrew the said Misc.petition on 08.10.2021. 3.3 After conclusion of the aforesaid proceedings, the petitioner filed an application on 01.12.2022 before the respondent seeking refund along with interest for the assessment year 2012-13 and since the same was not considered, petitioner filed a plea on 22.03.2023 before the Grievance Cell to consider the refund application pending before the respondent. Since the respondent - 5 - NC: 2024:KHC:4832 WP No. 16223 of 2023 did not take necessary steps in this regard, the petitioner initially preferred the present petition for directions to grant refund in terms of the refund application at Annexure-A dated 01.12.2022 and for grant of interest under Section 244A(1)(b) as well as for grant of interest under Section 244A(1A) for the assessment year 2012-13 and contended that since the respondent had not passed orders giving effect to (OGE), the petitioner was being put to irreparable injury and hardship and had approached this Court by way of the present petition. 4. During the pendency of the present petition, the respondent passed an OGE dated 23.08.2023, pursuant to which, the petitioner got the petition amended and assailed the aforesaid OGE dated 23.08.2023 as Annexure-P to the writ petition, interalia contending that the same was non est and barred by limitation apart from being illegal and invalid under Section 153(5) of the I.T.Act as can be seen from the amended memorandum of writ petition. 5. The petition has been opposed by the respondent who contends that there is no merit in the same and is liable to be dismissed. - 6 - NC: 2024:KHC:4832 WP No. 16223 of 2023 6. I have given my anxious consideration to the rival submissions and perused the material on record. 7. A perusal of the material on record will indicate that it is the specific contention of the petitioner that at the time of preferring the petition, since the respondent had not passed the OGE, in view of expiry of the period of three months from the end of the month, in which, the order of the Tribunal is received as contemplated under Section 153(5) of the I.T.Act; it is a matter of record that the order of the ITAT was received by the respondent on 09.08.2017 and if the period of three months is calculated from 31.08.2017, the due date to pass OGE would expire on 30.11.2017. It is also relevant to state that an OGE has to be passed on priority in terms of the following Board Instructions; • Instruction No. 1914 dated 02.12.1993 - paragraph D(iii); • Instruction No. 1789 dated 25.02.1988; • Circular No. 209 dated 11.01.1977; • Instruction 7 of F.No.279/MISC/M-42/2011-ITJ dated 24- 5-2011; 8. It is well settled that as per the principles of doctrine of merger, the Assessment order ceased to exist and the same stood - 7 - NC: 2024:KHC:4832 WP No. 16223 of 2023 merged with the order of the ITAT as held in the following judgments; • Kunhayammed vs. State of Kerala - (2000) 6 SCC 359; • VF Arvind Brands Pvt. Ltd. v. Add. Commissioner - 2013 SCC Online Kar 10489; • CIT vs. TejajiFarasramKharawalla - 1953 SCC OnLine Bom 28; 9. It is equally well settled that where no OGE is passed within the time prescribed under Section 153(5), the Assessing Officer has no authority to pass OGE beyond the time as held in the following cases; • Wipro Ltd. vs. JCIT, [2021] 130 taxmann.com 84 (Kar); • CIT v. Shelly Products, (2003) 261 ITR 367 (SC). 10. It is therefore clear that the Assessing Officer having failed to pass OGE within the prescribed time, returned income would be final as held in the following cases; • Aricent Technologies (Holdings) Ltd. vs. ACIT, WP (C) No. 13765/2022 dated 27.02.2023 (Del-HC); • Lakhpatrai Agarwal vs. ACIT, WP No. 9937 of 2022, dated 10.02.2023 (Bom); • Tata Projects Limited vs. DCIT, WP No. 1578 of 2022, dated 24.03.2022 (Bom). - 8 - NC: 2024:KHC:4832 WP No. 16223 of 2023 11. Further, the time limit provided under the statute for passing an order has to be strictly adhered to by the respondent as held in the following cases; • Wipro Ltd. vs. JCIT, [2021] 130 taxmann.com 84 (Kar); • Hope Textiles Ltd. v. Union of India - [1994] 205 ITR 508/73 Taxman 188 (SC); • VLS Finance Ltd. v. CIT - (2016) 12 SCC 32. 12. Further, the limitation prescribed in the I.T. Act was not merely a period of limitation but that it imposes a fetter upon the power of the Assessing Officer to take action under the said provisions as held in the following cases; • CCE & Customs v. Hongo India (P) Ltd., - (2009) 5 SCC 791; • S.S. Gadgil v. Lal & Co., - [1964] 53 ITR 231 (SC) • National Agricultural Co-operative Marketing Federation of India Ltd. v. Union of India - [2003] 260 ITR 548/128 Taxman 361 (SC); • Oracle India (P.) Ltd. v. Dy. CIT [2015] 63 taxmann.com 24/235 Taxman 227 (Delhi); SLP dismissed in [2016] 241 Taxman 311 (SC); • Sir Dinshaw Mulla in Nagendranath De v. Sureshchandra De - [ILR (1933) 60 Cal 1 : AIR 1932 PC 165] Referred in R. Rudraiah v. State of Karnataka, (1998) 3 SCC 23; • CIT v. V.V. Devassy - [2018] 403 ITR 25 (Kerala). - 9 - NC: 2024:KHC:4832 WP No. 16223 of 2023 13. It is also significant to note that once the period of limitation lapses, the concerned authority becomes functus officio and would not have jurisdiction to exercise the statutory power as held in the following cases; • BalasinorNagrik Co-operative Bank Ltd. v. Babubhai Shankerlal Pandya - (1987) 1 SCC 606 at page 609; • Minerals & Metals Trading Corpn. of India Ltd. v. Ocean Knight Maritime Co. Ltd., - (2012) 5 SCC 420. 14. As stated supra, the OGE at Annexure-P having been undisputedly passed the during the pendency of the present petition on 23.08.2023, even assuming that Section 153(3) was applicable and not Section 153(5), the due date for passing an order under this provision would also stand lapsed due to lapse of time as hereunder:- • As per section 153(3) is required to make fresh assessment within 31.12.2018 i.e., 9 months from the end of the financial year in which the order of the Tribunal was received by the authority. • Date of receipt of the order: 09.08.2017; • End of Financial year: 31.03.2018; • Due date: 31.12.2018; - 10 - NC: 2024:KHC:4832 WP No. 16223 of 2023 15. It is therefore clear that since the OGE was not passed within the prescribed time limit / period, the returned income of the petitioner has become final and consequently, any tax recovered from the petitioner - assessee beyond the tax on returned income is required to be refunded to the assessee in terms of Section 237 read with Section 240 as held in following cases; • CIT vs. Shelly Products - [2003] 261 ITR 367; • K. Nagesh vs. ACIT, [2015] 376 ITR 473 (Kar); • United Spirits Ltd. vs. ACIT - (2023) 156 taxmann.com 497 (Kar); • CIT v. Paul Noel Rodrigues - [2015] 231 Taxman 811 (Kar); • Plasticotes Investments (P.) Ltd. vs. CCIT - [2014] 52 taxmann.com 483 (Bom) • TE Connectivity India (P.) Ltd. v. DCIT - [2022] 138 taxmann.com 148 (Kar); • Vodafone Idea Ltd. vs. CPC - WP (L) No. 15398/2023 dated 08.11.2023 (Bom). 16. A perusal of the copies of Forms – 26AS and the screen shots of the ITBA portal will also indicate that the respondent has adjusted the refund granted for the Assessment years 2014-15, 2015-16, 2017-18, 2018-19 & 2019-20 against the non-existing demand of the impugned assessment year and as such, it is clear that the respondent has unlawfully adjusted Rs.4,73,27,390/- - 11 - NC: 2024:KHC:4832 WP No. 16223 of 2023 against a non-existing demand of Rs.4,02,20,200/- warranting interference in the present petition. 17. The aforesaid facts and circumstances clearly establish that the impugned OGE at Annexure-P dated 23.08.2023 is illegal, arbitrary and contrary to law and facts and the same deserves to be quashed and necessary directions are to be issued to the respondent to grant refund of Rs.4,73,27,390/- as stated in the refund application at Annexure-A dated 01.12.2022 filed by the petitioner. 18. Insofar as the claim of the petitioner for interest on refund under Section 244A(1)(b) of the I.T.Act is concerned, it is necessary to state that interest not paid along with the principal refunded would constitute ‘any amount’ under section 244A(1) and hence, interest on such interest not paid along with the principal amount refunded would also be liable to be paid to the assessee as held in the following decisions: • CIT vs. H.E.G Ltd., - [2010] 324 ITR 331 (SC); • CIT vs. Narendra Doshi - [2002] 254 ITR 606 (SC); • CIT vs .Syndicate Bank - [2020] 428 ITR 372 (Kar); • India Trade Promotion Organisation vs. CIT - [2014] 361 ITR 646 (Delhi); - 12 - NC: 2024:KHC:4832 WP No. 16223 of 2023 19. Further, interest has to be granted under section 244A(1)(b) from the date of payment of tax up to the date on which refund is granted i.e., up to the credit of amount to the account of the assessee as hereunder:- • Instruction No. 2 of 2007; • Circular No. 209 [F. No. 212/485/76(A-II)] dated 11.01.1977; • Ingenico International India Pvt Ltd vs JCIT [WP(C) 5570/2022] (Delhi); • Wabtec Locomotive Pvt Ltd vs ACIT [W.P. (C) 4405/ 2022] (Delhi); • CIT vs Pfizer Ltd [1991] 191 ITR 626 (Bombay). 20. Insofar as the claim of the petitioner for interest under Section 244A(1A) is concerned, the petitioner - assessee would be entitled to the interest at the rate of 3% per annum in addition to the interest under Section 244A(1)(b) for the period beginning from the date following the date of expiry of the time allowed under section 153(5) to the date on which the refund is granted. In this regard, it is an undisputed fact that for the impugned AY 2012-13, the Tribunal passed an order dated 07.07.2017 partly in favour of the petitioner; as per Section 153(5) of the I.T.Act, the Assessing Officer shall pass an OGE within a period of three months from the - 13 - NC: 2024:KHC:4832 WP No. 16223 of 2023 end of the month, in which the order under Section 254 is received by the PCCIT or CCIT or PCIT or CIT as held in the following judgments; • United Spirits Limited v. ACIT- [2024] 464 ITR 167 (Karnataka) (para 22); • Wipro Ltd vs JCIT (2021) 438 ITR 581 (Karnataka HC); • Nokia India (P) Ltd vs DCIT [2018] 407 ITR 20 (Delhi). 21. Thus, it is clear that the additional interest under Section 244A(1A) shall be computed from the expiry of time limit provided under Section 153 (5) till the date of grant of refund and consequently, the petitioner - assessee is entitled for interest under Section 244A(1A) also. 22. In the result, I pass the following:- ORDER (i) Petition is hereby allowed. (ii) The impugned order at Annexure-P dated 23.08.2023 passed by the respondent is hereby quashed. (iii) The respondent is directed to grant refund of Rs.4,73,27,390/- for the Assessment year 2012-13 to the petitioner within a period of one month from the date of receipt of a copy of this order. - 14 - NC: 2024:KHC:4832 WP No. 16223 of 2023 (iv) The respondent is also directed to grant interest on refund in a sum of Rs.1,57,62,280/- as stipulated under Section 244A(1)(b) of the I.T.Act for the Assessment year 2012-13 within a period of one month from the date of receipt of a copy of this order. (v) The respondent is further directed to grant interest on refund in a sum of Rs.80,45,656/- as stipulated under Section 244A(1A) of the I.T.Act for the Assessment year 2012-13 within a period of one month from the date of receipt of a copy of this order. Sd/- JUDGE NV/SRL "
Other Referred Cases
Kunhayammed vs. State of Kerala, VF Arvind Brands Pvt. Ltd. v. Add. Commissioner, CIT vs. Tejaji Farasram Kharawalla, Wipro Ltd. vs. JCIT, CIT v. Shelly Products, Aricent Technologies (Holdings) Ltd. vs. ACIT, Lakhpatrai Agarwal vs. ACIT, Tata Projects Limited vs. DCIT, Hope Textiles Ltd. v. Union of India, VLS Finance Ltd. v. CIT, CCE & Customs v. Hongo India (P) Ltd., S.S. Gadgil v. Lal & Co., National Agricultural Co-operative Marketing Federation of India Ltd. v. Union of India, Oracle India (P.) Ltd. v. Dy. CIT, CIT v. V.V. Devassy, Balasinor Nagrik Co-operative Bank Ltd. v. Babubhai Shankerlal Pandya, Minerals & Metals Trading Corpn. of India Ltd. v. Ocean Knight Maritime Co. Ltd., United Spirits Limited v. ACIT, Nokia India (P) Ltd vs DCIT, India Trade Promotion Organisation vs. CIT, CIT vs Pfizer Ltd
Laws Referred To
Income Tax Act, 1961
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