Sh. M.C. Anand Prop., Jalandhar V. The Income Tax Officer, Jalandhar

CO 3/ASR/2011

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7922 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 7 month(s) 9 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 10-10-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 09-10-2012
• Assessment Year: misc
• Appeal Filed On: 01-03-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: R L CHHANALIA
• Section: 143(3); 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.01(ASR)/2011 ASSESSMENT YEAR:1982-83 PAN :AATPA0247L THE INCOME TAX OFFICER, VS. SH. M.C. ANAND, WARD III(4), JALANDHAR. PROP. M/S. CHANDRA INDUST RIES, JALANDHAR. (APPELLANT) (RESPONDENT) C.O. NO.03(ASR)/2011 (ARISING OUT OF ITA NO. 01(ASR)/2011) ASSESSMENT YEAR: 1982-83 SH. M.C. ANAND, VS. INCOME TAX OFFICER, JALANDHAR. WARD III(4), JALANDHAR. (APPELLANT) (RESPONDENT) ASSESSEE BY: SH. R.L. CHHANALIA, DR DEPARTMENT BY: SH. ANIL MIGLANI, ADV. DATE OF HEARING:09/10/2012 DATE OF PRONOUNCEMENT:10/10/2012 ORDER PER BENCH ; THIS APPEAL OF THE REVENUE ARISES FROM THE ORDER O F THE CIT(A), JALANDHAR, DATED 25.10.2010 FOR THE ASSESSMENT YEAR 1982-83. THE ASSESSEE HAS ALSO FILED CROSS OBJECTION. ITA NO.01(ASR)/2011 CO NO.03(ASR)/2011 2 2. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPE AL: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN CANCELING THE INTEREST AMOUNTING TO RS .5,34,380/- CHARGED BY THE A.O. UNDER SECTION 220(2) OF THE INC OME-TAX ACT, 1961. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT THE INTEREST U/S 220( 2) OF THE INCOME-TAX ACT, 1961 WAS CHARGED BY THE A.O AS PER PROVISIONS OF SECTION 154 OF THE ACT. 3. IT IS PRAYED THAT THE ORDER OF THE LD. CIT(A)BE SET ASIDE AND THAT OF THE A.O. BE RESTORED. 3. IN THE C.O. THE ASSESSEE HAS RAISED FOLLOWING GR OUNDS: 1. THAT THE LD. CIT(A) HAS RIGHTLY DELETED THE ADD ITIONAL INTEREST CHARGED BY THE AO U/S 220(2) VIDE HIS ORDER DATED 2 5.10.2000 AND RESTRICTED THE INTEREST U/S 220(2) CHARGED EAR LIER AFTER PROPER APPRAISAL OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THAT THE LD. CIT(A) HAS ERRED IN NOT SUSTAINING THE ARGUMENT OF THE ASSESSEE THAT THE INTEREST U/S 220(2) ALREADY C HARGED COULD NOT BE VARIED U/S 154 ON A DEBATABLE ISSUE OF LAW. 3. THAT IN ANY CASE THE ORDER OF THE AO PASSING AN ORDER U/S 154 WHEREBY LEVYING INTEREST U/S 220(2) OF THE ACT AT R S.554260/- IS AGAINST LAW AND FACTS. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSM ENT IN THIS CASE WAS ORIGINALLY FRAMED U/S 143(3) ON 28.3.1985 AT AN INC OME OF RS.5,34,380/- RAISING DEMAND OF RS.4,44,325/-. THE ASSESSMENT OR DER WAS SET ASIDE BY THE LD. CIT(A) AND RESTORED TO THE FILE OF THE AO FOR D OING IT AFRESH. THE FRESH ASSESSMENT WAS FRAMED ON 23.3.1998, WHICH WAS AGAIN SET ASIDE ON ITA NO.01(ASR)/2011 CO NO.03(ASR)/2011 3 19.10.1989 BY THE LD. CIT(A). THE THIRD ASSESSMENT WAS FRAMED ON 31.3.1995 WHICH WAS ALSO SET ASIDE BY THE LD. CIT(A ) VIDE ORDER DATED 18.11.1996. FRESH ASSESSMENT WAS FRAMED AGAIN ON 30 .12.1998 WHICH WAS ALSO SET ASIDE BY THE LD. CIT(A). THE FINAL ASSESS MENT ORDER WAS FRAMED U/S 143(3) ON 26.3.2002 AT THE SAME INCOME OF RS.5,34,3 80/- WHICH WAS ORIGINALLY ASSESSED ON 28.3.1985. ACCORDING TO AO, THE DEMAND WAS ORIGINALLY CREATED ON 28.3.1985 AND NOTICE FOR RECO VERING THE DEMAND WAS ISSUED ON 23.3.1988. THE DEMAND WAS THEREFORE, HELD TO BE DUE TO BE PAID O OR BEFORE 28.4.1988. THE AO ACCORDINGLY COMPUTED TH E INTEREST U/S 220(2) FOR THE PERIOD 1.5.1988 TO 31.10.1996 AT RS.6,37,22 6/- IN RESPECT OF THE UNPAID DEMAND. THE AO ALSO NOTED THAT SEVERAL PAYME NTS MADE BY THE ASSESSEE AGAINST THE TAX DEMAND AND THE PERIOD OF D ELAY FOR THE PAYMENTS MADE AND COMPUTED FURTHER INTEREST U/S 220(2) OF RS .1,56,629/- FOR THE PERIOD 1.11.1996 TILL 22.3.2000. THE TOTAL INTERES T U/S 220(2) TILL 22.3.2000 WAS THUS COMPUTED AT RS.7,93,855/-. THE AO THEREFOR E, ISSUED NOPTICE U/S 154 TO CHARGE INTEREST U/S 220(2) TILL THE DATE O F THE NOTICE. THE ASSESSEE OBJECTED TO THE PROPOSED CHARGING OF INTEREST ON T HE GROUND THAT CERTAIN INTEREST U/S 220(2) HAD ALREADY BEEN CHARGED BY TH E DEPARTMENT AMOUNTING TO RS.1,20,859/- AND THAT THE TRO HAD ALSO CHARGED INTEREST U/S 220(2) HAD ALREADY BEEN CHARGED, THE SAME COULD NOT BE RECTIFI ED AGAIN BY EXTENDING THE ITA NO.01(ASR)/2011 CO NO.03(ASR)/2011 4 PERIOD FOR WHICH THE INTEREST WAS TO BE PAID. IT WA S FURTHER SUBMITTED THAT INTEREST COULD BE CHARGED FROM 1.5.1988 SINCE SUCH INTEREST WAS PAYABLE ONLY WHEN THE DEMAND REMAINED OUTSTANDING AND PAYABLE TO THE ASSESSEE. IT WAS CONTENDED THAT WHERE THE AMOUNT SPECIFIED IN THE N OTICE OF DEMAND WAS ALREADY PAID OR NO LONGER PAYABLE, THE LIABILITY TO PAY INTEREST U/S 220(2) COULD NOT ARISE. IT WAS SUBMITTED THAT WHEN THE ASS ESSMENT ORDER WAS SET ASIDE, THE DEMAND WAS NO LONGER DUE. IT WAS SUBMITT ED THAT THE FINAL ORDER AND DEMAND NOTICE WAS ISSUED ON 30.12.1998 AND THAT AT BEST THE INTEREST U/S 220(2) COULD BE CHARGED FROM 30.12.1998 BUT NOT FRO M 1.5.1998. IT WAS FURTHER SUBMITTED THAT RECTIFICATION COULD NOT BE D ONE IN RESPECT OF MATTERS WHICH WERE REQUIRED TO BE ESTABLISHED THROUGH A LON G DRAWN PROCESS OF REASONING. THE AO BEING NOT CONVINCED WITH THE ARGU MENTS OF THE ASSESSEE , HELD THAT IF THE ORDER WAS SET ASIDE IN FIRST APP EAL, BUT RESTORED ON SECOND APPEAL, INTEREST U/S 220(2) RAN FROM THE DUE DATE O F THE ORIGINAL DEMAND. HE RELIED ON THE JUDGMENTS IN THE CASES OF K.P. ABDUL KARIM HAJI VS. ITO 141 ITR 120 (KERALA), MOHD. ESSA MOOSA SAIT VS. GTO 167 ITR338 (KERALA) AND BHARAT COMMERCE & INDS. LTD. VS. UNION OF INDIA 188 ITR 277 (DEL) FOR THIS PROPOSITION. THE AO, THEREFORE, HELD THAT THE TOTAL INTEREST CHARGEABLE U/S 220(2) WAS RS.7,92,855/- AND AFTER REDUCING THE IN TEREST OF RS.2,39,595/- ITA NO.01(ASR)/2011 CO NO.03(ASR)/2011 5 ALREADY CHARGED BY THE ITO AND TRO, RAISED A BALANC E DEMAND OF RS.5,54,260/-. 5. BEFORE THE LD. CIT(A), THE ASSESSEES COUNSEL MA DE THE SUBMISSIONS WHICH WERE ACCEPTED BY THE LD. CIT(A) AND HELD THAT THE AOS ACTION IN CHARGING INTEREST FROM 1.5.1988 WHEN THE DEMAND P URSUANT TO THE SECOND ASSESSMENT ORDER FELL DUE IS CLEARLY AGAINST THE PR OVISIONS OF THE LAW RELATING TO CHARGING OF INTEREST U/S 220(2) SINCE THE DEMAND CREATED BY THE SECOND ASSESSMENT ORDER WAS NOT REVIVED BY ANY APPELLATE O RDER OF ANY HIGHER AUTHORITY AND ACCORDINGLY ADDITIONAL INTEREST U/S 2 20(2) CHARGED, CAN NOT SURVIVE. THE LD. CIT(A) DID NOT ACCEPT THE ARGUMENT S OF THE LD. COUNSEL FOR MAINTAINABILITY THAT NO ORDER U/S 154 OF THE ACT FO R LEVYING INTEREST U/S 220(2) CAN BE PASSED SINCE IT IS A DEBATABLE ISSUE . 6. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE ASSESSING OFFICER. HE FURTHER ARGUED THAT NO APPEAL IS MAINTA INABLE U/S 220(2) OF THE ACT 7. THE LD. COUNSEL FOR THE ASSESSEE, SH. ANIL MIGLA NI, ADVOCATE, ON THE OTHER HAND, RELIED UPON THE ARGUMENTS MADE BEFORE T HE LD. CIT(A) AND THE ORDER OF THE LD. CIT(A) WITH REGARD TO THE INTEREST U/S 220(2) OF THE ACT. HE FURTHER ARGUED THAT IT IS A DEBATABLE ISSUE AND SUC H DEBATABLE ISSUE CANNOT BE SUBJECT MATTER OF RECTIFICATION U/S 154 OF THE ACT AND RELIED UPON THE DECISION ITA NO.01(ASR)/2011 CO NO.03(ASR)/2011 6 OF THE HONBLE SUPREME COURT IN THE CASE OF VOLKART BROTHERS REPORTED IN 82 ITR 50 (SC). 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. AS REGARDS THE MAINTAINABILITY OF APPEAL AS ARGUED BY THE LD. DR, THOUGH THERE IS NO SPECIFIC GROUND RAISED BY THE REVENUE I N THIS REGARD BUT THE PRESENT APPEAL IS AGAINST THE ORDER U/S 154 OF THE ACT AND THEREFORE, THE SAME IS MAINTAINABLE IN THE EYES OF LAW. THEREFORE, AT T HE OUTSET, THE ARGUMENTS MADE BY THE LD. DR ARE REJECTED. AS REGARDS THE CHA RGING OF INTEREST U/S 220(2) OF THE ACT, THE LD. CIT(A) IS OF THE VIEW TH AT NONE OF THE AUTHORITY HAS MODIFIED THE DEMAND RAISED BY THE AO. THE ORDER OF THE AO HAVING BEEN SET ASIDE, THEREFORE, THERE IS NO DEMAND, AS S UCH ORDER DATED 27.7.2000 OF THE AO IS CORRECT IN LAW. THE LD. CIT(A) IS OF T HE VIEW THAT THE AO IS CORRECT IN LAW, WHO HAS TAKEN IN TO ACCOUNT THE DEM AND RAISED VIDE FIRST ORDER DATED 31.3.1995 AND TAKES INTO ACCOUNT THE ADDITION AL DEMAND RAISED VIDE SUBSEQUENT ORDER DATED 30.12.1998. IN THIS RESPECT, THERE IS NO DISPUTE TO THE FACT THAT THE DEMAND HAS NOT BEEN SATISFIED TILL 2 2.03.2000. THE ORDER OF THE AO HAVING BEEN SET-ASIDE THREE TIMES BY THE LD. C IT(A) AND FINALLY I.E. FOURTH TIME, ASSESSMENT HAD BEEN FRAMED U/S 143(3) OF THE ACT ON 26.03.2002 AT THE SAME INCOME OF RS.5,34,380/- WHIC H WAS FRAMED U/S 143(3) IN THE FIRST ASSESSMENT ON 28.3.1985. THE DEMAND WAS ORIGINALLY CREATED ON ITA NO.01(ASR)/2011 CO NO.03(ASR)/2011 7 28.3.1985 AND NOTICE FOR RECOVERY OF DEMAND WAS ISS UED ON 23.3.1988. THEREFORE, THE DEMAND WAS DUE TO BE PAID ON OR BEFO RE 28.4.1988 WHICH IN FACT WAS NOT PAID. THE FIRST PAYMENT MADE BY THE AS SESSEE WAS ON 26.11.1996 AND THEREFORE, THE AO HAS RIGHTLY COMPU TED INTEREST U/S 220(2) OF THE ACT FOR THE PERIOD FROM 1.5.1988 TO 31.10.19 96 AT RS.6,37,226/- IN RESPECT OF THE UNPAID DEMAND. THE AO HAS ALSO OBSER VED THAT SEVERAL PAYMENTS MADE BY THE ASSESSEE AGAINST THE TAX DEMA ND AND PERIOD OF DELAY FOR THE PAYMENTS MADE AND COMPUTED INTEREST UNDER SECTION 220(2) AT RS.1,56,629/- FOR THE PERIOD FROM 1.11.1996 TILL 22 .3.2000, WHEN THE ASSESSEE PAID THE FINAL DEMAND OF RS.27,111/- IS A MATTER OF RECORD AS PER ORDER OF THE AO U/S 154 OF THE ACT AT PAGE 2. AS RE GARDS ORDER U/S 154 OF THE ACT, THE SAME MERGES WITH THE ASSESSMENT ORDER WHIC H IS SUBJECT MATTER OF RECTIFICATION AND THEREFORE, WITH DOCTRINE OF MERG ER, THE INTEREST U/S 220(2) IS LIABLE TO BE PAID O THE AMOUNT WHICH IS SPECIFIED I N THE NOTICE OF DEMAND U/S 156, WHICH HAS NOT BEEN PAID WITHIN THE PERIOD PRES CRIBED U/S 220(1). THE ASSESSEE IS LIABLE TO PAY SIMPLE INTEREST U/S 220(2 ) OF THE ACT FROM THE DATE IMMEDIATELY FOLLOWING THE END OF THE PERIOD PRESCRI BED U/S 220(1) AND ENDING DATE ON WHICH THE AMOUNT IS PAID. THEREFORE , THE LD. CIT(A) IS NOT JUSTIFIED IN COMING TO THE CONCLUSION THAT ADDITION AL INTEREST CHARGED IN THE ORDER CANNOT SURVIVE . BY CONSIDERING THE DECISIONS OF VARIOUS COURTS OF LAW ITA NO.01(ASR)/2011 CO NO.03(ASR)/2011 8 RELIED UPON BY THE LD. COUNSEL FOR THE ASSESSEE AND THE LD. DR BEFORE THE LD. CIT(A) AND BEFORE US, WE ARE OF THE VIEW THAT THE A O HAS RIGHTLY CHARGED INTEREST U/S 220(2) OF THE ACT AND HAS RIGHTLY RECT IFIED THE SAME U/S 154 OF THE ACT, WHICH ORDER OF THE AO U/S 154 OF THE ACT MERGE S WITH THE ORDER OF THE ASSESSMENT U/S 143(3) OF THE ACT. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, ALL THE GROUNDS OF THE REVENUE ARE ALLOWED AND C.O. OF THE ASSESSEE IS DISMISSED. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I N ITA NO.01(ASR)/2011 IS ALLOWED AND C.O. NO.3(ASR)/2011 OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10TH OCTOBER, 2012. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 10TH OCTOBER, 2012 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:SH. M.C. ANAND, JALANDHAR. 2. THE ITO III(4), JALANDHAR. 3. THE CIT(A) 4. THE CIT 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.