M/s Aakar Construction, Baroda V. The ACIT.,Circle-5, Baroda

ITA 1250/AHD/2009

• Counselvise Citation: 125020514 RSA 2009
• Duration Of Justice: 2 year(s) 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 08-09-2011
• Assessment Year: 1999-2000
• Appeal Filed On: 20-04-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S S JHA
• Assessee Lawyers: S N DIVOTIA
• Keywords: Rectification of order; Principle of natural justice
• Section: 244A; 234B; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, A BENCH, AHMEDABAD BEFORE SHRI D. K. TYAGI, JUDICIAL MEMBER AND SHRI A. K. GARODIA, ACCOUNTANT MEMBER I.T.A. NO. 1249 & 1250/ AHD/2009 (ASSESSMENT YEAR 1998-99 & 1999-2000) M/S. AKAR CONSTRUCTION, 11, DHAIBAR COLONY, PALACE ROAD, BARODA VS. ACIT ,CIRCLE 5, BARODA PAN/GIR NO. : AADFA6382L (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI S. N. DIVOTIA, AR RESPONDENT BY: SHRI S S JHA, SR. DR DATE OF HEARING: 08.09.2011 DATE OF PRONOUNCEMENT: 16.09.2011 O R D E R PER SHRI A. K. GARODIA, AM:- THESE TWO APPEALS ARE FILED BY THE ASSESSEE AGAINS T TWO SEPARATE ORDERS OF LD. CIT(A) V, BARODA BOTH DATED 07.01.200 9 FOR THE ASSESSMENT YEARS 1998-99 & 1999-2000. SINCE COMMON AND INTERC ONNECTED ISSUE IS INVOLVED, BOTH THESE APPEALS WERE HEARD TOGETHER AN D ARE BEING DISPOSED OFF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CON VENIENCE. 2. THE GROUNDS RAISED BY THE ASSESSEE IN BOTH THESE YEARS ARE IDENTICAL AND HENCE, WE REPRODUCE GROUNDS RAISED BY THE ASSES SEE IN ASSESSMENT YEAR 1998-99 I.E. IN I.T.A.NO. 1249/AHD/2009, WHICH ARE AS UNDER: 1.1 THE ORDER PASSED U/S.250 ON 7.1.2009 FOR A .Y. 1998 - 99 BY CIT(A)-V, BARODA, UPHOLDING THE ORDER OF RECTIFI CATION PASSED U/S. 154 ON 8.5.2006 BY AO IS WHOLLY ILLEGAL, UNLAW FUL AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 2.1 THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND ON FACTS IN UPHOLDING THAT THE APPELLANT WAS NOT ENTITLED TO IN TEREST U/S. 244A I.T.A.NO. 1249, 1250 /AHD/2009 2 ON THE GROUND THAT REFUND WAS DELAYED FOR THE REASO NS ATTRIBUTABLE TO THE APPELLANT. 2.2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CTT(A) HAS FAILED TO APPRECIATE THAT THERE WAS NO D ELAY IN CLAIMING REFUND AS WELL AS IT WAS NOT ATTRIBUTABLE ON PART OF THE APPELLANT. 2.3 THE LD. CIT(A) HAS FAILED TO APPRECIATE THA T ON ACCOUNT OF PECULIAR CIRCUMSTANCES ARISING ON ACCOUNT OF WITHDR AWAL OF GROUND OF APPEAL UNDER THE MUTUAL UNDERSTANDING REACHED WI TH THE DEPARTMENT, THE REFUND HAS ARISEN AND HENCE THE APP ELLANT IS ENTITLED TO INTEREST U/S.244A OF THE ACT. IT IS , THEREFORE, PRAYED THAT THE ORDER PASSED BY THE CIT(A) MAY PLEASE BE CANCELLED AND AO BE DIRECTED TO ISSUE INT EREST ON REFUND IN ACCORDANCE WITH LAW. 3. THE BRIEF FACTS OF THE CASE ARE THAT IN THE ASSE SSMENT YEAR 1997-98,, THE ASSESSEE HAD NOT SHOWN THE RETENTION MONEY AS I TS INCOME, THOUGH THE ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTI NG. THE CASE WAS REOPENED U/S 147 IN THAT YEAR AND ADDITION WAS MADE . IT IS ALSO NOTED BY THE A.O. IN HIS ORDER PASSED BY HIM U/S 154 OF THE INCOME TAX ACT, 1961 ON 08.05.2006, FOR BOTH THE YEARS THAT THE ASSESSEE HAS IN PRINCIPLE AGREED TO THE DEPARTMENTS VIEW THAT THE SAID INCOME SHOUL D HAVE BEEN ADDED IN ASSESSMENT YEAR 1997-98 ITSELF. IT IS ALSO NOTED B Y THE A.O. IN THE SAME ORDER THAT SUBSEQUENTLY, PURSUANT TO A DECISION TAK EN IN A JOINT MEETING HELD IN THE OFFICE OF THE CIT-III, BARODA WITH CIT RANGE V, BARODA AND DCIT RANGE V, BARODA DURING THE COURSE OF HEARING F OR STAY PETITION ON 13.06.2005, THE ASSESSEE HAD AGREED TO WITHDRAW THE GROUND OF APPEAL RELATING TO THE ISSUE PERTAINING TO THE RETENTION M ONEY FOR WHICH APPEAL WAS FILED BEFORE THE TRIBUNAL IN ASSESSMENT YEAR 19 97-98. SUBSEQUENTLY, PROCEEDINGS U/S 154 WERE CARRIED OUT BY THE A.O. IN THE PRESENT TWO YEARS I.E. ASSESSMENT YEAR 1998-99 AND 1999-2000 AND INCO ME WAS REDUCED AS PER THE ORDER PASSED BY THE A.O. U/S 154 ON 14.09.2 005 IN BOTH THE YEARS AND RESULTANT REFUND WAS ALLOWED BY THE A.O. AS PE R THE INCOME TAX I.T.A.NO. 1249, 1250 /AHD/2009 3 COMPUTATION FORM FOR THE ASSESSMENT YEAR 1998-99 DA TED 14.09.2005, AVAILABLE ON RECORD, IT IS SEEN THAT OUT OF A TOTAL REFUND OF RS.1,61,804/-, INTEREST WAS ALLOWED BY THE A.O. U/S 244A IN RESPEC T OF THE REFUND OF RS.16,925/- WHICH WAS ON ACCOUNT OF REFUND ADJUSTME NT BUT NO INTEREST U/S 244A WAS ALLOWED BY THE A.O. IN RESPECT OF THE REFUND ON ACCOUNT OF TDS OF RS.1,44,879/-. SIMILARLY IN ASSESSMENT YEAR 1999-2000, AS PER THE INCOME TAX COMPUTATION FORM DATED 14.09.2005 AV AILABLE ON RECORD, OUT OF TOTAL REFUND OF RS.3,21,091/-, INTEREST U/S 244A WAS ALLOWED BY THE A.O. IN RESPECT OF REFUND OF RS.366/-, WHICH WAS PA ID BY THE ASSESSEE ON 24.02.2000 BUT NO INTEREST U/S 244A WAS ALLOWED BY THE A.O. ON THE BALANCE AMOUNT OF REFUND. THE ASSESSEE MOVED A PET ITION FOR RECTIFICATION U/S 154 ON 23.11.2005 FOR BOTH THE YEARS AND AGAINS T THIS APPLICATION OF THE ASSESSEE U/S 154, THE IMPUGNED ORDERS U/S 154 W ERE PASSED BY THE A.O. ON 08.05.2006. IN THESE TWO APPLICATIONS OF T HE ASSESSEE U/S 154, IT WAS THE CLAIM OF THE ASSESSEE THAT THE INTEREST U/S 244A SHOULD BE ALLOWED ON ENTIRE AMOUNT OF REFUND BUT THE A.O. HAS REJECTE D THE CLAIM OF THE ASSESSEE IN BOTH THE YEARS ON THIS BASIS THAT THE D ELAY IN GRANTING REFUND IS ATTRIBUTABLE TO THE ASSESSEE WHOLLY AND THEREFORE, ASSESSEE IS NOT ELIGIBLE FOR ANY INTEREST ON THE REFUND FOR THE PERIOD OF DE LAY SO ATTRIBUTABLE TO THE ASSESSEE. 4. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE CIT(A) IN BOTH THE YEAS BUT WITHOUT SUCCESSES AND N OW, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 5. IT WAS SUBMITTED BY THE LD. A.R. THAT THE DELAY IS NOT ATTRIBUTABLE TO THE ASSESSEE BECAUSE THE ISSUE WAS RESOLVED PURSUAN T TO A DECISION TAKEN IN A JOINT METING HELD IN THE OFFICE OF CIT-III, BA RODA WITH ADDITIONAL CIT RANGE V, BARODA AND DCIT, RANGE V, BARODA ON 13 .06.2005 AND HENCE, THE DELAY IN GRANTING THE REFUND IS NOT ATTR IBUTABLE TO THE ASSESSEE AND THEREFORE, INTEREST SHOULD BE ALLOWED TO THE AS SESSEE U/S 244A. IT WAS I.T.A.NO. 1249, 1250 /AHD/2009 4 ALSO SUBMITTED THAT IN ASSESSMENT YEAR 1997-98, THE ASSESSEE HAS SUFFERED INTEREST U/S 234B AS WELL AS 234D AND INTEREST EARL IER ALLOWED BY THE DEPARTMENT IN THAT YEAR U/S 244A WAS ALSO WITHDRAWN AND HENCE, IN THE PRESENT TWO YEARS, INTEREST SHOULD BE PAID TO THE A SSESSEE U/S 244A. AT THIS JUNCTURE, THE BENCH WANTED TO SEE THE COPY OF THE INCOME TAX COMPUTATION FORM FOR ASSESSMENT YEAR 1997-98 TO VER IFY THIS ASPECT AS TO WHETHER THE ASSESSEE HAS SUFFERED ANY INTEREST IN T HAT YEAR. LD. A.R. OF THE ASSESSEE SUBMITTED A COPY OF THE ORDER GIVING E FFECT TO THE ORDER OF LD. CIT(A) PASSED BY THE A.O. ON 6.12.2005 FOR THE ASSESSMENT YEAR 1997-98 ALONG WITH INCOME TAX COMPUTATION FORM IN T HAT YEAR IN ITNS 150 AND POINTED OUT THAT IN THAT YEAR, THE ASSESSEE HAS SUFFERED INTEREST OF RS.2,24,558/- U/S234B AND RS.1,76,463/- U/S234D AND INTEREST OF RS.26,174/- EARLIER ALLOWED BY THE DEPARTMENT U/S 2 44A WAS ALSO WITHDRAWN. IT WAS SUBMITTED THAT FOR THE MISTAKE C OMMITTED BY THE ASSESSEE OF NOT DECLARING CORRECT INCOME IN ASSESSM ENT YEAR 1997-98, THE ASSESSEE HAS ALREADY SUFFERED INTEREST IN THAT YEAR AND HENCE, FOR THE PRESENT TWO YEARS, I.E. ASSESSMENT YEAR 1998-99 AND 1999-2000, INTEREST SHOULD BE PAID TO THE ASSESSEE U/S 244A ON THE REFU ND ALLOWED TO THE ASSESSEE IN THESE TWO YEAS. 6. AS AGIANST THIS, IT WAS SUBMITTED BY THE LD. D.R . THAT IN SPITE OF THIS FACT THAT THE ASSESSEE HAS SUFFERED INTEREST U /S 234B AND 234D IN ASSESSMENT YEAR 1997-98, IT HAS TO BE ACCEPTED THAT IN THE PRESENT TWO YEARS I.E. ASSESSMENT YEAR 1998-99 AND 1999-2000, T HE DELAY IN GRANTING REFUND HAS BEEN CAUSED FOR THE REASONS ATTRIBUTABLE TO THE ASSESSEE BECAUSE HAD THE ASSESSEE DECLARED THE CORRECT INCOM E IN THESE TWO YEARS, THE A.O. WOULD HAVE ALLOWED THE REFUND ON THE PROCE SSING OF SUCH RETURNS AND HENCE, AS PER SUB-SECTION (2) OF SECTION 244A, NO INTEREST IS ALLOWABLE TO THE ASSESSEE BECAUSE THE PROCEEDINGS RESULTING I N REFUND ARE DELAYED FOR THE REASONS ATTRIBUTABLE TO THE ASSESSEE. I.T.A.NO. 1249, 1250 /AHD/2009 5 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. WE FIND THAT SUB-SECTION (2) OF SECTION 244A IS VERY MUCH R ELEVANT FOR DECIDING THE DISPUTE IN THESE TWO YEARS WHICH ARE BEFORE US. HENCE, WE REPRODUCE THE PROVISIONS OF SUB-SECTION (2) OF SECTION 244A W HICH ARE AS UNDER: S.244A(2): IF THE PROCEEDINGS RESULTING IN THE REF UND ARE DELAYED FOR REASONS ATTRIBUTABLE TO THE ASSESSEE WHETHER WH OLLY OR IN PART, THE PERIOD OF THE DELAY SO ATTRIBUTABLE TO HIM SHA LL BE EXCLUDED FORM THE PERIOD FOR WHICH INTEREST IS PAYABLE, AND WHERE ANY QUESTION ARISES AS TO THE PERIOD TO BE EXCLUDED, IT SHALL BE DECIDED BY THE CHIEF COMMISSIONER OR COMMISSIONER WHOSE DEC ISION THEREON SHALL BE FINAL. 8. FROM THE ABOVE PROVISIONS OF SUB-SECTION (2) OF SECTION 244A, WE FIND THAT IF THE PROCEEDINGS RESULTING IN REFUND AR E DELAYED FOR THE REASONS ATTRIBUTABLE TO THE ASSESSEE WHETHER WHOLLY OR IN P ART, THE PERIOD OF DELAY SO ATTRIBUTABLE TO THE ASSESSEE SHOULD BE EXCLUDED FOR THE PURPOSES OF GRANTING INTEREST U/S 244A. IN THE PRESENT CASE, T HE ASSESSEE DID NOT DECLARE THE CORRECT INCOME IN THESE TWO YEARS, BECA USE THE INCOME WHICH WAS TO BE DECLARED BY THE ASSESSEE IN THE ASSESSMEN T YEAR 1997-98 HAS BEEN DECLARED BY THE ASSESSEE PARTLY IN ASSESSMENT YEAR 1998-99 AND PARTLY IN 1999-2000. THE A.O. MADE ADDITION IN ASS ESSMENT YEAR 1997-98 WHICH WAS NOT ACCEPTED BY THE ASSESSEE AND THE ASSE SSEE WAS IN APPEAL IN THAT YEAR BEFORE THE TRIBUNAL. THEREAFTER, ON 13.0 6.2005, THERE WAS AN UNDERSTANDING REACHED BETWEEN THE DEPARTMENT AND TH E ASSESSEE THAT THE ASSESSEE WILL WITHDRAW THE GROUNDS OF APPEAL IN ASS ESSMENT YEAR 1997-98 AND AS A CONSEQUENCE THEREOF, INCOME WAS REDUCED BY THE A.O. IN THE PRESENT TWO YEAS AS PER THE ORDER PASSED BY HIM U/S 154 IN THESE TWO YEARS ON 14.09.2005, I.E. WITHIN THREE MONTHS FORM THE DATE OF UNDERSTANDING BETWEEN THE ASSESSEE AND THE DEPARTME NT ON 13.06.2005. IT IS NOTED BY THE A.O. IN THE ORDER PASSED BY HIM U/S 154 ON 14.09.2005 THAT THE ASSESSEE VIDE ITS LETTER DATED 21.07.2005 FURNISHED THE PROOF OF I.T.A.NO. 1249, 1250 /AHD/2009 6 WITHDRAWAL OF THE GROUNDS OF APPEAL AND THE ASSESSE E HAS FILED THE INDEMNITY BOND DATED 09.09.2005. WE FIND THAT WITH IN 5 DAYS OF FILING OF INDEMNITY BOND BY THE ASSESSEE ON 09.09.2005, THE A .O. PASSED THE RECTIFICATION ORDER AND GRANTED REFUND TO THE ASSES SEE ON 14.09.2005. HENCE, IN OUR CONSIDERED OPINION, THE PROCEEDINGS U /S 154, AS PER WHICH THE REFUND HAS RESULTED, ARE IN FACT DELAYED FOR TH E REASONS ATTRIBUTABLE TO THE ASSESSEE AND THERE IS CONSIDERABLE FORCE IN THE ARGUMENTS OF THE LD. D.R. OF THE REVENUE THAT HAD THE ASSESSEE DECLARED THE CORRECT INCOME IN THESE TWO YEARS, REFUND COULD HAVE BEEN GRANTED BY THE A.O. ON PROCESSING OF RETURN AND HENCE, WE ARE OF THE CONSI DERED OPINION THAT THE PROCEEDINGS RESULTING IN THE REFUND ARE DELAYED FOR THE REASONS ATTRIBUTABLE TO THE ASSESSEE EVEN IF NOT FULLY, AT LEAST PARTLY AND AS PER THE PROVISIONS OF SUB-SECTION (2) OF SECTION 244A FOR S UCH PERIOD AS REPRODUCED ABOVE, EVEN IF THE ASSESSEE IS PARTLY R ESPONSIBLE FOR THE DELAY, INTEREST IS NOT ALLOWABLE TO THE ASSESSEE U/S 244A. HENCE, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF LD. CIT(A) ON THIS ISSUE IN BOTH THE YEARS AND WE, THEREFORE, UPHOLD THE SAME. 9. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE DISMISSED. 10. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH SEP., 2011. SD./- SD./- (D. K. TYAGI) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED : 16 TH SEP., 2011 SP COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD BY ORDER 6. THE GUARD FILE AR,ITAT,AHMEDABAD I.T.A.NO. 1249, 1250 /AHD/2009 7 1. DATE OF DICTATION 12.09 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 13.09.OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S.14.09 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 16.09 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.16.09 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 16.0 9.2011 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. ..