Aarti Steels Ltd., Ludhiana V. DCIT, Ludhiana

CO 31/CHANDI/2009

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7158 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 10 month(s) 13 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 18-04-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 29-03-2012
• Assessment Year: misc
• Appeal Filed On: 05-06-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: JAI SHREE SHARMA
• Assessee Lawyers: SUBHASH AGGARWAL
• Keywords: Retrospective amendment
• Section: 143(3); 244A; 115JB; 147; 263; 144; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH (B) BEFORE MS.SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER C.O. NO.31/CHANDI/2009 IN ITA NO.494/CHANDI/09 ASSESSMENT YEAR 2006-07 AARTI STEELS LTD., V DCIT, CIRCLE-V, G.T.ROAD, LUDHIANA. LUDHIANA. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUBHASH AGGARWAL RESPONDENT BY : SMT. JAISHREE SHARMA DATE OF HEARING : 29.03.2012 DATE OF PRONOUNCEMENT : 18.04.2012 ORDER PER MEHAR SINGH, AM THE CAPTIONED CROSS OBJECTION, FOR THE ASSESSMENT YEAR 2006-07, HAS BEEN FILED BY THE ASSESSEE BEFORE THE BENCH, IN RESPECT OF APPEAL FILED BY THE REVENUE VI DE ITA NO. 494/CHD/2009, FOR THE ASSESSMENT YEAR 2006-07. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF CROSS OBJECTIONS: 1. THAT THE LD. CIT(A) HAS ERRED IN HOLDING THAT T HE AO WAS JUSTIFIED IN WITHDRAWING THE INTEREST ALREADY ALLOWED U/S 244A IN PROCEEDINGS U/S 154 OF THE INCOME-TAX ACT. 2. THAT THE ACTION OF THE CIT(A) IS AGAINST THE LA W AND FACTS OF THE CASE. 3. THE LD. 'AR' NARRATED THE FACTUAL BACKGROUND OF THE CASE, WHICH IS UNDISPUTED IN NATURE. THE GRIEVANCE OF THE 2 ASSESSEE IS THAT INTEREST GRANTED ON REFUND U/S 244 A OF THE ACT HAS BEEN WITHDRAWN BY THE REVENUE. HE WAS OF T HE OPINION THAT THE ORDER CHARGING INTEREST U/S 234D O F THE ACT, BY THE REVENUE, WAS SET ASIDE BY THE CIT(A) AS WELL AS THE TRIBUNAL. THEREFORE, ON THE SAME ANALOGY, LD. 'AR' URGED TO SET ASIDE THE ORDER, WITHDRAWING THE INTER EST, GRANTED ON REFUND U/S 244A OF BY AN ORDER PASSED U/ S 154 OF THE ACT. 4. LD. 'DR', ON THE OTHER HAND, VEHEMENTLY CONTENDE D THAT THE PROVISIONS OF SECTION 244A(3) OF THE INCOM E-TAX ACT,1961 CONTAIN CLEAR LEGISLATIVE INTENT AND, HENC E, THE INTEREST SO WITHDRAWN BY THE REVENUE, IN TERMS OF T HE SAID PROVISIONS, IS STATUTORILY VALID. 5. WE HAVE CAREFULLY PERUSED THE RIVAL SUBMISSIONS, FACTS OF THE CASE AND THE RELEVANT RECORDS. THE BR IEF FACTS OF THE CASE ARE THAT ASSESSMENT WAS FRAMED U/S 143( 3) OF THE ACT ON 28.03.2008, AT THE RETURNED INCOME OF RS.4,09,12,748/- U/S 115JB OF THE ACT. IN TERMS OF SECTION 115JB(2)(H), EFFECTIVE FROM 01.04.2001, BOOK PROFI T, BY THE AMOUNT OF DEFERRED TAX AND THE PROVISION THEREOF, W HICH WAS DEBITED IN THE PROFIT & LOSS ACCOUNT, WAS REQUI RED TO BE INCREASED. THE AO, CONSEQUENTLY, ISSUED NOTICE U/S 154 OF THE ACT, ON 21.05.2008, FOR THE PURPOSE OF GIVIN G EFFECT TO THE ABOVE REFERRED TO AMENDED CLAUSE OF SECTION 115JB(2)(H) OF THE ACT. THE AO PROPOSED TO ADD BACK , TO THE NET PROFIT, A SUM OF RS.19,14,25,910/-, REPRESENTIN G THE AMOUNT OF DEFERRED TAX PROVISIONS, CHARGED TO THE P ROFIT & 3 LOSS ACCOUNT. THE ASSESSEE DID NOT OBJECT TO THE P ROPOSED RECTIFICATION U/S 154 OF THE ACT AND, CONSEQUENTLY, THE AO RECOMPUTED THE INCOME U/S 115JB OF THE ACT AT RS.23,23,38,658/-, AS AGAINST RS.4,09,12,748/-, ASS ESSED ORIGINALLY U/S 143(3) OF THE ACT. THE AO, IN THE AS SESSMENT ORDER U/S 154 OF THE ACT DATED 22.05.2008 CHARGED I NTEREST U/S 234D OF THE ACT AMOUNTING TORS.9,13,378/-. THE AO ALSO WITHDREW INTEREST GRANTED TO THE ASSESSEE U/S 244A OF THE ACT. BOTH THE CIT(A) VIDE ORDER DATED 26.02.20 09 AND THE TRIBUNAL IN ITA NO. 494/CHD/2009 VIDE ORDER DAT ED 26.08.2010, ADJUDICATED THE ISSUE OF LEVY OF INTER EST U/S 234D OF THE ACT AGAINST THE REVENUE. A PERUSAL OF THE IMPUGNED ORDER OF THE TRIBUNAL REVEALS THAT THE PRE SENT C.O. RAISED BY THE ASSESSEE, IN RESPECT OF WITHDRAW AL OF INTEREST U/S 244A OF THE ACT, WAS NOT ADJUDICATED B Y THE TRIBUNAL. THEREFORE, THE ASSESSEE FEELS AGGRIEVED IN RESPECT OF NON-ADJUDICATION OF THE C.O. 5(I) THE ASSESSEE, HAS PLACED RELIANCE ON THE DECIS ION, IN THE CASE OF BHARAT CONDUCTORS (P) LTD. V CIT (1999) 238 ITR 89 (KAR), CIT V SATISH TRADERS (2001) 247 ITR 119 ( MP) AND CIT V HINDUSTAN ELECTROGRAPHITE LTD. (2000) 243 ITR 48 (S.C). LD. CIT(A), AS WELL AS THE TRIBUNAL HAD CO NSIDERED THESE CASE LAWS IN THE CONTEXT OF LEVY OF INTEREST U/S 234D OF THE ACT AND GAVE THEIR RESPECTIVE FINDINGS IN FA VOUR OF THE ASSESSEE. THE RATIO OF THESE CASE LAWS, IS INA PPLICABLE TO THE CONTENTS AND ISSUE RAISED IN THE CO UNDER RE FERENCE. IN THE CO, THE ASSESSEE APPELLANT URGED AGAINST WIT HDRAWAL 4 OF INTEREST BY THE AO AND, HENCE, THESE CASE LAWS A RE NOT RELEVANT TO THE FACTS AND ISSUES RAISED IN THE SAID CO. 6. A BARE PERUSAL OF THE PROVISION OF SECTION 244A OF THE ACT, REVEALS THAT WHERE REFUND OF ANY AMOUNT BECOME S DUE TO THE ASSESSEE, UNDER THE ACT, HE SHALL BE ENTITLE D TO RECEIVE, IN ADDITION TO THE SAID AMOUNT, SIMPLE INT EREST ON THE REFUND, CALCULATED IN THE MANNER SPECIFIED UNDE R THE SAID SECTION. HOWEVER, IT IS PROVIDED U/S 244A SUB -SECTION (3) THAT, IF, AS A RESULT OF AN ORDER PASSED U/S 14 7, 154, 155, 250, 254, 260, 262, 263, 264 OR 248, THE AMOUNT ON WHICH THE INTEREST WAS PAYABLE, HAS BEEN INCREASED/REDUCED, THE INTEREST SHALL, ACCORDINGLY BE INCREASED/REDUCED. IT IS PERTINENT TO REPRODUCE THE PROVISIONS OF SECTION 244A FOR THE PURPOSE OF PROPE R APPRECIATION OF THE LEGISLATIVE INTENT, CONTAINED T HEREIN : 244A. (1) WHERE REFUND OF ANY AMOUNT BECOMES DUE TO THE ASSESSEE UNDER THIS ACT, HE SHALL SUBJECT TO THE PROVISIONS OF THIS SECTION, BE ENTITLED TO RECE IVE, IN ADDITION TO THE SAID AMOUNT, SIMPLE INTEREST THEREON CALCULATED IN THE FOLLOWING MANNER, NAMELY : (A) (B). (2). (3) WHERE, AS A RESULT OF AN ORDER UNDER SUB- SECTION (3) OF SECTION 115WE OR SECTION 115WF OR SECTION 115WG OR SUB-SECTION (3) OF SECTION 143 OR SECTION 144 OR SECTION 147 OR SECTION 154 OR SECTION 155 OR SECTION 250 OR SECTION 254 OR SECTIO N 260 OR SECTION 262 OR SECTION 263 OR SECTION 264 OR AN ORDER OF THE SETTLEMENT COMMISSION UNDER SUB- SECTION (4) OF SECTION 245D, THE AMOUNT ON WHICH 5 INTEREST WAS PAYABLE UNDER SUB-SECTION (1) HAS BEEN INCREASED OR REDUCED, AS THE CASE MAY BE, THE INTEREST SHALL BE INCREASED OR REDUCED ACCORDINGLY, AND IN A CASE WHERE THE INTEREST IS REDUCED, THE ASSESSING OFFICER SHALL SERVE ON THE ASSESSEE A NOTICE OF DEMAND IN THE PRESCRIBED FORM SPECIFYING THE AMOUNT OF THE EXCESS INTEREST PAID AND REQUIRING HIM TO PAY SUCH AMOUNT; AND SUCH NOTICE OF DEMAND SHALL BE DEEMED TO BE A NOTICE UNDER SECTION 156 AND THE PROVISIONS OF THIS ACT SHALL APPLY ACCORDINGLY. 7. A BARE PERUSAL OF THE PROVISIONS OF SECTION 254A (3) OF THE ACT REVEALS THAT IN A SITUATION WHEREBY AN ORDE R IS PASSED UNDER VARIOUS SECTIONS OF THE ACT, CONTAINED THEREIN, THE AMOUNT ON WHICH INTEREST PAYABLE UNDER SUB- SECTION (1) HAS BEEN INCREASED OR REDUCED, AS THE C ASE MAY BE, THE INTEREST SHALL BE INCREASED OR REDUCED ACCO RDINGLY, AND IN A CASE WHERE INTEREST IS REDUCED, THE AO SHA LL SERVE ON THE ASSESSEE, A NOTICE OF DEMAND IN THE PRESCRIB ED FORM, SPECIFYING THE AMOUNT OF EXCESS INTEREST PAID AND R EQUIRING HIM TO PAY SUCH AMOUNT AND SUCH NOTICE OF DEMAND SH ALL BE DEEMED TO BE A NOTICE U/S 156 AND THE PROVISIONS OF THIS ACT SHALL APPLY ACCORDINGLY. THERE IS FUNDAMENTAL DISTINCTION BETWEEN INTEREST ON REFUNDS U/S 244A OF THE ACT AND INTEREST ON EXCESS REFUND U/S 234D OF THE ACT. 8. HAVING REGARD TO THE UNEQUIVOCAL AND CLEAR LEGIS LATIVE INTENT ENSHRINED IN THE PROVISIONS OF SECTION 244A( 3) OF THE ACT, IT IS NOT TENABLE TO RESORT TO THE INTERPRETAT IVE PROCESS OF SUCH SIMPLE AND CLEAR LANGUAGE OF THE PROVISIONS OF THE 6 ACT. THEREFORE, THE CLAIM OF THE ASSESSEE, FOUNDED ON THE BASIS OF ANALOGIES AND INFERENCES, IS NOT STATUTORI LY VALID IN THE LIGHT OF THE SPECIFIC, CLEAR PROVISIONS OF SECT ION 244A(3) OF THE ACT AND ALSO IN THE LIGHT OF COMMON LAW JURISPRUDENCE. THE RELEVANT PART OF THE FINDINGS O F CIT(A), AS CONTAINED IN PARA 5.1 OF THE APPELLATE ORDER DAT ED 26.02.2009, IS REPRODUCED HEREUNDER : 5.1 COMING TO THE ISSUE OF WITHDRAWING OF INTERES T U/S 244A, IT IS THE CONTENTION OF THE LD. COUNSEL T HAT FOR SIMILAR ARGUMENTS AS ADVANCED BY HIM AGAINST CHARGING OF INTEREST U/S 234D AS DISCUSSED ABOVE, THE AO COULD NOT BE SAID TO BE JUSTIFIED IN WITHDRAWING INTEREST U/S 244A. HOWEVER, I DO NOT AGREE WITH THE LD. COUNSEL IN THIS REGARD. AS PER THE RATIO OF THE VARIOUS DECISIONS RELIED UPON BY THE LD. COUNSEL AND WHICH HAVE BEEN DISCUSSED ABOVE AS ASSESSEE IS NOT TO BE PENALIZED BY CHARGING INTEREST ON THE ADDITIONAL DEMAND CREATED AS A RESULT OF RETROSPECTIVE AMENDMENT TO THE PROVISIONS OF THE ACT. WHEREAS CHARGING OF INTEREST U/S 234D ON SUCH AN INCOME COULD BE SAID T O BE PENALIZING AN ASSESSEE TO SOME EXTENT, WITHDRAWING INTEREST U/S 244A OF THE ACT WHICH WAS EARLIER ALLOWED TO AN ASSESSEE, COULD NOT BE TAKEN TO BE OF THE SAME NATURE SO AS TO BE TERMED AS PENALIZING THE ASSESSEE. THE APPELLANT HAD BEEN ALLOWED INTEREST U/S 244A OF THE ACT ON CERTAIN AMOUNT WHICH WAS ULTIMATELY RECOVERED FROM THE APPELLANT. THE APPELLANT IS NOT DISPUTING THAT POSITION. THEREFORE, WITHDRAWING INTEREST ALLOWED U/S 244A ON THIS AMOUNT IS JUST RECOVERING FROM THE APPELLANT WHAT HAD BEEN WRONGLY GIVEN TO IT EARLIER . THIS IS NO CASE COULD BE TERMED AS PENALIZING THE APPELLANT. THEREFORE, RATIO OF THESE DECISIONS WOU LD 7 NOT HELP THE CASE OF THE APPELLANT AS FAR AS WITHDRAWING OF INTEREST U/S 244A IS CONCERNED. THEREFORE, THE ORDER OF THE AO IN WITHDRAWING INTEREST U/S 244A IS FULLY JUSTIFIED AND IS ACCORDI NGLY CONFIRMED. 9. IN A SITUATION WHERE TAX LIABILITY IS VARIED, TH E CONSEQUENTIAL CORRESPONDING EFFECT, WOULD BE ON THE TAX PAYABLE OR AMOUNT REFUNDABLE. SUCH A SITUATION HAS BEEN COVERED UNDER THE SCHEME OF ACT BY INSERTING VARIOUS PROVISIONS, WHICH IS IN CONSONANCE WITH THE GENERAL LAW AND TENANTS OF RATIONAL JURISPRUDENCE. THE PROVISIONS ENSHRINED IN THE INCOME-TAX ACT,1961 ARE 234A(4), 234B(4), 234D(2), 244A(3), 221(2), 215(3) AND 214(1A) OF THE ACT. IT IS PERTINENT TO HIGHLIGHT H ERE THAT IMPOSITION OF ADDITIONAL TAX LIABILITY, BY WAY OF T AX, IS COVERED UNDER SEPARATE STATUTORY PROVISIONS, WHEREA S THE LEVY OF INTEREST IS PROVIDED UNDER DIFFERENT SET OF STATUTORY PROVISIONS UNDER THE ACT. THE ISSUE IN QU ESTION FALLS U/S 154 OF THE ACT. THE CHARGING OF INTEREST IS COMPENSATORY IN NATURE. IF A TAX DEMAND RAISED BY THE AO IS VARIED BY AN APPELLATE OR REVISIONAL AUTHORIT Y, IT IS THE APPELLATE AND REVISIONAL ORDER AND NOT THE ASSESSMENT ORDER, THAT WOULD HOLD THE FIELD UNDER T HE DOCTRINE OF MERGER, AND HENCE, FRESH NOTICE OF DEMA ND IS TO BE ISSUED ACCORDINGLY. AN INCREASE IN TAX LIABI LITY WOULD CORRESPONDINGLY REDUCE THE AMOUNT REFUNDABLE AND ALSO THE INTEREST PAYABLE ON SUCH REDUCED REFUND. PROVISIONS OF SECTION 244A(3) OF THE ACT CLEARLY CO VER SUCH A SITUATION. IF THE CONTENTION OF THE ASSESSE E IS 8 ACCEPTED, IT WOULD LEAD TO IRRATIONAL AND ABSURD CONSEQUENCES, WHICH WOULD MAKE THE PROVISIONS OF SECTION 244A(3) OF THE ACT INOPERATIVE AND REDUNDAN T. THE AO MERELY GAVE EFFECT TO THESE RELEVANT AND CLE AR PROVISIONS OF THE ACT. 10. IN VIEW OF THE ABOVE LEGAL AND FACTUAL DISCUSSI ONS, CO OF THE ASSESSEE IS NOT LEGALLY AND FACTUALLY TENABL E AND, HENCE, THE SAME IS DISMISSED. IN THE RESULT, CO OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH APRIL,2012. SD/- SD/- (SUSHMA CHOWLA) (MEHAR SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER POONAM COPY TO : THE APPELLANT/THE RESPONDENT/THE CIT (A)/ THE CIT/THE DR. ASSISTANT REGISTRAR, ITAT CHANDIGARH