SHASHI INVESTMENT AND FINANCE LIMITED, KOLKATTA V. ITO - 8(3)(1), MUMBAI

ITA 1601/MUM/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93080 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2015
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2001-2002
• Appeal Filed On: 18-03-2015
• Court: TRIBUNAL
• Department Lawyers: N V NADKARNI
• Section: 143(3); 244A; 154

Judgement Text

IN THE INCO ME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ./I.T.A. NO. 1601/M/2015 ( AY: 2001 - 2002 ) M/S. SHASHI INVESTMENT AND FINANCE LIMITED, A.K. JAIN, 15B, CLIVE ROW, KOLKATA 700 001. / VS. ITO 8(3)(1), MUMBAI. ./ PAN : AAECS5940G ( / APPELLANT) .. ( / RESPONDENT ) / ASSESSEE BY : SUBHASH AGARWAL / REVENUE BY : SHRI N.V. NADKARNI / DATE OF HEARING : 05.5 .2015 / DATE OF PRONOUNCEMENT :30.6 .2015 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 18.8.2015 IS DIRECTED AGAINST THE ORDER OF THE CIT (A) - 18, MUMBAI DATED 27.11.2014 FOR THE ASSESSMENT YEAR 2001 - 2002. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT (A) WAS NOT JUSTIFIED IN CONFIRMING THE ACTION OF THE AO IN REJECTING THE APPLICATION FOR RECTIFICATION U/S154. 2. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT (A) OUGHT TO HAVE GIVEN A DIRECTION TO AO TO ALLOW THE INTEREST TO THE ASSESSEE U/S 244A (1)(B) ON RS. 50,50,538 .17 FOR THE PERIOD 26.2.2005 TO 8.9.2009 DURING WHICH FUNDS OF THE ASSESSEE REMAINED FROZEN WITH THE BANK AS PER THE DIRECTION OF THE INCOME TA X DEPARTMENT. 2. THE ISSUE IN THIS APPEAL RELATES TO THE DENIAL OF INTEREST ON THE AMOUNT REFUNDABLE TO THE ASSESSEE AND REJECTION OF ASSESSEES RECTIFICATION APPLICATION U/S 154 OF THE ACT. BRIEFLY STATED, RELEVANT FACTS IN THIS REGARD ARE THAT THE ASSESSMENT IN THE CASE OF THE ASSESSEE WAS COMPLETED ON THE TOTAL INCOME OF RS . 6.6 CRS AND RAISED DEMAND OF RS. 4.02 CRS (ROUNDED OF). ASSESSEE OWNS A CURRENT ACCOUNT WITH ABN 2 AMRO BANK. TRO ISSUED A NOTICE U/S 226(3) OF THE ACT ON THE SAID AMOUNT. THE BANK DID NOT RESPOND IMMEDIATELY TO THE TRO. AFTER A GAP OF NEARLY FIVE YEARS, THE BANK INTIMATED THE T RO INFORMING HIM OF TH E CREDIT BALANCE OF RS. 50,50,5 3 8 / - . SUBSEQUENTLY, A CHEQUE FOR THE SAID AMOUNT DATED 8.9.2009 WAS SEND TO THE TRO, WHICH WAS DULY DEPOSITED IN THE GOVERNMENT ACCOUNT ON 24.9.2009 TO THE CREDIT OF THE ASSESSEE. MEANWHILE, THE ASSESS EE GOT SUBSTANTIAL RELIEF IN APPEALS BEFORE THE CIT (A) AND THUS, RESULTED IN REFUND TO THE ASSESSEE. AFTER GIVING EFFECT TO THE SAID ORDER OF THE CIT (A), AO ISSUED REFUND TOGETHER WITH INTEREST CALCULATED W.E.F. 24.4.2009 ONLY AND NOT FROM THE DATE OF N OTICE U/S 226(3) OF THE TRO I.E., 27.8.2004. ASSESSEE FILED A RECTIFICATION APPLICATION BEFORE THE AO ASKING FOR THE INTEREST RIGHT FROM THE DATE OF ATTACHMENT OF THE ASSESSEE S B ANK ACCOUNT ON 27.8.2004 OR AT LEAST FROM THE DATE OF AVAILABILITY OF THE BA LANCE OF ITS ACCOUNT I.E., 26.2.2005 . IT IS THE ARGUMENT OF T HE ASSESSEE THAT THE AMOUNT OF R S. 50,50,538 / - WAS AVAILABLE IN THE BANK ACCOUNT OF THE ASSESSEE TO THE DEPARTMENT AND THEREFORE, THE AMOUNT IS DEEMED TO HAVE BEEN PAID TO REVENUE IN THE EYES O F LAW . LOGIC IS VERY CLEAR THAT ON ATTACHMENT BY TRO, THE BANKER BECOMES THE AGENT OF THE REVENUE / TRO, SO FAR AS THE SAID ASSESSEES BANK ACCOUNT IS CONCERNED. PER CONTRA, I T IS THE AOS OPINION THAT ASSESSEE SHOULD GET INTEREST FROM THE BANK AND NOT F ROM THE DEPARTMENT AS THE SAID CREDIT BALANCE OF RS. 50,50,583/ - WAS UTILIZED BY THE BANK FOR ITS BUSINESS. ACCORDINGLY, AO REJECTED THE RECTIFICATION APPLICATION FILED BY THE ASSESSEE. AGGRIEVED WITH THE SAME, ASSESSEE FILED AN APPEAL BEFORE THE FIRST AP PELLATE AUTHORITY. 3. DURING THE PROCEEDINGS BEFORE T HE CIT (A), ASSESSEE FILED WRITTEN SUBMISSIONS, WHICH ARE REPRODUCED IN PARA 2.2 OF THE IMPUGNED ORDER. AFTER CONSIDERING THE SAID SUBMISSION OF THE ASSESSEE, CIT (A) CALLED FOR A REMAND REPORT FROM THE AO AND ON PERUSAL OF THE SAID REPORT, CIT (A) NARRATED THE VARIOUS FACTS LEADING TO THE REJECTION OF APPLICATION U/S 154 OF THE ACT AND CONCLUDED THAT THE ASSESSEE SHOULD CLAIM INTEREST FROM THE BANK, NOT FROM THE DEPARTMENT AS ASSESSEES MONEY OF RS. 50, 50, 538 / - WAS LYING IN THE BANK ACCOUNT WITH TH E BANK AND IT IS NOT WITH THE DEPARTMENT. HE ACCORDINGLY DISMISSED THE APPEAL OF THE ASSESSEE. AGGRIEVED WITH THE SAME, ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL . 4. DURING THE PROCEEDINGS B EFORE US , LD COUNSEL FOR THE ASSESSEE NARRATED THE VARIOUS DATES AND SUBMITTED THAT, ON ATTACHMENT OF THE BANK ACCOUNT BY THE TRO, 3 THE BANK INFORMED THE CREDIT BALANCES IN THE ACCOUNT TO THE TUNE OF RS. 538.17 ONLY. THERE WAS INFLOW OF FUNDS INTO THE SAID ACCOUNT TO THE TUNE OF RS. 50,50,000/ - ON 26.2.2005 AND THIS FACT WAS NOT COMMUNICATED TO THE AO / TRO EITHER BY THE BANK OR BY THE ASSESSEE TILL 10.8.2009. OTHERWISE, RS. 50,50,538/ - SINCE DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE, WHICH IS UNDER ATTACHMENT BY GARNISHEE AWARD, THE SAID AMOUNT IS DEEMED PAID TO THE GOVERNMENT ACCOUNT TOWARDS TAX DEMANDS OF THE ASSESSEE. SO FAR AS THE ASSESSEE IS CONCERNED, THE SAID AMOUNT SHOULD BE TREATED AS A TAX PAID TO THE GOVERNMENT ACCOUNT, AND THEREFORE, CONSIDERING T HE RELIEF GRANTED BY THE CIT (A) AND DETERMINATION OF THE REFUND BY THE AO, THE ASSESSEE IS ENTITLED TO THE INTEREST ON THE SAID AMOUNT DURING THE PERIOD FROM 26.2.2005 TO 10.8.2009. LD COUNSEL FOR THE ASSESSEE ALSO BROUGHT MY ATTENTION TO THE LETTER OF T HE TRO - 8(1), MUMBAI DATED 20.11.2009 ABOUT THE TROS DEMAND FROM THE BANK TO CALCULATE 12% INTEREST ON RS. 50,50,538/ - FROM 26.2.2005 TO 8.8.2009, SO THAT THE TRO CAN REFUND THE SAID INTEREST TO THE ASSESSEE. THERE ARE NO DETAILS ABOUT THE OUTCOME OF THE SAID PROCEEDINGS ON RECORD. IT IS THE CLAIM OF THE ASSESSEE THAT ON THE ISSUE OF GARNISHEE AWARD ON BANK ACCOUNT OF ASSESSEE, THE BANK BECOMES AN AGENT TO THE DEPARTMENT SO FAR AS THE BANK ACCOUNT OF THE ASSESSEE IS CONCERNED. 5. ON THE OTHER HAND, LD DR FOR THE REVENUE RELIED ON THE ORDER OF THE ASSESSING OFFICER AND THE CIT (A) ON ONE HAND AND THE PROVISIONS OF SECTION 244A (1)(B) OF THE ACT. EXPLAINING THE SAID PROVISIONS, LD DR SUBMITTED THAT THE INTEREST IS CHARGEABLE ON THE REFUND ISSUED TO THE ASSES SEE ON ANY ACCOUNT, WHICH BECOMES DUE TO THE ASSESSEE. FOR THIS PURPOSE, ASSESSEE SHOULD HAVE MADE THE PAYMENT OF TAX ON PENALTY. HE ALSO BROUGHT OUR ATTENTION TO THE EXPLANATION, WHEREIN THE EXPRESSION DATE OF PAYMENT OF TAX OF PENALTY IS DEFINED. FU RTHER, HE REASONED THAT IN ANY CASE, WHERE ASSESSEES MONEY IS NOT PAID AND THERE IS INFLOW OF FUNDS TO THE BANK ACCOUNT OF THE ASSESSEE , WHICH IS UNDER ATTACHMENT U/S 226(3) OF THE ACT, THE SAID AMOUNT CANNOT BE DEEMED AS PAYMENT OF TAX ON PENALTY. THERE FORE, THE ASSESSEE IS NOT ENTITLED TO INTEREST ON THE SAID UNPAID AMOUNT TO THE GOVERNMENT ACCOUNT. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AND THE RELEVANT PROVISIONS BROUGHT TO MY ATTENTION BY THE PARTIES. WE HAVE ALSO PERUSED THE DATES, PLACED ON TO THE RECORD BEFORE ME , WHICH ARE RELEVANT FOR ADJUDICATION OF THE APPEAL AND THE SAID DATES ARE REPRODUCED AS UNDER: 4 S NO DATE EVENT 1 30.3.3004 ASSESSMENT U/S 143(3) COMPLETED RAISING A DEMAND OF RS. 4,02,00,454/ - 2 2.9.2004 AO ISSUED NOTICE OF ATTACHMENT U/S 226(3) TO ABN AMRO BANK IN RESPECT OF ACCOUNT NO.423348 3 7.9.2004 BANK INFORMS AO THAT THE BALANCE IN THE ACCOUNT IS TO THE TUNE OF RS. 538.17 ONLY 4 26.2.2005 INFLOW OF FUNDS IN THE ACCOUNT CREDIT BALANCE OF RS. 50,50,538/ - 5 10.8.2009 LETTER ISSUED BY BANK TO TRO THAT RS. 50,50,538/ - WERE LYING IN THE BANK ACCOUNT 6 8.9.2009 RS. 50,50,538/ - REMITTED TO THE ACCOUNT OF THE DEPARTMENT. 7. 30.9.2009 APPEAL EFFECT ORDER RESULTING INTO REFUND INTEREST U/S 244A WAS ALLOWED FROM THE DATE OF CREDIT I.E., 8.9.2009 ON RS. 50,50,538/ - 8. 20.11.2009 TRO WRITES A LETTER DIRECTING THE BANK TO CALCULATE 12% INTEREST ON RS. 50,50,538/ - FROM 26.2.2005 TO 8.9.2009 AND MAKE THE PAYMENT OF INTEREST TO THE DEPARTMENT 9 5 .4.2013 A RECTIFICATION APPEAL FILED CLAIMING INTEREST FOR THE LOCK - IN - PERIOD FROM 26.2.2005 TO 8.9.2009 10 23.8.2013 RECTIFICATION PETITION DISPOSED OF STATING THAT THE ASSESSEE HAS BEEN DEBARRED FROM ITS DUE INTEREST FOR THE SAID LOCK - IN - PERIOD DUE TO I NACTION OF THE BANK AND NOT TO THE DEPARTMENT. 7. AS SEEN FROM THE ABOVE TABLE, THE BANK INTIMATED THE TRO, AFTER THE ISSUE OF NOTICE U/S 226(3) OF THE ACT, GIVING THE D ETAILS OF CREDIT BALANCE OF RS. 538/ - . SUBSEQUENTLY, ON 26.2.2005, THERE WAS AN INFLOW OF FUNDS TO THE SAID ACCOUNT TO THE TUNE OF RS. 50,50,000/ - BUT THE REMITTER OF THE SAID AMOUNTS IS NOT KNOWN. IF THE ASSESSEE HAS DEPOSITED THE SAID AMOUNT, HE IS EXPECTED TO HAVE INFORMED THE TRO WITH A REQUEST TO APPROPRIATE THE SAME TOWARDS TAX. THERE IS NO SUCH INTIMATION BY THE ASSESSEE TO THE TRO. IT IS AN ADMITTED FACT THAT EVEN THE BANK DID NOT BOTHER TO INTIMATE THE TRO ABOUT THE EXISTENCE OF INCREASED CREDIT BALANCE IN THE SAID ACCOUNT. SO FAR AS THIS ATTACHED BANK ACCOUNT IS CONCERNED, T HE B ANK WAS INACTIVE TILL 10.8.2009. ON THIS DATE , THERE IS AN INFORMATION TO THE TRO ABOUT THE INCREASED CREDIT BALANCE IN THE BANK ACCOUNT TO THE TUNE OF RS. 50,50,538/ - . THIS WAS SUBSEQUENTLY APPROPRIATED TOWARDS THE TAX OF THE ASSESSEE. THUS, THE SUM OF RS. 50,50,538/ - UNDISPUTEDLY REMITTED TO THE GOVERNMENT ACCOUNT ONLY IN AUGUST / SEPT EMBER OF 2009. IN THAT PERIOD I.E., FROM 26.2.2005 TO AUGUST - 2009, THE MONEY WAS LYING WITH THE BANK. SUBSEQUENTLY, I HAVE PERUSED THE RELEVANT PROVISIONS RELATING TO THE INTEREST REFUND U/S 244A OF THE ACT. THE RELEVANT PORTIONS OF THE SAID SECTION READ AS UNDER: 244A(1)(B): - IN ANY OTHER CASE, SUCH INTEREST SHALL BE CALCULATED AT THE RATE OF [ONE AND HALF PERCENT] F OR EVERY MONTH OR PART OF A MONTH COMPRISED IN THE PERIOD OR PERIODS FROM THE DATE OR, AS THE CASE MAY BE, DATES OF PAYMENT OF THE TAX OR PENALTY TO THE DATE ON WHICH THE REFUND IS GRANTED. EXPLANATION: - FOR THE PURPOSES OF THIS CLAUSE, DATE OF PAYMENT OF TAX OR PENALTY MEANS THE DATE ON AND FROM WHICH THE AMOUNT OF TAX OR PENALTY SPECIFIED IN THE NOTICE OF DEMAND ISSUED UNDER SECTION 156 IS PAID IN EXCESS OF SUCH DEMAND . 5 8. THE ABOVE PROVISIONS ARE UNAMBIGUOUS ABOUT THE DETERMINATION OF REFUND ON THE P AYMENT OF TAX OR PENALTY AND CHARGING SIMPLE INTEREST ON THE FUND. THE METHOD OF CALCULATION OF INTEREST IS ALSO SPECIFIED. CLAUSE (B) TO SECTION 244A (1) ALSO PROVIDES FOR PERIOD OF TIME THE INTEREST IS CALCULATED ON THE REFUND BY THE EXPRESSION ...... ... THE DATE OR, AS THE CASE MAY BE, DATES OF PAYMENT OF THE TAX OR PENALTY TO THE DATE ON WHICH THE REFUND IS GRANTED. THE EXPRESSION DATE OF PAYMENT OF TAX OR PENALTY WAS ALSO EXPLAINED IN EXPLANATION TO THE SAID SECTION 244A (1) OF THE ACT. THUS, THE INTEREST IS CALCULATED FROM THE DATE OF THE PAYMENT OF TAX OR PENALTY. THE PROVISIONS DO NOT ENVISAGES THE CLASSIC INTERPRETATION OF THE SAID EXPRESSION. IN THE LIGHT OF THE ABOVE LEGAL POSITION, WE SHALL PROCEED TO EXAMINE THE FACTS OF THE PRESENT C ASE AND IF THE INFLOW OF FUNDS TO THE BANK ACCOUNT TO THE TUNE OF RS. 50,50,000/ - CONSTITUTES PAYMENT OF TAX OR PENALTY. 9. IT IS AN UNDISPUTED FACT THAT THE CREDIT BALANCE AS ON THE DATE OF ATTACHMENT U/S 226(3) IS ONLY RS. 538/ - . THERE IS A DEPOSIT OF RS. 50,50,000/ - ON 26.2.2005 AND THE SAME IS NOT REPORTED TO THE TRO EITHER BY THE ASSESSEE OR BY THE BANK LEAVE ALONE , THE REQUEST FOR APPROPRIATING THE SAME TOWARDS TAX OR PENALTY OF THE ASSESSEE. IT IS NOT KNOWN AS TO FROM WHICH SOURCE THIS AMOUNT IS D EPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE, AND IF THE ASSESSEE IS AWARE OF THE SAME. IF THE ASSESSEE ITSELF IS THE DEPOSITOR, WHY THE ASSESSEE HAS NOT INTIMATED TO THE TRO ABOUT SUCH DEPOSIT. IT IS NOT OUT OF PLACE TO MENTION THAT THE TRO IS NOT EXPECT ED TO INQUIRE ABOUT THE CREDIT DEPOSITS IN THE BANK ACCOUNT OF THE ASSESSEE PERIODICALLY IN IS FOR THE ASSESSEE OR THE BANK TO REPORT THE AUTHORITIES . THE ISSUE OF GARNISHEE AWARD ON THE BANK ACCOUNT OF THE ASSESSEE, IN OUR OPINION, IS NOT SUFFICIENT TO FULFIL THE CONDITION SPECIFIED IN CLAUSE (B) OF SECTION 244A(1) OF THE ACT. THE PROVISIONS VISU ALIZE THE PAYMENT OF TAX OR PENALTY TO BECOME ELIGIBLE FOR INTEREST. THUS, SUM OF RS. 50.50 LAKHS IS THE CASE OF UNPAID AMOUNT AND UNINTEND FOR PAYMENT TOWARDS TAXES. THE INTEREST IS CALCULATED AND PAID ONLY ON THE EXCESS PAYMENT TAX OR PENALTY AND NOT ON THE UNPAID AMOUNTS OR AMOUNT LYING WITH THE BANK ACCOUNT OF THE ASSESSE E. IN FACT, THE BANK IS THE BENEFICIARY OF THE SAID AMOUNT. EVEN BEFORE US ALSO, DESP ITE REPEATED ENQUIRIES, LD COUNSEL FOR THE ASSESSEE COULD NOT DEMONSTRATE THE SOURCE OF THE SAID FUNDS AND THE REASONS FOR REMITTING THE SUM IN THE SAID ATTACHED BANK ACCOUNT OF THE ASSESSEE , KNOWING A GARNISHEE AWARD IS IN FORCE . ASSESSEE COULD NOT ANSWE R AS TO WHY THE INFORMATION ABOUT THE DEPOSITING OF THE SUM OF RS. 50,50,000/ - 6 IN THE BANK ACCOUNT OF THE ASSESSEE WAS NOT COMMUNICATED TO THE TRO / AO. IT IS NOT THE CASE THAT , ON THE DATE OF ATTACHMENT, THERE IS A CREDIT BALANCE OF RS. 50,50,538/ - AND T HE TRO HAS THE SAID INFORMATION. THE SAME AMOUNT OF RS. 50,50,000/ - HAS ENTERED THE BANK ACCOUNT OF THE ASSESSEE AFTER A GAP OF FIVE MONTHS FROM THE DATE OF ATTACHMENT. ASSESSEE IS A BUSINESS ENTITY AND IT IS AWARE OF THE UTILIZATION OF THE SAID SUM OF R S. 50.50 LAKHS BY THE BANK . CONSIDERING THE FACTUAL MATRIX OF THE CASE, WE ARE OF THE OPINION, THE ORDER OF THE CIT (A) IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUNDS RAISED BY THE ASSESSEE ARE DISMISSED. 10. IN T HE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH JUNE , 2015. SD/ - SD/ - ( VIJAY PAL RAO ) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 30.6. 201 5 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT - 4. / 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI