Insilco Limited, Gurgaon V. ACIT, New Delhi

ITA 2586/DEL/2011

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3027 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 9 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 27-01-2016
• Assessment Year: 1993-1994
• Appeal Filed On: 18-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Rectification of order; Opportunity of being heard; Wrong claim; Difference of opinion; Change of opinion
• Section: 143(3); 244A; 147; 263; 144; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH C NEW DELHI BEFORE : SHRI I.C. SUDHIR , JUDICIAL MEMBER & SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 2586/DEL./2011 ASSTT. YEAR : 1993 - 94 INSILCO LTD., VS. A.C.I.T., 11(1), 1 & 2, 12 TH FLOOR, GERMAN CENTRE, NEW DELHI. FOR INDUSTRY & TRADE, BULDING NO. 9, TOWER - B, DLF CYBER CITY, PHASE - III, GURGAON0122002 (HARYANA) [PAN: AAACI 1203N] (APPELLANT) (RESPONDENT) APPELLANT BY : SH. V.P. GUPTA, ADVOC ATE & SH. ANUBHAV KUMAR, ADVOCATE RESPONDENT BY : SH. SURENDER PAL, SR. DR DATE OF HEARING : 18.02.2016 DATE OF PRONOUNCEMENT : 07 .03.2016 ORDER PER L.P. SAHU, ACCOUNTANT MEMBER: THIS IS ASSESSEE'S APPEAL AGAINST CIT(A)'S ORDER DATED 15 - 3 - 2013, RELATING TO A.Y. 1993 - 94. FOLLOWING GROUNDS ARE RAISED: 1. THAT THE CIT(A) ERRED IN NOT ADJUDICATING AND ALLOWING THE GROUNDS RAISED BEFORE HIM IN THE APPEAL FILED BY THE APPELLANT AGAINST ORDER DATED 24 - 12 - 2005 PASSED U/S 154 OF THE ACT BY THE ASSESSING OFFICER. 2. THAT THE CIT(A) ERRED IN NOT APPRECIATING THAT THE ORDER DATED 24 - 12 - 2005 PASSED BY THE AO WAS ILLEGAL, UNWARRANTED, VOID AND BEYOND THE POWERS OF THE AO U/S 154 OF THE ACT AND DESERVE TO BE QUASHED. ITA NO. 2586/DEL./2011 2 3. THAT THE CIT(A) ERRED IN NOT CONSIDERING AND DISCUSSING SUBMISSIONS MADE BY THE APPELLANT BEFORE HIM I REGARD TO VALIDITY OF ORDER DATED 24 - 12 - 2005 PASSED BY THE AO U/S 154 OF THE ACT. 4. WITHOUT PREJUDICE TO GROUNDS HEREIN ABOVE, THE C1T(A) ALSO ERRED IN DIRECTI NG THE ASSESSING OFFICER TO EXAMINE APPLICABILITY OF SUB - SECTION (2) OF SECTION 244A OF THE ACT, WHEREAS, IT WAS NEITHER THE SUBJECT MATTER OF APPEAL BEFORE HIM NOR HE HAD POWER UNDER LAW TO SET UP A NEW CASE AND SET ASIDE THE ORDER U/S 251 OF THE ACT. 5. THAT THE ORDER PASSED BY CIT(A) IS VOID, BAD UNJUSTIFIED, AGAINST THE PROVISION OF LAW AND WITHOUT GIVING AN OPPORTUNITY TO THE APPELLANT AND, THEREFORE, SAME DESERVES TO BE QUASHED AND APPEAL OF THE APPELLANT SHOULD BE ALLOWED. 2. BRIEF FACTS ARE: DUR ING THE COURSE OF ASSESSMENT FOR A.Y. 1992 - 93 THE AO MADE THE ADDITION OF INTEREST INCOME OF RS. 2,69,84,3017 - , AS INCOME FROM OTHER SOURCES, REJECTING THE ASSESSEE'S PLEA THAT IT WAS BUSINESS INCOME. THE DISPUTE WENT UP TO THE LEVEL OF THE ITAT, WHICH ADM ITTING ASSESSEE'S ALTERNATE GROUND HELD THE INCOME TO BE TAXABLE IN A.Y. 1993 - 94. PURSUANT THERETO AO PASSED ORDER GIVING EFFECT TO THE ORDER OF ITAT FOR A.Y. 1992 - 93 AND IN ORDER TO INCLUDE THIS AMOUNT IN A.Y. 1993 - 94, A NOTICE U/S 154 DATED 4 - 6 - 2004 WAS ISSUED TO THE ASSESSEE, INVITING OBJECTIONS ON THE INCLUSION OF THIS INCOME IN A.Y. 1993 - 94. ASSESSEE GAVE ITS ''NO OBJECTION AND AO VIDE ORDER DATED 9 - 6 - 2004, PASSED U/S 154, REDUCED THE ASSESSED LOSS FOR A.Y. 1993 - 94 TO RS. 4,02,58,429/ - . BESIDES, AO WI THDREW THE CREDIT FOR TDS AMOUNTING TO RS. 68,98,588/ - , WHICH RELATED TO THE INTEREST INCOME INCLUDED IN A.Y. 1992 - 93 AND CONSEQUENTLY TO ALLOW THE SAME NOW IN A.Y. 1993 - 94. TO THIS NOTICE U/S 154 ALSO ASSESSEE GAVE ITS 'NO OBJECTION' FOR PROPOSED RECTIFIC ATION WITH THE REQUEST TO ALLOW THE INTEREST ON REFUND AS PER PROVISIONS OF THE ACT. ITA NO. 2586/DEL./2011 3 2.1. THEREAFTER AO PASSED AN ORDER U/S 154 DATED 30 - 7 - 2004 IN A.Y. 1993 - 94 GIVING CREDIT FOR TDS AMOUNTING TO RS. 61,58,7327 - INSTEAD OF RS. 68,98,588/ - , AS ORIGINALLY A LLOWED. IN THE TAX COMPUTATION MADE WITH ORDER U/S 154 AO ALLOWED REFUND OF RS. 61,58,732/ - AND INTEREST THEREON U/S 244A OF THE ACT FROM 1 - 4 - 1993 TO 30 - 7 - 2004 AMOUNTING TO RS. 75,44,408/ - . AO WHILE WITHDRAWING CREDIT FOR TDS IN A.Y. 1992 - 93 ALSO CHARGED I NTEREST U/S 220(2). 2.2. ON THESE ORDERS, ASSESSEE FILED APPEALS AS UNDER: 1992 - 93: ASSESSEE CHALLENGED THE CHARGEABILITY OF INTEREST U/S 220(2). 1993 - 94: ASSESSEE CLAIMED FURTHER CREDIT FOR TDS OF RS. 7,39,856/ - . BEING THE DIFFERENCE OF CREDIT EARLIER GIVEN IN A.Y. 1992 - 93 AND THEREAFTER IN A.Y. 1993 - 94 (68,98,588 - 61,58,732). 2.3. LD. (TIT(APPCALS) - XIV, NEW DELHI \ IDE TWO SEPARATE ORDERS DATED 3 1 - 3 - 2005, HELD AS UNDER: 1992 - 93: INTEREST U/S 220(2) OF THE ACT SHOULD NOT BE CHARGED AS DEMAND WAS NOT OUTSTANDING AT ANY STAGE AND THEREFORE, PROVISIONS OF SEC. 220(2) WERE NOT APPLICABLE. 1993 - 94: IN RESPECT OF SHORT CREDIT OF TDS OF RS. 7,39,856/ - , LD. CIT(APPEALS) DIRECTED THE AO TO ALLOW CREDIT IN ANY YEAR, EITHER IN A.Y. 1993 - 94 OR IN A.Y. 1992 - 9 3. ITA NO. 2586/DEL./2011 4 2.4. CONSEQUENT TO THE ORDER OF ID. CIT(APPEALS) FOR A.Y. 1992 - 93, QUASHING THE INTEREST U/S 220(2), AO ISSUED FURTHER NOTICE U/S 154 DATED 6 - 8 - 2005 OF THE ACT, PROPOSING AS UNDER: 'SUBSEQUENT TO THE ORDER PASSED BY THE CIT(A) VIDE APPEAL NO. 118/04 - 05/CIT - XIV/DEL/ DATED 3 1 - 3 - 05 A.Y. 1992 - 93 QUASHING THE CHARGING OF INTEREST U/S 220(2} OF THE ACT OF RS. 1,30,10,5827 - FOR A.Y. 1992 - 93, IT IS PROPOSED TO WITHDRAW INTEREST U/S 244A FOR A.Y. 1993 - 94 OF RS. 71,39,7897 - OUT OF TOTAL INTEREST GRANTED OF RS . 75,44,408/ - VIDE ORDER U/S 154/143(L)_(A) DATED 30 - 7 - 2004 AS INTEREST IS TO BE GRANTED TILL THE DATE OF ISSUE OF REFUND I.E. 30 - 3 - 1994.' 2.5. ASSESSEE FILED ITS OBJECTIONS VIDE LETTER DATED 16 - 8 - 2005 CONTENDING THAT HERE WAS NO MISTAKE IN THE ORDER DAT ED 30 - 7 - 2004 WHILE GRANTING INTEREST U/S 244A OF THE ACT. AO HIMSELF PROPOSED ACTION U/S 154 EARLIER TO WITHDRAW CREDIT FOR TDS IN A.Y. 1992 - 93 AND ALLOW THE SAME IN A.Y. 1993 - 94 ALONG WITH INTEREST U/S 244A OF THE ACT; THAT EACH YEAR WAS A SEPARATE UNIT A ND INTEREST U/S. 244A OF THE ACT WAS ALLOWABLE IN A.Y. 1993 - 94 INDEPENDENT OF ANY DEMAND/ REFUND, INTEREST CHARGED/ ALLOWED IN A.Y. 1992 - 93. THEREAFTER, AO AGAIN ISSUED NOTICE U/S 154 DATED 5 - 9 - 2005 ON SIMILAR LINES TO NOTICE DATED 5 - 8 - 2005, TO WHICH A SSESSEE REPLIED DATED 15 - 9 - 2005 REITERATING ITS STAND. 2.6. AO, HOWEVER, PASSED ORDER U/S 154 OF THE ACT DATED 24 - 10 - 2005 BY WHICH INTEREST U/S 244A GRANTED EARLIER WAS WITHDRAWN TO THE EXTENT OF RS. 72,01,376/ - OUT OF INTEREST ON REFUND EARLIER ALLOWED AS UNDER: ORDER U/S 154/154/143(1) OF THE INCOME TAX ACT, 1961 ORDER U/S 154 OF THE I.T. ACT, 1961 WAS PASSED ON 30.07.2004 WHEREIN INTEREST U/S 244A OF RS. 75,44,408/ - WAS GRANTED TO THE ASSESSEE FROM 3.4.1993 TO 31.3.2004 I.E. THE DATE OF ISSUE OF REFUND. THE FACTS OF THE CASE ARE THAT THE HON'BLE ITAT VIDE ORDER ITA NO. 6639/DEL/94 DATED 17.09.2002 FOR ASSESSMENT YEAR 1992 - 93 HELD THAT INTEREST INCOME OF RS. 2,69,84,301/ - DOES NOT PERTAIN TO A.Y. 92 - 93 BUT PERTAIN TO A.Y. 93 - 94. IN ITA NO. 2586/DEL./2011 5 THE ORDER U/S 2 54/ 143(3) PASSED FOR AY 92 - 93 ON 28.6.2004 , CREDIT FOR TDS AMOUNTING TO RS. 68,98,588/ - RELATING TO INTEREST INCOME OF RS. 2,69,84,301/ - WAS WITHDRAWN. AT THE TIME OF WITHDRAWAL OF TDS CREDIT A DEMAND OF RS. 2,04,62,717/ - INCLUDING INTEREST U/S 220(2) AM OUNTING TO RS. 1,30,10,582 WAS RAISED IN THE ASSESSMENT YEAR 1992 - 93. AFTER WITHDRAWAL OF TDS CREDIT FROM THE AY 92 - 93, CREDIT OF RS. 61,58,732/ - WAS ALLOWED TO THE ASSESSEE IN AY 93 - 94. APART FROM TDS, AN INTEREST U/S 244A AMOUNTING TO RS. 75,44,408/ - WAS ALSO ALLOWED TO THE ASSESSEE ON THAT CREDIT FROM 1ST DAY OF ASSESSMENT YEAR TO THE DATE OF ISSUE OF REFUND I.E. FROM 1.4.93 TO 30 - 7 - 04. SIMULTANEOUSLY INTEREST U/S 220(2) OF RS. 1,30,10,582 WAS CHARGED FROM THE DATE OF ISSUE OF REFUND TO THE DATE OF WITHD RAWAL OF CREDIT. THE ASSESSEE WENT INTO APPEAL AGAINST THE SAID ORDER AND THE C1T(A) - X1V VIDE APPEAL NO. 118/04 - 05/CIT(A) - XIV/DEL DATED 31.3.2005 HAS QUASHED CHARGING OF INTEREST U/S 220(2) ON THE GROUND THAT THE INTEREST U/S 220(2) CAN BE CHARGED IF THERE IS A DEMAND NOTICE AND THERE SHOULD BE A DEFAULT IN PAYING THE AMOUNT SO DEMANDED WITHIN THE TIME STIPULATED IN THE NOTICE. AS THE CHARGING OF INTEREST U/S 220(2) WAS QUASHED BY THE CIT(A), ALLOWANCE OF INTEREST U/S 244A IN THE ASSESSMENT YEAR 93 - 94 BECO ME INFRUCTUOUS AS THE REFUND IN QUESTION WAS ORIGINALLY ISSUED ON 29.6.93 FOR RS. 10,15,480/ - AND ON 30.3.94 FOR RS.64,36,655/ - AND THE INTEREST U/S 244A IS ALLOWABLE ONLY UPTO THE DATE OF ISSUE OF REFUND I.E. UPTO 29.6.93 AND 30.3.94 RESPECTIVELY IN THE A SSESSMENT YEAR 1992 - 93 FROM WHERE THE CREDIT WITHDRAWN I.E. RS. 343032/ - - . TO PROPOSED WITHDRAWAL OF INTEREST PAID IN EXCESS AMOUNTING TO RS. 72,01,376/ - , A NOTICE U/S 154 DATED 05.09.2005 WAS ISSUED TO THE ASSESSEE FIXING THE CASE FOR 15.09.2005. IN RESP ONSE TO NOTICE U/S 154, THE COUNSEL FOR THE ASSESSEE HAS FILED A REPLY DATED 15.09.2005 STATING THAT THERE IS NO MISTAKE IN THE ORDER U/S 154 DATED 30.07.2004 AND REQUESTED NOT TO PASS RECTIFICATION ORDER U/S 154. THE REPLY FILED BY THE ASSESSEE WAS DULY C ONSIDERED. IN THIS REGARD SECTION 244A(L)(A) CLEARLY SPEAKS THAT WHERE THE REFUND IS OUT OF ANY TAX COLLECTED BY WAY OF IDS OR PAID BY WAY OF ADVANCE TAX DURING THE FINANCIAL YEAR IMMEDIATELY PRECEDING THE ASSESSMENT YEAR, SUCH INTEREST SHALL BE CALCULATE D AT THE RATE OF 1 % PER MONTH OR PART OF A MONTH COMPRISED IN THE PERIOD FROM THE 1ST DAY OF APRIL OF ASSESSMENT YEAR TO THE DATE ON WHICH THE REFUND IS GRANTED. IN THE PARTICULAR CASE THE INTEREST U/S 244A IS ALLOWABLE TO THE ASSESSEE FROM 1.4.93 TO 29.6 .93 ON RS. 8,83,022/ - AND FROM 13.9.93 TO 31.3.94 ON RS. 52,75,710/ - . THE TOTAL INTEREST ALLOWABLE THUS COMES, TO RS.343032/ - . KEEPING IN VIEW OF THE AFOREMENTIONED ORDER ITA NO. 2586/DEL./2011 6 OF THE CIT(A) AND READING OF SECTION 4A(L)(A), THE EXCESS INTEREST AMOUNTING TO RS.72 ,01,376/ - IS HEREBY WITHDRAWN. ISSUE REVISED FORMS. WITHDRAW EXCESS INTEREST ALLOWED U/S 244A OF RS. 72,01,3 76/ - AND ALLOW INTEREST ONLY UPTO THE ISSUE OF REFUND IN THE ASSESSMENT YEAR 1992 - 93 I.E. UPTO 29.6.93 AND 30.3.94 AS PER RULES.' 2.7. AGGRIEV ED, ASSESSEE PREFERRED FIRST APPEAL. LD. CIT(APPEALS), HOWEVER, DISMISSED THE ASSESSEE'S APPEAL BY FOLLOWING OBSERVATIONS: '7. THIS BEING THE FACTS OF THE CASE IT IS SEEN THAT THE APPELLANT HAD ITSELF OFFERED THE ENTIRE INCOME FOR ASSESSMENT FOR THE ASSES SMENT YEAR 1992 - 93 AND THE REFUND WAS GIVEN TO THE APPELLANT ON 30 - 3 - 94. HOWEVER, THIS CASE WAS TAKEN UP FOR SCRUTINY AND ON 30 - 3 - 94 A DEMAND OF RS. 2,14,58,452/ - WAS RAISED. THE ISSUES WERE DECIDED AGAINST THE ASSESSEE BY THE CIT(A) REGARDING TH E TAXABILITY OF INCOME AS INCOME FROM OTHER SOURCE. HOWEVER, IN ITS APPEAL BEFORE THE ITAT THE APPELLANT TOOK AN ADDITIONAL GROUND WHICH READS AS UNDER: 'THAT IN THE ALTERNATIVE AND WITHOUT PREJUDICE TO GROUND NO. 3, EVEN IF THE INTEREST OF RS. 2,69,84,301/ - IS IN THE NATURE OF INCOME SAME IS NOT INCOME OF ASSESSMENT YEAR 1992 - 93 AS NO LEGAL RIGHT HAD ACCRUED TO RECEIVE PUBLIC ISSUE MONEY AS WELL AS INTEREST THEREON TILL 31ST MARCH, 1992. 8. IN CONSEQUENCE TO THIS ADDITIONAL GROUND TAKEN BY TH E APPELLANT BEFORE THE HON'BLE ITAT THE ORDER PASSED BY THE HON'BLE ITAT ON 17TH SEPT. 02 DIRECTED THAT ITS INCOME SHOULD BE TAXED IN THE ASSESSMENT YEAR 1993 - 94 AND NOT IN THE ASSESSMENT YEAR 19923 - 93. NOW THE QUESTION ARISES THAT ONCE THE ASSESSEE HAD IT SELF OFFERED THE INCOME FOR TAXATION IN THE ASSESSMENT YEAR 1992 - 93 AND THEN TAKEN AN ADDITIONAL STAND BEFORE THE HON'BLE ITAT THAT THIS INCOME IS TAXABLE IN THE ASSESSMENT YEAR 1993 - 94, THEN CAN THE ASSESSEE CLAIM INTEREST U/S 244A, FOR THE DEPARTMENT HAD ALREADY COMPUTED THE INCOME AS PER THE ASSESSEE'S CLAIM FOR TDS FOR THE ASSESSMENT YEAR 1992 - 93 AND DETERMINED ITS INCOME ACCORDINGLY. IF SUBSEQUENTLY THE APPELLANT CLAIMS THAT THIS INCOME IS TO BE TAXED IN THE ASSESSMENT YEAR 1993 - 94 AND NOT IN THE ASSES SMENT YEAR 1992 - 93 THEN THE INTEREST ARISING ON ACCOUNT OF SUCH REFUND ATTRACTS THE PROVISIONS OF SUB - ITA NO. 2586/DEL./2011 7 SECTION (2) OF SECTION 244A. IF A WRONG CLAIM IS MADE BY THE APPELLANT THEN SUB CLAUSE (2) OF SECTION 244A ARE ATTRACTED WHICH READS AS UNDER: 'IF THE PR OCEEDINGS RESULTING IN THE REFUND ARE DELAYED FOR REASONS ATTRIBUTABLE TO THE ASSESSEE, WHETHER WHOLLY OR IN PART, THE PERIOD OF THE DELAY SO ATTRIBUTABLE TO HIM SHALL BE EXCLUDED FROM THE PERIOD FOR WHICH INTEREST IS PAYABLE AND WHETHER ANY QUESTION ARISE S AS TO THE PERIOD TO BE EXCLUDED, IT SHALL BE DECIDED BY THE CHIEF COMMISSIONER OF COMMISSIONER WHOSE DECISION THEREON SHALL BE FINAL' 9. THIS ISSUE WHETHER SUB - SECTION (2) OF SECTION 244A ARE ATTRACTED OR NOT HAS BEEN EXAMINED BY THE ASSESSING OFFICER. AS SUCH THE ASSESSING OFFICER IS DIRECTED TO EXAMINE THIS PROVISION AND THEN DETERMINE THE INTEREST U/S 244A. THIS ISSUE IS DECIDED ACCORDINGLY. AGGRIEVED, ASSESSEE IS BEFORE US. 3. LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE FACTS AND CONT ENDS THAT ASSESSEE'S ISSUES ABOUT REFUND AND INTEREST U/S 244A PAYABLE THEREON HAS BEEN SUBJECTED TO MULTIPLE 154 ORDERS, THE CHRONOLOGY IS MENTIONED IN AO'S IMPUGNED ORDER. 3.1. BESIDES, THE REMAINING CREDIT OF RS. 7,39,856/ - WAS GRANTED IN A.Y. 1992 - 93. IT SHALL BE PERTINENT TO MENTION THAT THE AMOUNTS OF REFUNDS, ISSUES ABOUT INTEREST ON REFUNDS WERE ALLOWED IN FAVOUR OF THE ASSESSEE AFTER DUE APPROVAL OF ORDER OF CIT, DELHI - IV, NEW DELHI VIDE ORDER DATED 29 - 7 - 2004, WHICH IS PLACED ON THE R ECORD, RELEVANT PORTION IS AS UNDER: 'YOU WERE DIRECTED TO TAKE ALL REMEDIAL ACTIONS AND SEND COMPLIANCE REPORT BY 05.05.04. I ALSO PERSONALLY EXPLAINED TO YOU THAT ORDERS U/S. 154 SHOULD ONLY BE PASSED AFTER ALLOWING OPPORTUNITY OF BEING HEARD. HOWEVER, NO REPORT WAS RECEIVED IN THE SUCCEEDING TWO MONTHS IN SPITE OF SEVERAL ITA NO. 2586/DEL./2011 8 TELEPHONIC REMINDERS IN THIS REGARD. EXAMINATION OF FILE REVEALS THAT YOU HAD SENT THE REFUND PROPOSAL TO ADDL. CIT, RANGE - II ON 28.05.04 BY PASSING ORDER U/S 154 WITHOUT ALLOWING OPPO RTUNITY TO THE ASSESSEE. THESE WERE SENT BACK BY ADDL. CIT ON 04.06.04 WITH THE DIRECTIONS THAT ORDERS U/S.184 MAY BE PASSED AFTER ALLOWING OPPORTUNITY OF BEING HEARD. FINALLY, YOU RESUBMITLED THE PROPOSAL VIDE LETTER NO.308 DATED 29.06.04 BUT AGAIN ORDE RS U/S.154 WERE PASSED FOR AY.94 - 95 TO 2002 - 03 WITHOUT ALLOWING OPPORTUNITY. HOWEVER, IN ACCORDANCE WITH THE INSTRUCTIONS EARLIER CONVEYED, CREDIT FOR TDS OF RS.68.98 LACS ALLOWED IN A Y.92 - 93 WAS WITHDRAWN. HOWEVER, THE RELEVANT YEAR WISE CHART WAS A GAIN NOT SUBMITTED. AS PER THE PROPOSALS RESUBMITTED BY YOU VIDE LETTERS NO.308 & 309 DATED 29.06.04, YOU HAVE SOUGHT APPROVAL AS UNDER. - (I) FOR ISSUING REFUND OF RS. 4,64,09,2027 - FOR AY.92 - 93. (II) FOR ISSUING REFUND OF RS. 1,53,14,7587 - FOR A.Y.93 - 94 AND FOR ADJUSTING THIS AMOUNT AGAINST THE DEMAND OF RS. 2,04,62,7177 - . AFTER EXAMINING THE RELEVANT FILES, I FOUND THAT THERE IS A NEED FOR MAKING NECESSARY CORRECTIONS ON ITNS - 150 PREPARED BY YOU AND THESE HAVE DULY BEEN EXPLAINED TO YOU PERSON ALLY. THEREFORE, YOUR PROPOSAL FOR ISSUE OF FOLLOWING REFUNDS IS APPROVED. - (I) REFUND OF RS. 4,64,09,202/ - FOR A.Y.92 - 93. THIS IS WITH REFERENCE TO ORDER U/S.254 READ WITH SEC. 143(3) AND THE FACT MAY ACCORDINGLY BE DULY STATED ON ITNS - 150. MINOR CALCULA TION CORRECTIONS MAY BE MADE AT YOUR END. AGAINST THIS REFUND, YOU WOULD ADJUST THE DEMAND OF RS. 2,04,62,717/ - RAISED FOR AY.92 - 93 BY PASSING ORDER U/S.184 READ WITH SEC. 143(1)(A) WITHDRAWING CREDIT FOR TDS IN RESPECT OF THE INCOME WHICH IS NOT ASSESSED I N THIS YEAR. CONSEQUENTLY, FOR AY.92 - 93, THERE IS A DEMAND AS CALCULATED BY YOU WHICH HAS TO BE COLLECTED OUT OF REFUND. (II) APPROVAL IS ALSO GRANTED FOR ISSUE OF REFUND FOR A.Y 93 - 94. YOU MAY ALSO ADJUST THE DEMAND RAISED FOR A.Y.2003 - 04. YOU MAY ALSO R E - CHECK THAT TDS CREDIT SHOULD BE ALLOWED ONLY ON INCOME ASSESSED FOR A Y. 93 - 94. ITA NO. 2586/DEL./2011 9 YOU WOULD APPRECIATE THAT BECAUSE OF EXCEPTIONAL DELAY IN PASSING THE APPEAL EFFECT ORDERS, THE REVENUE HAD TO SUFFER BY PAYING SUBSTANTIAL AMOUNT OF INTEREST. THEREFORE, IT IS ALWAYS ADVISABLE TO TAKE PROMPT ACTION IN SUCH CASES. 3.2. IT IS VEHEMENTLY ARGUED THAT THE INTEREST ON REFUND WHICH HAS BEEN CALCULATED WITH THE CONCURRENCE OF ADDL. CIT & CIT, NEW DELHI CANNOT BE TERMED TO CARRYING MISTAKE APPARENT FROM RECORD. 3. 3. LD. COUNSEL CONTENDS THAT ORDER U/S 154 CAN BE RECTIFIED ONLY IF THERE IS A GLARING MISTAKE APPARENT FROM THE RECORD. THE ORDER PASSED BY AO TO GIVE EFFECT TO THE ITAT ORDER DATED 30 - 7 - 2004 WAS A VALID ORDER PASSED AS PER THE DIRECTIONS OF A HIGHER APP ELLATE AUTHORITY. IT CANNOT BE CALLED CARRYING MISTAKE APPARENT FROM THE RECORD AS IN NONE OF THE RECTIFICATION ORDERS AO HAS EVER INDICATED ANY REASONS FOR DELAY IN REFUND ATTRIBUTABLE TO THE ASSESSEE. THE DETERMINATION NOW, AS TO WHETHER THE DELAY IN GRA NTING REFUND IS ATTRIBUTABLE TO THE ASSESSEE OR NOT, IS A DEBATABLE ISSUE TO ARRIVE AT A CONCLUSION AFTER CONSIDERATION OF FACTS AND ARGUMENTS. THE SAME CANNOT BE CALLED MISTAKE APPARENT FROM RECORD AND CARRIED OUT U/S 154. THEREFORE, THE IMPUGNED ORDER WHICH IS TO BE RECTIFIED U/S 154 CONTAINS NO APPARENT MISTAKE. 3.4. IN THE FIRST PARA OF THE 154 ORDER AO HAS REFERRED ONLY TO THE HISTORY; IN SECOND PARA, AO HAS RELIED ON THE ORDER FOR A.Y. 1992 - 93 IN WHICH THE ID. CIT(APPEALS) QUASHED THE INTERE ST U/S 220(2) WHICH ALSO HAS NO RELEVANT TO A.Y. 1993 - 94. AO HAS ARBITRARILY HELD THAT THE INTEREST GRANTED TO ASSESSEE FOR A.Y. 1993 - 94 BECAME INFRUCTUOUS, WHICH IS A DISTINCT AND SEPARATE ISSUE. ACCORDING TO ID. COUNSEL, BOTH THE YEARS ARE DISTINCT AND S EPARATE TAXABLE ENTITIES, QUASHING OF INTEREST U/S 220 FOR A.Y. 1992 - 93 HAS NO RELATION WITH ITA NO. 2586/DEL./2011 10 GRANT OF INTEREST U/S 244A FOR A.Y. 1993 - 94. THEREFORE, THERE EXISTS NO MISTAKE FOR A.Y. 1993 - 94 WHICH IS SOUGHT TO BE RELIED ON BY AO. 3.5. LD. COUNSEL THEN REL IED ON HON'BLE SUPREME COURT JUDGMENT IN THE CASE OF SANDVIK ASIA LTD. VS. CIT & OTHERS B(2006) 280 ITR 643 (SC), HOLDING THAT ASSESSEE HAS A RIGHT TO BE COMPENSATED FOR WRONGFUL DETENTION OF MONIES BY THE DEPARTMENT. FURTHER RELIANCE IS PLACED ON HON'BLE SUPREME COURT JUDGMENT IN THE CASE OF MEPCO INDUSTRIES LTD. VS. CIT & ANR. (2009) 319 ITR 208 (SC), WHICH IN TURN HAS RELIED ON OTHER SUPREME COURT JUDGMENT, FOR THE PROPOSITION THAT RECTIFIABLE MISTAKE MUST BE ONE WHICH IS APPARENT FROM THE RECORD AND NOT DEPENDENT ON LONG DRAWN PROCESS OF REASONING OR HAVING TWO OPINIONS: '10. BEFORE CONCLUDING, WE MAY STATE THAT IN DEVA METAL POWDERS (P) LTD. VS. COMMR., TRADE TAX 2008(2) SCC 439, A DIVISION BENCH OF THIS COURT HELD THAT A 'RECTIFIABLE MISTAKE' MUST EXIS T AND THE SAME MUST BE APPARENT FROM THE RECORD. IT MUST BE A PATENT MISTAKE, WHICH IS OBVIOUS AND WHOSE DISCOVERY IS NOT DEPENDENT ON ELABORATE ARGUMENTS. 11. TO THE SAME EFFECT IS THE JUDGMENT OF THIS COURT IN THE CASE OF CCE VS. ASCU LTD. 2003 (151) ELT 481 (SC), WHEREIN IT HAS BEEN HELD THAT A 'RECTIFIABLE MISTAKE' IS A MISTAKE WHICH IS OBVIOUS AND NOT SOMETHING WHICH HAS TO BE ESTABLISHED BY A LONG DRAWN PROCESS OF REASONING OR WHERE TWO OPINIONS ARE POSSIBLE. DECISION ON DEBATABLE POINT OF LAW CANN OT BE TREATED AS 'MISTAKE APPARENT FROM THE RECORD'. 3.6. AO HAS DECIDED THE MERITS ABOUT THE PERIOD OF ELIGIBILITY OF INTEREST IN THE GARB OF A RECTIFICATORY ORDER THAT NOW ASSESSEE WAS ELIGIBLE FOR REFUND FOR THE PERIOD 1 - 4 - 1993 TO 29 - 6 - 1993 AND FROM 30 - 9 - 1993 TO 31 - 3 - 1994 ONLY. THIS CONCLUSION DEPENDS UPON VERIFICATION OF FACTS AND INTERPRETATIONS AS THE REMAINING PERIOD HAS NOT BEEN ATTRIBUTABLE TO ANY FAULT ON THE PART OF THE ASSESSEE, AS THERE IS NO WHISPER ABOUT IT. IF REFUND AND INTEREST THEREON IS SUED ITA NO. 2586/DEL./2011 11 EARLIER IS ALTERED DUE TO EFFECT OF AN APPELLATE ORDER, IN THAT CASE PROVISIONS OF SECTION 244A(3) ARE APPLICABLE WHICH ARE AS UNDER: '244A(3) - WHERE, AS A RESULT OF AN ORDER UNDER SUB - SECTION (3) OF SECTION 115 WE OR SECTION 115WF OR SECTION 115WG OR SUBSECTION (3) OF SECTION 143 OR SECTION 144 OR SECTION 147 OR SECTION 154 OR SECTION 155 OR SECTION 250 OR SECTION 254 OR SECTION 260 OR SECTION 262 OR SECTION 263 OR SECTION 264 OR AN ORDER OF THE SETTLEMENT COMMISSION UNDER SUB - SECTION (4) OF SECTION 245D, THE AMOUNT ON WHICH INTEREST WAS PAYABLE UNDER SUB - SECTION (4) HAS BEEN INCREASED OR REDUCED, AS THE CASE MAY BE, THE INTEREST SHALL BE INCREASED OR REDUCED ACCORDINGLY, AND IN A CASE WHERE THE INTEREST IS REDUCED, THE ASSESSING OFFICER SHALL SERVE ON THE ASSESSEE A NOTICE OF DEMAND IN THE PRESCRIBED FORM SPECIFYING THE AMOUNT OF THE EXCESS INTEREST PAID AND REQUIRING HIM TO PAY SUCH AMOUNT; AND SUCH NOTICE OF DEMAND SHALL BE DEEMED TO BE A NOTICE UNDER SECTION 156 AND THE PROVISIONS OF THIS ACT SHA LL APPLY ACCORDINGLY.' 3.7. THUS, IF BY ANY ORDER OF THE COURT ANY AMOUNT OF REFUND IS INCREASED OR REDUCED, IN THAT CASE THE AMOUNT OF INTEREST ALLOWABLE U/S 244A IS TO BE ACCORDINGLY INCREASED OR REDUCED. IN THIS CASE THE INTEREST IN QUESTION WAS AWARD ED TO ASSESSEE CONSEQUENT TO ITAT DIRECTIONS WHICH IS COVERED U/S 244A(3). THE ORDER DATED 30 - 7 - 04 WAS PASSED CONSEQUENT TO ITAT JUDGMENT DATED 17 - 9 - 02 AND AS PER THE EFFECT OF THE ORDER OF THE ITAT IF THE REFUND OF THE ASSESSEE BECAME DUE, THE INTEREST IS TO BE AWARDED TO THE ASSESSEE THEREON. IF ANY FURTHER 154 ORDER IS PROPOSED TO BE PASSED, THEN IT SHOULD BE IN CONFORMITY WITH RATIO LAID DOWN BY THE HON'BLE SUPREME COURT JUDGMENTS IN THE CASES OF SANDVIK ASIA LTD. (SUPRA) & MEPCO INDUSTRIES LTD. (SUPRA) . IN THE IMPUGNED ORDER THE AO HAS NOT WHISPERED ABOUT ANY DELAY WHICH IS ATTRIBUTABLE TO THE ASSESSEE FOR DELAYED GRANT OF REFUND AND THE ORDER OF THE AO WHICH WAS IN CONFORMITY WITH SEC. 244A(3) HAS BEEN HELD TO BE A MISTAKEN ORDER WITHOUT POINTING ANY M ISTAKE. ITA NO. 2586/DEL./2011 12 3.8. MOST IMPORTANTLY THE AMOUNT OF REFUND AND INTEREST THEREON U/S 244A WAS ALLOWED TO ASSESSEE CONSEQUENT TO VERIFICATION BY ADDL. CIT & CIT, NEW DELHI AS MENTIONED ABOVE IN THE ORDER DATED 29 - 7 - 04. THUS, ON BOTH THE COUNTS THE AO'S ORDER BECOM ES ARGUMENTATIVE, AGAINST THE LAW. THE IMPUGNED 154 ORDER BEING ARGUMENTATIVE, INTERPRETATIVE AND BASED ON CHANGE OF OPINION CANNOT BE CALLED A RECTIFICATORY ORDER. IN THE GARB OF RECTIFICATORY ORDER THE AO HAS ATTEMPTED TO DECIDE THE MERITS AND REDUCE INT EREST WITHOUT THERE BEING ANY MISTAKE IN CONTRADISTINCTION TO DIRECTIONS OF HIS OWN ADDL. CIT & CIT. 4. LD. DR RELIED ON THE ORDERS OF AUTHORITIES BELOW AND CONTENDS THAT SECTION 244A(2) PROVIDES AS UNDER: '244A(2) - IF THE PROCEEDINGS RESULTING IN THE REFUND ARE DELAYED FOR REASONS ATTRIBUTABLE TO THE ASSESSEE, WHETHER WHOLLY OR IN PART, THE PERIOD OF THE DELAY SO ATTRIBUTABLE TO HIM SHALL BE EXCLUDED FROM THE PERIOD FOR WHICH INTEREST IS PAYABLE, AND WHERE ANY QUESTION ARISES AS TO THE PERIOD TO B E EXCLUDED, IT SHALL BE DECIDED BY THE CHIEF COMMISSIONER OR COMMISSIONER WHOSE DECISION THEREON SHALL BE FINAL.' 4.1. IT IS FURTHER PLEADED THAT IN THIS CASE THE DELAY WAS ATTRIBUTABLE TO ASSESSEE INASMUCH AS THE ASSESSEE CLAIMED THE IMPUGNED TO BE INCO ME FOR A.Y. 1992 - 93 AND WHEN THE HEAD OF INCOME WAS CHANGED, THE ASSESSEE AT THE LEVEL OF ITAT RAISED THE ISSUE ABOUT ITS TAXABILITY IN A.Y. 1993 - 94. THEREFORE, THE PROCEEDINGS RESULTING IN THE REFUND WERE DELAYED FOR REASONS ATTRIBUTABLE TO THE ASSESSEE A ND THE PERIOD SO ATTRIBUTABLE SHALL BE EXCLUDED WHILE CALCULATING THE PERIOD OF INTEREST PAYABLE. THE AO FAILED TO APPLY SEC. 244A(2), WHILE GRANTING INTEREST, THIS MISTAKE WAS SOUGHT TO BE RECTIFIED BY AO. 4.2. IN CASE OF DISPUTE ABOUT REASONS OF DELAY OF REFUND THE SAME WAS TO BE REFERRED BY ASSESSEE TO THE CCIT OR THE CIT CONCERNED. THE ASSESSEE INSTEAD OF ITA NO. 2586/DEL./2011 13 RECOURSING TO THESE AUTHORITIES HAS APPROACHED THE ITAT, WHICH HAS NO JURISDICTION TO DECIDE THIS ISSUE. 5. LEARNED COUNSEL FOR THE ASSESSEE IN RE PLY CONTENDS THAT IN NONE OF AO'S ORDERS THERE IS ANY WHISPER OF ANY DELAY ATTRIBUTABLE TO THE ASSESSEE. THE REFUND AND INTEREST WAS APPROVED BY ADDL. CIT & CIT AS PER PROCEDURE, WHO HAVE ELABORATELY DEALT WITH ISSUE ABOUT DELAY AND AO'S ROLE THEREIN. 5.1 . WITH THESE ORDERS ON RECORD AND IN THE ABSENCE OF ANY ALLEGATION ABOUT ASSESSEE'S DEFAULT, THE ISSUE OF INTEREST ON REFUND CANNOT BE READJUDICATED IN THE GARB OF RECTIFICATION. LD. CIT(APPEALS) WHILE DECIDING ASSESSEE'S APPEAL SHOULD NOT HAVE ISSUED FUR THER DIRECTIONS TO AO TO CONSIDER THE ISSUE OF 244A(2) AFRESH. REFERENCE TO RECONSIDER 244A BY CIT(A) ITSELF MAKES THE ORDER OF AO & CIT(A) TO DECIDE AFRESH ARGUMENTATIVE ISSUES I.E. TO CONSIDER THE DELAY ATTRIBUTABLE TO THE ASSESSEE. FOR THIS PURPOSE NEW FACTS ARE TO BE ASCERTAINED AND THE RESPONSIBILITY ABOUT DELAY IS TO BE FIXED, WHICH CANNOT BE DONE BY WAY OF RECTIFICATION U/S 154. THE ID. CIT(APPEALS)'S ACTION IS WRONG INASMUCH AS NEITHER THE ISSUE ARISES OUT OF THE ORDER OF AO NOR ANY ENHANCEMENT NOTI CE WAS SERVED ON THE ASSESSEE. 5.2. BESIDES, AO'S RECTIFICATION AND CIT(A)'S DIRECTION IS AT VARIANCE WITH THE APPROVAL OF REFUND AND INTEREST ACCORDED BY ADDL. CIT & CIT, NEW DELHI AFTER DUE VERIFICATION OF RECORDS AND REPORTS. 5.3. HON'BLE SUPREME CO URT IN THE CASE OF MEPCO INDUSTRIES LTD. AND OTHER JUDGMENTS (SUPRA), HAS LAID DOWN THAT MISTAKE RECTIFIABLE U/S 154 MEANS ONE ITA NO. 2586/DEL./2011 14 WHICH IS GLARING AND WHICH IS NOT DEPENDENT ON LONG DRAWN PROCESS OF REASONING AND HAVING TWO OPINIONS. 6. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH THE RELEVANT MATERIAL AVAILABLE ON RECORD. ONE FACT WHICH IS TO BE BORNE IN MIND IS THAT THE IMPUGNED ORDER WAS PASSED U/S 154 AND ASSESSEE'S GROUNDS OF APPEAL BEFORE ID. CIT(APPEALS) ARE TO THE EFFECT THAT AO ERRED IN PASSING THE ORDER U/S 154 ON DEBATABLE ISSUES. FROM THE ORDERS PASSED BY AO U/S 154 THERE IS NEITHER ANY HINT NOR ANY REFERENCE THAT ANY DELAY WAS ATTRIBUTABLE TO THE ASSESSEE. LD. CIT(APPEALS) INSTEAD OF DECIDING THE GROUNDS RAISED BY THE ASSE SSEE HAS DECIDED A NEW ISSUE BY HOLDING THAT AO'S ORDER U/S 154 WAS TO BE UPHELD AND 244A(2) SHOULD BE EXAMINED. INSTEAD OF DECIDING THE MAIN ISSUE RAISED IN ASSESSEE'S APPEAL, A NEW DIRECTION HAS BEEN GIVEN TO EXAMINE THE INTEREST U/S 244A, WHICH REQUIRED ASCERTAINMENT OF NEW FACTS INASMUCH AS IN NONE OF THE EARLIER ORDERS, THERE IS ANY WHISPER TO THE DELAY ATTRIBUTABLE TO THE ASSESSEE. THUS, LD. CIT( APPEALS) INSTEAD OF DECIDING THE MERITS OF THE AO'S ORDER IN TERMS OF RECTIFICATORY ORDER HAS TRAVELED INT O DEBATABLE ISSUE WHICH REQUIRE MERE FACTUAL FINDING, ARGUMENTS AND ASCERTAINMENT OF FACTS WHICH DOES NOT FALL IN THE REALM OF RECTIFICATION OF MISTAKE. BE THAT AS IT MAY, SEC. 244A(2) POSTULATES THAT WHERE ANY DISPUTE ARISES ABOUT THE DELAY FOR REASONS AT TRIBUTABLE TO THE ASSESSEE THE SAME SHOULD BE REFERRED TO THE CCIT/ CIT, WHOSE DECISION IS FINAL ON THIS ISSUE. THE REFERENCE IS NOT APPLICABLE TO ASSESSEE ALONE BUT WHEN THE AO RAISES A DISPUTE, HE CAN ALSO REFER THE MATTER TO CCIT/ CIT. SURPRISINGLY, IN ALL THESE PROCEEDINGS THERE IS NO WHISPER OF DELAY ATTRIBUTABLE TO ASSESSEE OR ANY ISSUE RAISED BY AO IN FIRST ORDER GIVING EFFECT TO ITAT ORDER. EVEN IN THE ORDER OF ID. CIT(APPEALS) THERE IS NO ACCUSATION. IN THE ABSENCE OF ANY ACCUSATION AGAINST ASSESSE E IN THE ORDER ITA NO. 2586/DEL./2011 15 SOUGHT TO BE RECTIFIED, LD. CIT(APPEALS) SHOULD NOT HAVE GIVEN A DIRECTION TO EXAMINE AFRESH THE ASSESSEE'S CASE U/S 244A(2). WE ARE UNABLE TO AGREE WITH ID. DR THAT ITAT HAS NO JURISDICTION INASMUCH AS EITHER THERE IS ALLEGATION FOR ATTRIBU TABLE TO REASONS FOR DELAY IN GRANTING OF REFUND NOR AO EVER RAISED THIS DISPUTE IN FIRST ORDER GIVING EFFECT TO ITAT ORDER. ON THE PLAIN READING OF THE PROVISIONS OF SEC. 244A(3) IF THE ASSESSEE'S REFUND IS INCREASED IN THAT CASE THE INCREASED INTEREST U/ S 244A IS TO BE GIVEN BY WAY OF A STATUTORY EXERCISE. THE MERITS ABOUT DELAY AND REASONS ATTRIBUTABLE TO ASSESSEE FALL WITHIN THE REALM OF ARGUMENTS AND REGULAR PROCEEDINGS AND NOT RECTIFICATION OF MISTAKES, MORE SO AMOUNT OF REFUND IS CONCURRED BY ADDL. CIT & CIT. THUS THE IMPUGNED ORDER OF AO PASSED U/S 154 CANNOT BE UPHELD. SIMILARLY, LD. CIT(APPEALS) ALSO ERRED IN NOT DECIDING THE DISPUTE AS RAISED IN GROUNDS OF APPEAL AND INSTEAD GAVE A FRESH DIRECTION TO VERIFY FACTS AND EXAMINE THE APPLICABILITY OF SEC. 244A WHICH WOULD REQUIRE ASCERTAINMENT OF FRESH FACTS, REASONS AND ACCOUNTABILITY. 7. IN VIEW OF THESE FACTS WE HOLD THAT THE IMPUGNED ORDER PASSED BY THE AO U/S 154 CANNOT BE SUSTAINED. ASSESSEE'S APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN CO URT ON 07.03.2016 . SD/ - SD/ - ( I.C. SUDHIR ) (L.P. SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 07.03.2016 *AKS/ - COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT. REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI