Rishikesh Balbhim Pathare, Ahmednagar V. Assistant Commissioner of Income-tax, Ahmednagar Circle , Ahmednagar

ITA 2006/PUN/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4899 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 24-08-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHRI
• Keywords: Set aside
• Section: 143(3); 234B; 139(1); 148; 263; 154; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI S. S. VISWANETHRA RAVI, JM SL. NO. ITA NO. NAME OF APPELLANT NAME OF RESPONDENT ASST. YEAR 1 - 2 2005 /PUN/2017 2006/PUN/2017 RISHIKESH BALBHIM PATHARE, PROP. M/S. VARAD ENTERPRISES, ASHTAVINAYAK COLONY, PIPELINE ROAD, AHMEDNAGAR-414003. PAN: AYPPP2243K ACIT, AHMEDNAGAR CIRCLE, AHMEDNAGAR. 2011 - 12 2012-13 3 2007 /PUN/2017 M/S. AKSHAR UDYOG, ASHTAVINAYAK COLONY, PIPELINE ROAD, AHMEDNAGAR-414003. PAN: AAKFA8960B ACIT, AHMEDNAGAR CIRCLE, AHMEDNAGAR. 2011 - 12 ASSESSEE BY : SHRI PIYUSH BAFNA REVENUE BY : SHRI PANKAJ GARG / DATE OF HEARING : 04.11.2019 / DATE OF PRONOUNCEMENT : 04.11.2019 / ORDER PER D. KARUNAKARA RAO, AM: THERE ARE THREE APPEALS UNDER CONSIDERATION INVOLVING TWO DIFFERENT ASSESSEES NAMELY (I) RISHIKESH BALBHIM PATHARE AND (II) M/S. AKSHAR UDYOG. REFERRING TO THE GROUNDS RAISED BY THE ASSESSEE IN ALL THE THREE APPEALS FOR THE ASSESSMENT YEARS 2011-12 AND 2012-13, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN ALL THESE THREE APPEALS, IS A COMMON ISSUE INVOLVED I.E. VALIDITY OF THE ORDERS U/S 154 OF THE ACT FOR RECTIFYING THE MISTAKE RELATING TO LEVY OF INTEREST U/S 234A OF THE ACT, WHEN THE SAID ORDERS DID NOT CONTAIN ANY DIRECTIONS IN FAVOUR OF CHARGING OF THE SAID INTEREST U/S 234A OF THE ACT. 2 ITA NOS.2005 TO 2007/PUN/2017 2. REFERRING TO THE ABOVE COMMON ISSUE RAISED IN ALL THESE THREE APPEALS, LD. COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO AN ORDER OF THE AMRITSAR BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. M/S. HERITAGE PROJECT VIDE ITA NO.170/ASR/2016 FOR THE ASSESSMENT YEAR 2009-10 DATED 12.10.2017 AND SUBMITTED THAT A SIMILAR ISSUE CAME FOR ADJUDICATION BY THE SAID TRIBUNAL AND RULED THAT EXISTENCE OF A DIRECTION ON THE FACE OF THE ASSESSMENT ORDER IS THE REQUIREMENT FOR THE ASSESSING OFFICER FOR ASSUMPTION OF JURISDICTION U/S 154 OF THE ACT FOR RECTIFICATION OF RELATED MISTAKE. IN THIS REGARD, LD. COUNSEL FILED A NOTE ON FACTS AND SUBMISSIONS AND THE SAME IS EXTRACTED AS UNDER :- 1. LEVY OF INTEREST U/S 234A WITHOUT SPECIFIC MENTION IN THE ASSESSMENT ORDER: 1.1. ATTENTION IS DRAWN TO THE ASSESSMENT ORDER. IT WILL BE APPRECIATED THAT THERE IS NO MENTION IN THE END OF THE ASSESSMENT ORDER THAT INTEREST U/S 234A BE CHARGED SEPARATELY. 1.2. IT IS ONLY CAME TO BE REALIZED LATER ON BY THE AO THAT INTEREST U/S 234A WAS NOT LEVIED AND THUS HE ISSUED NOTICE U/S 154. 1.3. IT IS SUBMITTED THAT WITHOUT THERE BEING SPECIFIC SATISFACTION REGARDING CHARGING OF INTEREST U/S 234A IN THE ASSESSMENT ORDER ITSELF, AO IS NOT PERMITTED TO ISSUE NOTICE U/S 154 TO SUBSTITUTE SUBSEQUENTLY SAID SATISFACTION. ADMITTEDLY, SECTION 234A IS MANDATORY PROVISION AS PER THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF ANJUM GHASWALA 252 ITR 1, IF THE ASSESSMENT ORDER IS SILENT WITH REGARD TO THE PAYMENT OF INTEREST THEN WITHOUT CHALLENGING THE ASSESSMENT ORDER THE REVENUE CANNOT, WHILE ISSUING NOTICE OF DEMAND, CLAIM INTEREST UNDER THE AFORESAID SECTIONS. 1.4 IT IS SUBMITTED THAT THE ASSESSING OFFICER VIRTUALLY ACTS LIKE A JUDICIAL OFFICER. IF HE PASSES A WRONG ORDER NOT TO LEVY THE INTEREST THEN THE REVENUE MUST CHALLENGE THE SAID ORDER AND GET THE SAME SET ASIDE AND AN ORDER MUST BE PASSED DIRECTING INTEREST SHOULD BE PAID. THIS CAN BE DONE BY COMMISSIONER EXERCISING JURISDICTION U/S 263 BUT BY NO MEANS IT CAN BE DONE U/S 154. IF NO SUCH ORDER IS THERE, THE REVENUE CANNOT DEMAND INTEREST U/S 234A. 1.5. REFER: CIT VS. RUCHIRA PAPERS LTD - HIMACHAL PRADESH HIGH COURT - 212 TAXMAN 9 CIT VS. DEEP AVADH HOTELS P. LTD - ALLAHABAD HIGH COURT - 350 ITR 185 IN VIEW OF ABOVE, IT IS SUBMITTED THAT THESE ORDER PASSED U/S 154 BE QUASHED AND CONSEQUENTLY DEMAND RAISED MAY PLEASE BE DIRECTED TO BE DELETED. 2. VALIDITY OF JURISDICTION ASSUMED U/S 154: 3 ITA NOS.2005 TO 2007/PUN/2017 2.1. WITHOUT PREJUDICE TO ABOVE SUBMISSION, IT IS SUBMITTED THAT THE ISSUE INVOLVED IN THE PRESENT APPEALS IS AS TO WHETHER INTEREST NOT CHARGED IN THE ORIGINAL ASSESSMENT ORDER CAN BE RECTIFIED OR NOT U/S 154 IS HIGHLY DEBATABLE WHICH REQUIRES LONG DRAWN PROCESS OF DEBATE AND GREATLY DEBATABLE. 2.2. REFER: ITO VS. M/S HERITAGE PROJECT AMRITSAR ITAT - IN ITA NO. 170/ASR/2016 DATED 12.10.2017 3. ON MERIT- NO INTEREST CAN BE CHARGED U/S 234A: 3.1. ATTENTION IS DRAWN TO THE PROVISION U/S 234A(3) WHEREIN ASSESSEE IS EXPECTED TO FILE THE RETURN IN RESPONSE TO NOTICE U/S 148 WITHIN THE TIME PRESCRIBED THEREIN. THEREFORE, FILING OF THE RETURN IS SINE QUA NON FOR COMPLIANCE OF NOTICE ISSUED U/S 148. NOW SUCH FILING OF RETURN U/148 CAN BE DONE IN 2 WAYS- 3.1.1. ACTUAL FILING OF RETURN OF INCOME AFRESH IS ORIGINAL RETURN IS NOT FILED OR FILING THE RETURN DISCLOSING THE SAME INCOME AS DISCLOSED IN ORIGINAL RETURN OR MAKING MODIFICATION IN THE INCOME DECLARED IN THE ORIGINAL RETURN OF INCOME. IN OTHER WORDS, THE RETURN HAS TO BE ACTUALLY FILED. 3.1.2. SECONDLY WITHOUT ACTUALLY FILING THE RETURN OF INCOME AS MENTION IN ABOVE (I) AND WHERE THE RETURN OF INCOME IS ORIGINALLY FILED U/S 139 THE ASSESSEE CAN REPLY TO THE NOTICE U/S 148 STATING THAT THE ORIGINAL RETURN FILED U/S 139 BE CONSIDERED AS FILED IN RESPONSE TO NOTICE ISSUED U/S 148. 3.2. IT WILL BE APPRECIATED THAT EVEN SUCH WRITING OF LETTER BY ASSESSEE REQUESTING TO TREAT RETURN ORIGINALLY FILED AS FILED IN RESPONSE TO NOTICE ISSUED U/S 148 IS LEGALLY ACCEPTED AS IF ASSESSEE HAS ACTUALLY FILED RETURN IN RESPONSE TO NOTICE ISSUED U/S 148 ALTHOUGH NO RETURN HAS ACTUALLY BEEN FILED. 3.3. NOW REFERRING TO THE CASE OF THE APPELLANT, THE REGULAR RETURN OF INCOME IS FILED ON 27.09.2011 I.E. BEFORE THE DUE DATE AS SPECIFIED U/S 139(1). NEEDLESS TO STATE IT IS A VALID RETURN. IN SPITE OF THE FACT THAT THE SAID RETURN HAS NOT BEEN TAKEN FOR SCRUTINY AND NO ASSESSMENT IS MADE U/S 143(3) NEVERTHELESS THE SAID RETURN BY ANY STANDARD CANNOT BE REGARDED AS NON-EST. IT IS VERY MUCH A VALID RETURN. NOTICE U/S 148 WAS REQUIRED TO BE ISSUED TO GET THE SAID RETURN REGULARIZED FOR ASSESSMENT TO BE COMPLETED U/S 143(3) R.W.S. 147. UNLESS THIS PROCEDURE IS FOLLOWED ASSESSING OFFICER DOES NOT GET JURISDICTION TO ASSESS OR REASSESS THE INCOME OF THE ASSESSEE FOR THE RELEVANT AY. 3.4. IT IS ADMITTED THAT ON RECEIPT OF NOTICE ISSUED U/S 148 THE APPELLANT HAS NOT WRITTEN TO THE ASSESSING OFFICER TO TREAT THE ORIGINAL RETURN FILED IN TIME AS FILED IN RESPONSE TO NOTICE U/S 148. QUESTION HOWEVER IS MERELY BY REASON OF THIS FAILURE COULD IT BE LEGALLY SAID THAT NO RETURN IS FILED IN RESPONSE TO NOTICE U/S 148; WHILE ADMITTEDLY WHILE SIMPLY BY WRITING THE LETTER TO TREAT THE ORIGINAL RETURN FILED U/S 139 AS FILED IN RESPONSE TO 148 THE SAME IS LEGALLY ACCEPTED AS IF RETURN IS ACTUALLY FILED IN RESPONSE TO NOTICE U/S 148 ALTHOUGH IN FACT IT IS NOT SO. 3.5. THEREFORE, AT THE MOST THERE IS THE TECHNICAL OMISSION ON THE PART OF THE APPELLANT IN NOT WRITING TO THE ASSESSING OFFICER TO TREAT THE ORIGINAL RETURN TO TREAT U/S 148. THAT OMISSION PER SE CANNOT BE THE GROUND TO HOLD THAT THE SAID ORIGINAL RETURN IS NON-EST. 3.6. ATTENTION IS ALSO DRAWN TO THE ASSESSMENT ORDER PARTICULARLY TO THE COMPUTATION PORTION AND IT WILL BE SEEN THAT WHILE ASSESSING THE TOTAL 4 ITA NOS.2005 TO 2007/PUN/2017 INCOME DECLARED IN THE ORIGINAL RETURN IS CONSIDERED AS BASIS OR FOUNDATION FOR MAKING FURTHER ADDITION THEREON. IN OTHER WORDS, HAD THE ORIGINAL RETURN BE TREATED AS NON-EST THERE WAS NO REASON FOR THE ASSESSING OFFICER TO ADD UP THE INCOME DECLARED IN THE SAID RETURN OF INCOME AS THE ENTIRE ASSESSMENT WAS OPEN FOR VERIFICATION EXAMINATION AS IS THE CASE WHERE DE NOVO ASSESSMENT IS MADE. 3.7. THUS, WHEN ORIGINAL RETURN FILED WITHIN DUE DATE U/S 139(1), IT IS SUBMITTED THAT INTEREST U/S 234A CANNOT BE CHARGED DESPITE THE FACT THAT IT WAS NOT SEPARATELY INTIMATED THAT RETURN FILED ORIGINALLY U/S 139(1) MAY BE CONSIDERED AS FILED IN RESPONSE TO NOTICE U/S 148. 3. ON THE OTHER HAND, LD. DR FOR THE REVENUE RELIED HEAVILY ON THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A). 4. WE HEARD BOTH THE SIDES ON THIS LIMITED ISSUE AND PERUSED THE SAID ORDER OF THE TRIBUNAL IN THE CASE OF M/S. HERITAGE PROJECT (SUPRA). FURTHER, WE ALSO EXAMINED THE ASSESSMENT ORDER, IN GENERAL AND THE CONTENTS OF PARA 11 TO 13, IN PARTICULAR FOR WANT OF DIRECTION, IF ANY, IN FAVOUR OF CHARGING OF INTEREST U/S 234A OF THE ACT. WE FIND THAT THERE IS NO WHISPER ABOUT THE PROPOSAL TO LEVY OF INTEREST U/S 234A OF THE ACT IN THE ASSESSMENT ORDERS. CONSIDERING THE SAME, WE ARE OF THE OPINION THAT THE ORDER OF THE TRIBUNAL IN THE CASE OF M/S. HERITAGE PROJECT (SUPRA) IS APPLICABLE DIRECTLY TO THE FACTS OF THE PRESENT CASE. FOR THE SAKE OF COMPLETENESS, THE RELEVANT PARA 5 OF THE SAID ORDER OF THE TRIBUNAL (SUPRA) IS EXTRACTED HEREUNDER :- 5. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE THOUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT ASSESSEE FILED A RETURN OF INCOME DECLARING A LOSS OF RS.2,84,909/- THE RETURN OF INCOME WAS FILED ON 31.03.2010 WHICH WAS REQUIRED TO BE FILED ON 30.09.2009. THE ASSESSING OFFICER VIDE ASSESSMENT ORDER DATED 23.12.2012 COMPLETED THE ASSESSMENT AFTER MAKING CERTAIN ADDITIONS AND IN THE BODY OF ASSESSMENT ORDER CHARGED INTEREST U/S 234B. HOWEVER, HE DID NOT MAKE ANY DIRECTION TO CHARGE ANY INTEREST U/S 234A OF THE ACT LATER ON HE PASSED AN ORDER U/S 154 ON 10.05.2013 AND CREATED AN ADDITIONAL DEMAND OF RS.2,14,9,438/- BEING INTEREST FOR SIX MONTHS WHICH THE ASSESSEE 5 ITA NOS.2005 TO 2007/PUN/2017 WAS LIABLE TO BE CHARGED U/S 234A OF THE ACT. THE LD. CIT(A) HAS DELETED THE DEMAND FOR INTEREST BY FOLLOWING THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. RANCHI CLUB LTD. IN 247 ITR 0209. THE HON'BLE SUPREME COURT ORDER IN THE CASE OF RANCHI CLUB LTD. HAS DISMISSED THE APPEAL OF REVENUE AGAINST THE PATNA HIGH COURT. THE CONCLUSION OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. RANCHI CLUB LTD. IS THAT IN THE ABSENCE OF ANY SPECIFIC MENTION OF THE ASSESSMENT YEAR: 2009-10 ASSESSING OFFICER IN THE ASSESSMENT ORDER FOR CHARGING OF INTEREST U/S 234A AND 234B, NO INTEREST WOULD BE RECOVERED FROM THE ASSESSEE MERELY BY WAY OF A DEMAND NOTICE. WE FURTHER FIND THAT HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. KISHAN LAL (HUF) HAS AGAIN FOLLOWED THE ORDER OF HON'BLE SUPREME COURT AND HAS HELD THAT IN THE ABSENCE OF ANY DIRECTION IN THE ASSESSMENT ORDER FOR CHARGING INTEREST U/S 234A AND 234B INTEREST CANNOT BE RECOVERED. FOR THE SAKE OF COMPLETENESS, THE FINDINGS OF THE LD. CIT(A) ARE REPRODUCED BELOW: .. THE HON'BLE COURT HAS HELD THAT IF THERE IS NO DIRECTION IN THE ORIGINAL ASSESSMENT ORDER, NO RECTIFICATION CAN BE MADE AS THERE IS NO MISTAKE APPARENT FROM RECORD. THE CASE LAW RELIED ON BY LD. DR IS ON A DIFFERENT ASPECT WHERE THE HON'BLE COURT HAS SAID THAT OMISSION OF APPLICATION OF STATUTORY PROVISION IS A MISTAKE RECTIFIABLE U/S 154 OF THE ACT WHEREAS IN THE PRESENT CASE THE ISSUE IS AS TO WHETHER INTEREST NOT CHARGED IN THE ORIGINAL ASSESSMENT CAN BE RECTIFIED OR NOT AND THE CASE LAW OF HON'BLE SUPREME COURT AND OTHER CASE LAWS ARE DIRECTLY ON THE ISSUE. 5. CONSIDERING THE ABOVE SETTLED LEGAL POSITION ON THE MATTER IN THE SAID PRECEDENT AND CONSIDERING THE COMMONALITY OF THE FACTS OF ALL THE THREE CASES, WE ARE OF THE OPINION THAT THE ASSESSING OFFICER ASSUMED JURISDICTION U/S 154 OF THE ACT IS VALIDLY. CONSEQUENTIAL COMMON GROUND NOS.2 AND 3 RAISED BY THE ASSESSEE IN ALL THE THREE APPEALS ARE ALLOWED. 6. CONSIDERING THE RELIEF GRANTED TO THE ASSESSEE ON THE LEGAL ISSUE, THE ADJUDICATION OF OTHER GROUND NO.1 RELATING TO THE MERIT BECOMES AN ACADEMIC EXERCISE ONLY. THUS, THE GROUND NO.1 RAISED BY THE ASSESSEE IN ALL THE THREE APPEALS ARE DISMISSED. 6 ITA NOS.2005 TO 2007/PUN/2017 7. IN THE RESULT, ALL THE THREE APPEALS OF THE RESPECTIVE ASSESSEES ARE PARTLY ALLOWED. ORDER PRONOUNCED ON 04 TH DAY OF NOVEMBER, 2019. SD/- SD/- (S. S. VISWANETHRA RAVI) (D. KARUNAKARA RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; / DATED : 04 TH NOVEMBER, 2019. SUJEET / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(A)-2, PUNE. 4. THE PR. CCIT, PUNE. 5. , , , / DR, ITAT, B BENCH, PUNE. 6. / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE.