Tam Tam Pedda Guruva Reddy, V. ACIT,

ITA 244/BANG/2014

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1506 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 22-07-2015
• Assessment Year: 1992-1993
• Appeal Filed On: 17-02-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P K SRIHARI
• Assessee Lawyers: R B KRISHNA
• Keywords: Rectification of order
• Section: 143(3); 244A; 147; 263; 144; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH B BEFORE SMT. P MADHAVI DEVI, JUDICIAL MEMBER AND SHRI JASON P BOAZ, ACCOUNTANT MEMBER ITA NO.244 /BANG/2014 (ASST. YEAR 1992-93) TAM TAM PEDDA GURUVA REDDY, NO.1427, 18 TH MAIN, 2 ND PHASE 2 ND CROSS, J.P NAGAR, BANGALORE-560 078. . APPELLANT VS. THE ASST. COMMISSIONER OF INCOME-TAX, CIRCLE-4(1), BANGALORE. . RESPONDENT APPELLANT BY : SHRI R.B KRISHNA, ADVOCATE RESPONDENT BY : SHRI P.K SRIHARI, ADDL. CIT DATE OF HEARING : 28-7-2015 DATE OF PRONOUNCEMENT : 23-9-2015 O R D E R PER JASON P BOAZ, ACCOUNTANT MEMBER : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED OF THE COMMISSIONER OF INCOME-TAX(A) II, BANGALO RE DATED 26/11/2013 FOR THE ASST. YEAR 1992-93. ITA NO.244/B/14 2 2. THE FACTS OF THE CASE, BRIEFLY, ARE AS UNDER: 2.1 THE HONBLE HIGH COURT OF KARNATAKA PASSED AN O RDER IN ITA NO.36 OF 1999 DATED 8/9/2006 IN THE ASSESSEES CASE WHEREBY THE TOTAL INCOME CAME TO BE REDUCED TO RS.9,39,406/- FROM THE ORIGINALLY ASSESSED INCOME OF RS.30,95,390/-. THE ASSESSING O FFICER PASSED AN ORDER GIVING EFFECT (HEREAFTER REFERRED TO AS OGE) TO THE HONBLE HIGH COURT ORDER WHEREBY THE REFUNDABLE AMOUNT WAS DETERMINED AT RS.48,08,868/- WHICH INCLUDED AN AMOUNT OF RS.26,58 ,286/- TOWARDS INTEREST PAYABLE U/S 244A OF THE INCOME-TAX ACT, 19 61 (HEREINAFTER REFERRED TO AS THE ACT). THE OGE DID NOT CONTAIN OR MENTION THE DATE OF THE ORDER AND THE REFUND ARISING OUT OF THE UNDATED ORDER WAS PAID TO THE ASSESSEE VIDE CHEQUE DATED 8/5/2007. 2.2 AFTER A LAPSE OF CONSIDERABLE TIME, IT WAS FOUN D THAT THE REFUND HAS BEEN GRANTED TO THE ASSESSEE IN EXCESS, DUE TO WRONG COMPUTATION OF INTEREST U/S 244A OF THE ACT. THE ASSESSING OF FICER, THEREFORE SOUGHT TO RECTIFY THE OGE BY INVOKING THE PROVISION S OF SEC. 154 OF THE ACT. AFTER PUTTING THE ASSESSEE ON NOTICE, THE ASSESSING OFFICER PASSED AN ORDER U/S 154 OF THE ACT DATED 31/3/2011 ( (SIC.31/3/2012) DETERMINING THE AMOUNT OF REFUND TO THE ASSESSEE AT RS.36,21,199/-; ITA NO.244/B/14 3 WHICH INCLUDED AN AMOUNT OF RS.15,72,339/- TOWARDS INTEREST U/S 244A OF THE ACT, AS AGAINST RS.26,58,286/- GRANTED EARLIER. IN THIS ORDER, THE ASSESSING OFFICER CHARGED INTEREST OF RS .3,09,495/- U/S 234D OF THE ACT. THOUGH NO DETAILS OF THIS CHARGE OF INTEREST IS MENTIONED IN THE ORDER U/S 154, FROM THE COMPUTATI ON OF INTEREST IT IS SEEN THAT INTEREST U/S 234D OF THE ACT HAS BEEN CHA RGED FOR 57 MONTHS, I.E THE PERIOD BETWEEN THE OGE AND ITS RECTIFICATIO N ON 31/3/2012. THEREFORE, THE LEVY OF INTEREST U/S 234D OF THE ACT IS ON THE EXCESS REFUND GIVEN DUE TO WRONG COMPUTATION OF INTEREST U /S 244A OF THE ACT. THIS ORDER U/S 154 OF THE ACT WAS DATED 31/3/ 2011. SUBSEQUENTLY, THE ASSESSING OFFICER PASSED A CORRIG ENDUM, CORRECTING THE DATE THEREOF TO 31/3/2012. 2.3 AGGRIEVED BY THE ORDER U/S 154 OF THE ACT DATED 31/3/2012 FOR ASST. YEAR 1992-93, THE ASSESSEE PREFERRED AN APPEA L TO THE CIT(A)-II, BANGALORE. AFTER HEARING THE ASSESSEE AND OBTAININ G A REMAND REPORT FROM THE ASSESSING OFFICER, THE LEARNED CIT(A) UPHE LD THE DECISION OF THE ASSESSING OFFICER AND DISMISSED THE ASSESSEES APPEAL VIDE THE IMPUGNED ORDER DATED 26/11/2013. ITA NO.244/B/14 4 3.1 AGGRIEVED BY THE ORDER OF THE CIT(A)-II, BANGAL ORE DATED 26/11/2013 FOR ASST. YEAR 1992-93 THE ASSESSEE PREF ERRED THIS APPEAL RAISING THE FOLLOWING GROUNDS: 1) THE ORDER U/S 154 OF THE INCOME-TAX ACT, 1961 PASSED BY THE ASSESSING OFFICER IS TIME BARRED AND HENCE TO BE SET ASIDE. 2) IF IT WERE TO BE HELD THAT THE ORDER U/S 154 OF THE INCOME-TAX ACT, 1961 PASSED BY THE ASSESSING OFFICE R IS NOT TIME BARRED THEN, INTEREST U/S 234D CHARGED BY THE AO ON RECOVERY OF EXCESS INTEREST GRANTED EARLIER U/S 244A IS ILLEGAL AND HENCE TO BE WITHDRAWN. 3) THE APPEAL MAY BE ALLOWED FOR THE ABOVE GROUND(S ) AND ANY OTHER GROUNDS(S) WHICH THE APPELLANT MAY BE PERMITTED TO ADDUCE AT THE TIME OF HEARING. 3.2 IN THE PROCEEDINGS BEFORE US, THE LEARNED AR FO R THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LEARNED CIT(A). IN SHORT, THE ASSESSEE CONTENDS THAT THE UNDATED OGE OF THE A SSESSING OFFICER WAS ACTUALLY PASSED ON 31/3/2007 AND, THEREFORE, TH E RECTIFICATION ORDER U/S 154 OF THE ACT PASSED ON 31/3/2012 IS BEY OND THE STATUTORY LIMIT SPECIFIED IN THE ACT AND IS, THEREFORE, BARRE D BY LIMITATION AND IS LIABLE TO BE SET ASIDE. ITA NO.244/B/14 5 3.3 PER CONTRA, THE LEARNED DR FOR REVENUE SUPPORTE D THE VIEW OF THE LEARNED CIT(A) THAT THE UNDATED ORDER WAS PASSE D ON 8/5/2007. THE LEARNED DR SUBMITTED THE REPORT OF THE ASSESSIN G OFFICER WHICH CONTAINED COPY OF THE ORDER SHEET NOTING OF 4 TH APR, 2007 AND COPY OF THE ASSESSEES LETTER DATED 25/4/2007 TO SUPPORT RE VENUES CONTENTION THAT THE UNDATED ORDER WAS PASSED IN THE FIN. YEAR 2007-08 AND, THEREFORE, THERE WAS TIME TILL 31/3/2012 TO PASS AN Y RECTIFICATION TO THE OGE. 3.4.1 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD, INCLUDING THE JU DICIAL PRONOUNCEMENTS CITED AND RELIED UPON. THE ISSUES F OR CONSIDERATION BEFORE US IS TWO- FOLD: (I) WHETHER THE ORDER U/S 154 OF THE ACT DATED 31/ 3/2012 IS BARRED BY LIMITATION AND, THEREFORE, NEEDS TO BE SE T ASIDE. (II) EVEN IF THE SAID ORDER U/S 154 OF THE ACT WAS PASSED WITHIN TIME SPECIFIED, WHETHER THE INTEREST CHARGED U/S 23 4D OF THE ACT IN THE SAID ORDER IS WRONG AND REQUIRES TO BE CANCELLED. 3.4.2 IN THE SECOND ISSUE (II) ABOVE, WHICH WE SHAL L EXAMINE FIRST, THE CONTENTION OF THE ASSESSEE IS THAT THE INTEREST CHA RGED U/S 234D OF THE ITA NO.244/B/14 6 ACT IS WRONG AND REQUIRES TO BE WITHDRAWN. IT MAY BE MENTIONED HERE THAT THE OBJECTION OF THE ASSESSEE IS NOT IN RESPEC T OF WITHDRAWAL OF THE EXCESS INTEREST CHARGED U/S 244A OF THE ACT, BUT IS ONLY ON THE CHARGING OF INTEREST U/S 234D ON THE SAME. THE LEA RNED CIT(A) HAS DISMISSED THE CONTENTION OF THE ASSESSEE OBSERVING THAT- (I) THE SECTION ONLY MENTIONS THE INTEREST TO BE CHARGE D ON THE EXCESS REFUND GRANTED EARLIER. (II) SINCE THE ASSESSEE ENJOYED EXCESS REFUND TO WHICH H E WAS NOT ENTITLED, THE CHARGED INTEREST U/S 234D OF THE ACT IS CHARGED ON SUCH REFUND UPTO THE PERIOD WHICH HE ENJ OYED THE EXCESS REFUND. (III) THE INTEREST CHARGED U/S 234D OF THE ACT IS COMPENS ATORY IN NATURE AS THE ASSESSEE HAS ENJOYED EXCESS REFUND (INCLUDING INTEREST) WRONGLY GRANTED TO HIM. THERE IS NO QUESTION OF COMPOUND INTEREST CHARGEABLE OR CHARGED BY THE ASSESSING OFFICER U/S 234D OF THE ACT. A PLAIN AND CAREFUL READING OF SEC. 234D WILL THROW LIGHT ON TH E CORRECT LEGAL POSITION. ITA NO.244/B/14 7 3.4.3 AT THIS STAGE, IT WOULD BE RELEVANT TO HAVE A PLAIN READING OF THE PROVISION OF SEC. 234D OF THE ACT, WHICH IS AS UNDER:- INTEREST ON EXCESS REFUND (1) SUBJECT TO THE OTHER PROVISIONS OF THIS ACT, WHERE ANY REFUND IS GRANTED TO THE ASSESSEE UNDER SUB-SECTION (1) OF SECTION 143, AND (A) NO REFUND IS DUE ON REGULAR ASSESSMENT; OR (B) THE AMOUNT REFUNDED UNDER SUB-SECTION (1) OF SEC. 1 43 EXCEEDS THE AMOUNT REFUNDABLE ON REGULAR ASSESSMENT , THE ASSESSEE SHALL BE LIABLE TO PAY SIMPLE INTEREST AT THE RATE OF [ONE HALF] PERCENT ON THE WHOLE OR THE EXCE SS AMOUNT SO REFUNDED, FOR EVERY MONTH OR PART OF A MO NTH COMPRISED IN THE PERIOD FROM THE DATE OF GRANT OF R EFUND TO THE DATE OF SUCH REGULAR ASSESSMENT. (2) WHERE, AS A RESULT OF AN ORDER U/S 154 OR SECTION 1 55 OR SECTION 250 OR SEC. 254 OR SEC. 260 OR SEC. 262 OR SEC. 263 OR SEC. 264 OR AN ORDER OF THE SETTLEMENT COMMISSION UNDER SUB-SECTION (4) OF SEC. 245D, THE AMOUNT OF REFUND GRANTED UNDER SUB-SECTION (1) OF SECTION 143 IS HELD T BE CHARGEABLE, IF ANY, UNDER SUB- SECTION (1) SHALL BE REDUCED ACCORDINGLY. EXPLANATION WHERE, IN RELATION TO AN ASSESSMENT Y EAR, AN ASSESSMENT IS MADE FOR THE FIRST TIME UNDER SECT ION ITA NO.244/B/14 8 147 OR SECTION 153A, THE ASSESSMENT SO MADE SHALL B E REGARDED AS A REGULAR ASSESSMENT FOR THE PURPOSES O F THIS SECTION.] FROM THE PROVISIONS OF SECTION 234D OF THE ACT, TH E TWO ATTENDANT CONDITIONS STIPULATED FOR CHARGING OF INT EREST ARE- (A) ANY REFUND GRANTED TO THE ASSESSEE U/S 143(1) OF TH E ACT, AND (B) - NO REFUND IS DUE ON REGULAR ASSESSMENT OR - THE AMOUNT OF REFUND U/S 143(1) OF THE ACT EXCEEDS THE AMOUNT REFUNDABLE ON REGULAR ASSESSMENT 3.4.4 THEREFORE, THE FIRST CONDITION FOR CHARGING OF INTEREST U/S 234D OF THE ACT IS THAT THERE SHOULD HAVE BEEN REFU ND GRANTED TO THE ASSESSEE U/S 143(1) OF THE ACT. THIS PRINCIPLE HAS BEEN UPHELD BY THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF DIT(INT . TAXATION) VS. VS. DELTA ACTIVITIES INC., (2012) 21 TAXMAN.COM 511 (BOM), RELIED UPON BY THE ASSESSEE, WHEREIN THE HONBLE HIGH COUR T HAS HELD THAT SEC. 234D OF THE ACT IS ATTRACTED ONLY WHEN THE REF UND GRANTED TO THE ASSESSEE U/S 143(1) OF THE ACT BECOME REFUNDABLE. ITA NO.244/B/14 9 3.4.5 REGULAR ASSESSMENT HAS BEEN DEFINED U/S 2(4 0) OF THE ACT TO MEAN ASSESSMENT MADE U/S 143(3) OR 144 OF THE ACT. THEREFORE, THE DEFINITION OF REGULAR ASSESSMENT DOES NOT INCLUDE ORDER GIVING EFFECT TO APPELLATE ORDER. THIS PRINCIPLE HAS BEE N UPHELD BY THE ITAT, DELHI BENCH, IN THE CASE OF ACIT VS. ORACLE I NDIA PVT. LTD., IN ITA NOS.4639 & 4640/DEL/2007 DATED 31/3/2008 WHEREI N IT WAS HELD THAT THE CHARGE OF INTEREST U/S 234D OF THE ACT BY THE ASSESSING OFFICER FOR THE FIRST TIME IN AN ORDER PASSED U/S 2 54/250 OF THE ACT WHILE GIVING EFFECT TO THE ORDERS OF THE APPELLATE AUTHORITIES WAS NOT IN ACCORDANCE WITH LAW. 3.4.6 IN THE CASE ON HAND, THERE WAS A MISTAKE IN C OMPUTATION OF THE REFUND TO BE GRANTED TO THE ASSESSEE PURSUANT TO TH E ORDER OF THE HONBLE HIGH COURT. THE MISTAKE WAS DUE TO COMPUTA TION OF INTEREST U/S 244A OF THE ACT PAYABLE TO THE ASSESSEE. THIS MISTAKE IN COMPUTING THE INTEREST U/S 244A OF THE ACT HAS BEEN RECTIFIED BY PASSING THE ORDER U/S 154 OF THE ACT ON 31/3/2012, AND WITH WHICH THE ASSESSEE HAS NO QUARREL. IT IS NOT THE CASE OF REV ENUE THAT THE REFUND HAS ARISEN DUE TO ORDER U/S 143(1) OF THE ACT. THE REFORE, THE FIRST NECESSARY CONDITION FOR CHARGING OF INTEREST U/S 23 4D OF THE ACT IS NOT SATISFIED. ITA NO.244/B/14 10 3.4.7 FURTHER, THE REFUND HAS ARISEN DUE TO AN ORD ER GIVING EFFECT TO AN APPELLATE ORDER, WHICH WAS SUBSEQUENTL Y RECTIFIED U/S 154 OF THE ACT, WHEREIN THE INTEREST U/S 234D OF THE AC T WAS CHARGED. IN THESE CIRCUMSTANCES, THE SECOND CONDITION THAT REFU ND GRANTED EARLIER BECOMES REFUNDABLE TO REVENUE ON REGULAR ASSESSMENT IS ALSO NOT SATISFIED. 3.4.8 IN VIEW OF THE FACTUAL MATRIX OF THE CASE ON HAND, AS DISCUSSED ABOVE, WE ARE OF THE CONSIDERED OPINION THAT BOTH T HE CONDITIONS FOR CHARGING OF INTEREST U/S 234D OF THE ACT ARE NOT SA TISFIED. CONSEQUENTLY GROUND NO.2 RAISED BY THE ASSESSEE IS ALLOWED. 4. AS REGARDS THE CONTENTION RAISED BY THE ASSESSEE IN GROUND NO.1 THAT THE ORDER U/S 154 OF THE ACT WAS BARRED BY LIM ITATION, THE DOCUMENTS BROUGHT ON RECORD BY THE LEARNED DR SEEM TO CLEARLY INDICATE THAT THE ORDER GIVING EFFECT TO THE HONBL E HIGH COURTS ORDER (SUPRA) WAS PASSED IN THE PERIOD RELEVANT TO FIN. Y EAR 2007-08 AND, THEREFORE, THE ASSESSING OFFICER HAD TIME TILL 31/3 /2012 TO PASS THE RECTIFICATION ORDER. SINCE THE SUBSTANTIVE ISSUE R EGARDING THE CHARGING OF INTEREST U/S 234D OF THE ACT HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE AND THE ASSESSEE HAS NO GRIEVANCE WITH RES PECT TO THE RE- ITA NO.244/B/14 11 COMPUTING OF INTEREST U/S 244A OF THE ACT AS PER TH E ORDER U/S 154 OF THE ACT DATED 31/3/2012, THIS ISSUE IS ACADEMIC IN NATURE. WE ARE OF THE VIEW THAT, IN THESE CIRCUMSTANCES, IT IS NOT NE CESSARY TO MAKE ANY SURMISES. ON THE ACTUAL DATED ON WHICH THE UNDATED ORDER GIVING EFFECT HAS BEEN PASSED, EXCEPT TO OBSERVE THAT THE DOCUMENTS BROUGHT ON RECORD BY THE LEARNED DR CLEARLY ESTABLISH THAT THE OGE WAS PASSED IN THE FIN. YEAR 2007-08 AND, THEREFORE, THE ASSESSING OFFICER HAD TIME TILL 31/3/2012 TO PASS ANY RECTIFICATION O RDER. 5. GROUND NO.3 IS GENERAL IN NATURE AND, THEREFORE, NO ADJUDICATI ON BEING CALLED FOR THEREON, THIS GROUND IS DISMISSED AS INFRUCTUOUS. 16. IN THE RESULT, THE ASSESSEES APPEAL FOR THE A SSESSMENT YEAR 1992-93 IS PARTLY ALLOWED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD SEPT, 2015. SD/- SD/- (P MADHAVI DEVI) (JAS ON P BOAZ) JUDICIAL MEMBER ACCOUNTANT M EMBER VMS. BANGALORE DATED : 23/9/2015 ITA NO.244/B/14 12 COPY TO : 1. THE ASSESSEE 2. THE REVENUE 3.THE CIT CONCERNED. 4.THE CIT(A) CONCERNED. 5.DR 6.GF BY ORDER ASST. REGISTRAR, I TAT, BANGALORE.