Chennai Port Trust, CHENNAI V. DCIT, CHENNAI

ITA 136/CHNY/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8920 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-07-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 25-05-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 25-01-2016
• Court: TRIBUNAL
• Department Lawyers: A B KOLI
• Assessee Lawyers: K MEENATCHI SUNDARAM
• Keywords: Rectification of order; Opportunity of being heard; Principle of natural justice; Condonation of delay
• Section: 244A; 12AA; 154

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL B BENCH, CHENNAI , . , BEFORE SHRI CHANDRA POOJARI , ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I.T.A.NO. 136/MDS/2016 / ASSESSMENT YEAR :200 3 - 0 4 M/S. CHENNAI PORT TRUST, C/O. SUNDARAM & NARAYANAN CHARTERED ACCOUNTANTS, 18, BALAIAH AVENUE, LUZ CHURCH ROAD, MYLA P ORE, CHENNAI 600 0 0 4 . [PAN: A A AL C 0025B ] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX BUSINESS CIRCLE VIII/ DCIT [EXEMPTIONS], CHENNAI 34 . ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI K. MEENATCHI SUNDARAM, C.A. / RESPONDENT BY : SHRI A. B . KOLI , J CIT / DATE OF HEARING : 2 6 . 0 5 .201 6 / DATE OF P RONOUNCEMENT : 06 . 0 7 .201 6 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : TH I S APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) I 3 , CHENNAI , DATED 03 . 11 .20 1 5 RELEVANT TO THE ASSESSMENT YEAR 200 3 - 0 4 BY RAISING FOLLOWING GROUNDS: 1.0 GROUND NO. L - DENIAL OF INTEREST U/S 244A FOR A PERIOD OF 35 MONTHS FROM 01.04.2003 TO 16.03.20 06 1.1 CIT(A) ERRED IN LAW BY IGNORING THE FOLLOWING FACTS WHILE ADJUDICATING THAT THERE IS A DELAY ATTRIBUTABLE TO THE ASSESSEE UP TO 16.03.2006 : - I .T.A. NO . 136 /M/ 16 2 (I) THE SUBJECT REFUND IS MADE PURSUANT TO 'PROCEEDINGS' OF AO INITIATED U/S 154 IN WHICH THERE IS NO DELAY ATTRIBUTABLE TO ASSESSEE WITHIN THE MEANING OF SECTION 244A(2) BEYOND 18.02.2005, NAMELY THE DATE OF FILING THE RETURN OF INCOME; (II) THERE IS NO DELAY ATTRIBUTABLE TO THE ASSESSEE BEYOND 01.04.2003 AS PER THE EXAMPLE III GIVEN IN PARAGRAPH 11.8 TO PART III OF CIRCULAR NO.549 DATED 31.10.1989 ISSUED BY CBDT AND CONSEQUENTLY INTEREST UJ S 244A IS PAYABLE TO THE ASSESSEE W.E.F. 01.04.2003; AND (III) FILING OF APPLICATION ON 18.03.2006 BY ASSESSEE FOR GRANT OF REGISTRATION U/S 12AA IS NOT 'THE PRO CEEDING RESULTING IN THIS SUBJECT REFUND WITHIN THE MEANING OF SECTION 244A(2)'. 1.2 CIT(A) ERRED IN LAW IN NOT ADJUDICATING THE FOLLOWING GROUNDS AGITATED BEFORE HIM. (I) GROUND NO.L.5 TO THE EFFECT THAT REFERRING TO ADMINISTRATIVE CIT U/S 244A(2) I S 'OUT OF SCOPE' WHILE PASSING AN ORDER U J S 154; AND (II) GROUND NO. 1.6 TO THE EFFECT THAT PRINCIPLES OF NATURAL JUSTICE IS NOT FOLLOWED BY ADMINISTRATIVE CIT BY NOT - GIVING AN OPPORTUNITY TO THE ASSESSEE WHILE GIVING A DIRECTION U/S 244A(2) TO THE AO . 2.0 RELIEF CLAIMED IN THE APPEAL THE HON 'BLE ITAT MAY BE PLEASED TO DIRECT THE AO (I) TO GRANT INTEREST FOR A PERIOD OF 35 MONTHS FROM 01.04.2003 TO 18.03.2006 AS PER THE PROVISIONS OF SECTION 244A; AND (II) TO PAY CONSEQUENTIAL INTEREST FOR THE PERIOD BEGINNING FROM 20.06.2012, BEING THE DATE OF THE ORDER OF THE AO TO THE DATE OF ISSUE OF REFUND AT Y2 % P.M. ON THE AMOUNT OF INTEREST ARRIVED IN (I) ABOVE AS PER THE DECISION IN THE CASE OF SANDVIK ASIA LTD V CIT REPORTED AS 150 TAXMAN 591(SC). 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PUBLIC BODY, A TRUST FUNCTIONING UNDER THE DIRECT CONTROL AND SUPERVISION OF A MINISTRY OF THE UNION GOVERNMENT. FOR THE ASSESSMENT YEAR 2003 - 04, THE ASSESSEE HAS FILED ITS I .T.A. NO . 136 /M/ 16 3 RETURN OF INCOME ON 18.02.20 05. ORDER UNDER SECTION 143(1) OF THE INCOME TAX ACT, 1961 [ ACT IN SHORT] WAS PASSED IN THE MONTH OF FEBRUARY, 2005. THE ASSESSEE FILED ITS RETURN IN THE STATUS OF LOCAL AUTHORITY. THEREAFTER, THE ASSESSEE HAS APPLIED FOR REGISTRATION UNDER SECTION 12AA OF THE ACT TO THE DIRECTOR OF INCOME TAX [EXEMPTIONS] IN THE STATUS OF TRUST AND TO CLAIM EXEMPTION UNDER SECTION 11 OF THE ACT. THE ASSESSEE WAS GRANTED REGISTRATION UNDER SECTION 12AA OF THE ACT VIDE ORDER DATED 16.06.2008. IN THAT ORDER, CONDONATION OF DELAY IN FILING THE REGISTRATION APPLICATION WAS GRANTED AND REGISTRATION TO THE TRUST UNDER SECTION 12AA OF THE ACT WAS GRANTED WITH EFFECT FROM 01.04.2002. MOREOVER, THE LD. CIT(A), VIDE APPEAL ORDER DATED 23.03.2014 ALLOWED THE APPEAL IN FAVOUR OF THE A SSESSEE. THE ASSESSING OFFICER GAVE EFFECT TO THE LD. CIT(A) S ORDER ON DATED 31.01.2011, WHILE THE SAID ORDER ENTIRE INCOME OF .29,46,71,260/ - WAS CONSIDERED AS EXEMPT UNDER SECTION 11 OF THE ACT AND TOTAL INCOME ARRIVED AT .NIL. THE ASSESSING OFFICER H AS GIVEN CREDIT FOR PREPAID TAXES AND REFUND DETERMINED FOR .6,57,00,000/ - AND ON THIS REFUND INTEREST UNDER SECTION 244A FOR THE PERIOD APRIL, 2011 TO OCTOBER 2011 WAS QUANTIFIED AT .22,99,500/ - . IN THE OPINION OF ASSESSEE, HE WAS NOT GRANTED CORRECT IN TEREST UNDER SECTION 244A OF THE ACT AND THEREFORE, THE ASSESSEE HAS FILED RECTIFICATION APPLICATION ON DATED 22.12.2011 . THE SAME WAS DISPOSED BY THE ASSESSING OFFICER BY PASSING COMMON ORDER UNDER SECTION 154 OF THE ACT FOR THE ASSESSMENT YEARS 2003 - 04, 2004 - 05 AND 2005 - 06 ON 20.06.2012. IT IS, AT THE EXPRESSION I .T.A. NO . 136 /M/ 16 4 DIRECTION OF THE LD. COMMISSIONER, THE REFUND WAS ISSUED FROM THE DATE OF APPLICATION MADE FOR REGISTRATION UNDER SECTION 12AA OF THE ACT. THEREFORE, FROM THE DATE OF FILING OF RETURN TO THE DATE OF APPLICATION MADE UNDER SECTION 12AA OF THE ACT, THE LD. COMMISSIONER HAS CONSIDERED IT AS DELAY ATTRIBUTABLE TO THE ASSESSEE AND THEREFORE, THE INTEREST ON REFUND FOR THIS PERIOD WAS NOT GRANTED TO THE ASSESSEE. AGGRIEVED BY THE ORDER PASSED UNDER SECTI ON 154 OF THE ACT, SINCE CORRECT INTEREST UNDER SECTION 244A OF THE ACT WAS NOT GRANTED TO THE ASSESSEE, THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A) FOR THE RELEVANT ASSESSMENT YEAR UNDER CONSIDERATION. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND VARIOUS DECISIONS, THE LD. CIT(A) DISMISSED THE APPEAL FILED BY THE ASSESSEE. 3. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. THE LD. COUNSEL FOR THE ASSESSEE HAS STRONGLY CONTENDED THAT THE ASSESSEE WAS GIVEN AN OPPORTUNITY OF BEING H EARD BEFORE PASSING RECTIFICATION ORDER UNDER SECTION 154 OF THE ACT. IT WAS ALSO SUBMITTED THAT THE SERVICE OF NOTICE UNDER SECTION 154 OF THE ACT IS MANDATORY BEFORE PASSING THE ORDER AND IT IS NOT A PROCEDURAL ERROR. THEREFORE, THE ORDER PASSED BY THE L D. CIT(A) SHOULD BE DISMISSED. 4. ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORDERS OF AUTHORITIES BELOW. I .T.A. NO . 136 /M/ 16 5 5. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD AND CAREFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE RECTIFICATION ORDE R DATED 20.06.2012 PASSED BY THE ASSESSING OFFICER READS AS UNDER: GIVING EFFECT TO THE CIT(A) S ORDER DATED 23.03.2011 FOR THE A. YRS. 2003 - 04, 2004 - 05 & 2005 - 06 WAS PASSED ON 31.10.2011, WHEREIN INTEREST U/S 244A WAS RESTRICTED TO THE DATE OF RECEIPT O F THE ABOVE MENTIONED ORDER OF THE CIT(A). VIDE ITS PETITION DATED 2.01.2012, THE ASSESSEE HAS REQUESTED FOR GRANT OF INTEREST U/S 244A FROM THE DATE OF FILING OF RETURN OR PAYMENT OF TAX, WHICHEVER IS LATER. IN THIS CONNECTION, DIRECTIONS WERE SOUGHT F ROM THE COMMISSIONER OF INCOME TAX VIII, CHENNAI AND AS DIRECTED VIDE HIS LETTER DATED 18.06.2012, INTEREST U/S 244A IS HEREBY GRANTED FROM THE DATE OF FILING OF APPLICATION FOR REGISTRATION U/S 12AA OF THE ACT I.E., 16.03.2006. ACCORDINGLY, INTEREST U/S 2 44A HAS BEEN WORKED OUT FOR A. YRS. 2003 - 04, 2004 - 05 & 2005 - 06 (AS PER ANNEXURE) AND GRANTED TO THE ASSESSEE. 6. THE ABOVE TWO PARAGRAPH ORDER OF THE ASSESSING OFFICER CLEARLY INDICATES THAT THE ASSESSEE WAS NOT GIVEN AN OPPORTUNITY OF BEING HEARD BEFOR E PASSING THE ORDER UNDER SECTION 154 OF THE ACT. THE ASSESSEE HAS ALSO RAISED THIS ISSUE BEFORE THE LD. CIT(A) AND NO FINDING APPEARS TO HAVE BEEN FOUND IN THE APPELLATE ORDER. FIRST OF ALL, IN VIEW OF THE ORDER OF THE LD. CIT(A) DATED 23.03.2011, THE ASS ESSING OFFICER [ACIT, BC VIII] VIDE HIS ORDER DATED 31.10.2011 WORKED OUT THE REFUND AS PER GIVING EFFECT TO THE ORDER OF CIT(A) AT .6,79,99,500/ - . SINCE THE ASSESSEE HAS DISPUTED INTEREST CALCULATION UNDER SECTION 244A OF THE ACT FILED RECTIFICATION PE TITION AND WHILE I .T.A. NO . 136 /M/ 16 6 PASSING RECTIFICATION ORDER UNDER SECTION 154 OF THE ACT VIDE ORDER DATED 20.06.2012, WITHOUT GIVING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AS PER SECTION 154(3) OF THE ACT, THE SAME ASSESSING OFFICER HAS WORKED OUT THE DEMAND AT . 6,09,45,770/ - BY REDUCING THE REFUND AT . 80,82,96,222 / - BY ADJUSTING EARLIER YEARS PAYMENTS AS BELOW: FROM TO % OF INTEREST AMOUNT OF TAX INTEREST NO. OF MONTHS A. FOR TAXES PAID BEFORE THE END OF THE RELEVANT PREVIOUS YEAR MAR. - 06 JUNE 12 0.50 333, 094,510 126,575,914 76 B. FOR TAXES PAID AFTER THE END OF THE RELEVANT PREVIOUS YEAR SEP. - 06 JUNE 12 0.50 154,696,319 54,143,712 70 C. FOR TAXES PAID AFTER THE END OF THE RELEVANT PREVIOUS YEAR MARCH 09 JUNE 12 0.50 65,700,000 13,140,000 193,859,625 4 0 GROSS REFUND OF TAX AND INTEREST 553,490,829 193,859,625 747,350,454 LESS: REFUNDS ALREADY ISSUED & INTEREST US 234D ON 30.04.2004 BY PAYMENT MODE MAY,04 JUNE 12 0.50 353,175,262 173,055,878 98 ON 28.12.2007 BY ADJUSTING AGAINST TH E DEMAND OF AY 2004 - 05 & 2005 - 06 JAN. 08 JUNE 12 0.50 167,449,026 45,211,237 54 * ON 31.10.2011 GIVING EFFECT CIT(A) S ORDER DATED 23.03.2011 NOV.11 JUNE 12 0.50 67,999,500 1,405,318 8 TOTAL 588,623,788 219,672,434 808,296,222 NET REFUND OF TAX AND INTEREST (60,945,767) NET DEMAND (ROUNDED OFF) 60,945,770 * A S PER ORDER DATED 31.10.2011 (GIVING EFFECT TO CIT(A) DATED 23.03.2011) BASIC REFUND AND INTEREST U/S 244A WERE 6,57,00,000/ - AND . 22,99,500/ - RESPECTIVELY UNDER THE ABOVE FACTS AND CIRCUMSTANCES, WE SET ASIDE THE ORDER PASSED BY THE LD. CIT(A) AND REMIT THE MATTER BACK TO THE ASSESSING OFFICER TO RECONSIDER THE ENTIRE ISSUE AFRESH AFTER GIVING AN OPPORTUNIT Y OF BEING HEARD TO THE ASSESSEE. SINCE WE HAVE SET ASIDE THE ORDER OF THE LD. CIT(A) TO MEET THE PRINCIPLES OF NATURAL JUSTICES, ADJUDICATION OF OTHER GROUNDS ON MERITS IS I .T.A. NO . 136 /M/ 16 7 NOT WARRANTED AT THIS JUNCTURE. THUS, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 7 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED ON THE 6 TH JULY , 201 6 AT CHENNAI. SD/ - SD/ - ( CHANDRA POOJARI ) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 06 . 0 7 .201 6 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.