DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-1, NASHIK V. M/S ASHOKA BUILDCON LTD, NASHIK

ITA 3/PUN/2020

AI Insights

The case involves the Deputy Commissioner of Income Tax, Central Circle 1, Nasik (Appellant) vs. M/s. Ashoka Buildcon Ltd. (Respondent). The dispute centered on the withdrawal of excess interest on a tax refund under section 244A of the Income Tax Act, 1961. The A.O had issued a notice under section 154 to rectify the earlier assessment order, claiming that the interest granted was erroneous as the refund amount was less than 10% of the assessed tax. The CIT(A) found that the rectification was not a mistake apparent from the record, a decision which was upheld by the Tribunal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 124358 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 26-01-2023
• Assessment Year: 2010-2011
• Appeal Filed On: 01-01-2020
• Other Referred Cases: D. Swarup, ITO vs Gammon India Ltd. (141 ITR 841), T. S. Balaram, ITO v Volkart Bros (1971) 82 ITR 40 (SC)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 154; 143(3); 244A; 143(1); 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER ITA No. 03/PUN/2020 : A.Y. 2010-11 The Dy. C.I.T. Central Cir. 1, Nasik Appellant Vs. M/s. Ashoka Buildcon Ltd., S.No. 861, Ashoka House, Ashoka Marg, Wadala Nashik 422 011 PAN: AABCA 9272 J Respondent Appellant by : Shri Ramnath P. Murkunde Respondent by : Shri Pramod Shingte Date of Hearing : 27-01-2023 Date of Pronouncement : 31-01-2023 ORDER PER SHRI PARTHA SARATHI CHAUDHURY, JM This appeal preferred by the Revenue emanates from order of the ld. CIT(A)-12, Pune dated 31-10-2019 for assessment year 2010-11 as per the following grounds of appeal. 1. On the fact and circumstance of the case and in law, the ld. CIT(A) erred in not allowing the withdrawal of the excess interest u/s 244A on refund granted, where section 244A(1) clearly applicable to all the order passed u/s 143(1 )/143(3) which also includes order passed u/s 143(3) r.w.s. 147 of the Income tax Act. 2. On the fact and circumstance of the case and in law, the ld. CIT(A) erred in viewing that the Assessing Officer was wrong in restoring to rectifying the order u/s 154 of the I T Act to withdraw the excess interest granted u/s 244A to the assessee, failing to appreciate that it was a mistake apparent from record. 3. On the fact and circumstance of the case and in law, the ld. CIT(A) failed to appreciate that the Assessing Officer was right in holding that if the resulting refund is less than 10% of the assessed tax then the assessee was not entitle to receive interest u/s 244A. 4. Any other ground may arise at the time of hearing. 5. It is submitted that monetary limit of CBDT Circulars no.17/2019 will not apply as addition is based on Revenue Audit Objection in the case where has been accepted by the Department, falling under exception 10(c) as laid down by the Board in 2 ITA 03//PUN/2022 Ashoka Buildcon Ltd. A.Y. 2010-11 Circular No. 3/2018 dated 11.07.2018 as amended by Board's letter dated 20.08.2019. 6. It is therefore prayed that CIT(A)’s order be set aside and order of the A.O be restored.” 2. The relevant facts are that assessee is a limited company engaged in the business of Civil Construction, Infrastructure Project Development etc. The A.O passed order u/s 143(3) r.w.s. 147 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) assessing total income at Rs. 78,59,55,690/-. On perusal of the tax sheets it was unveiled that assessee had paid tax of Rs. 27,92,00,346/- with refund amount of Rs. 1,31,70,894/-, along with interest u/s 244A of the Act of Rs. 11,24,680/-. As the refund amount was less than 10% of the assessed tax, the assessee was not entitled to receive interest on refund. Thereby notice u/s 154 of the Act was issued on 03-01-2018 which was duly served on the assessee. After perusal of the submission filed by the assessee to drop the rectification proceedings as the order passed is neither u/s 143(1) nor u/s/ 143(3)/144, hence section 244A(1) is not applicable, is not found acceptable. Thus, A.O passed rectification order u/s 154 of the Act withdrawing erroneous grant of interest u/s 244A of the Act. 3. The ld. CIT(A) on this issue observed and held as follows: 3.1 I have considered the submission of the appellant and perused the assessment order. Brief facts of the case are that the assessee was refund an amount of Rs. 1,31,70,894/- on which interest u/s 244A of the Act amounting to Rs. 11,42,6801- was given under an order passed u/s 143(3) rws.147. Later, the Assessing Officer was of the opinion that if the resulting refund is less than) 10 % of the assessed tax then the assessee was not entitled to receive interest u/s 244A/ t Therefore, the AO rectified the order u/s 143(3) rws 147 by an order u/s 154 and withdrew the excess interest u/s 244A on refund granted to the assessee. The assessee during the 154 proceedings objected to the proposed rectification arguing that the proviso under section 244A(1 )(b) excludes grant of interest for those cases where the tax was determined under sub-section (1) of section 143 or on regular assessment. In support of his argument the assessee relied upon Bombay High Court Case in the case of D. Swarup, ITO vis Gammon India Ltd. (141 ITR 841). However, the assessing officer was of the opinion that the case law is not applicable to the facts 3 ITA 03//PUN/2022 Ashoka Buildcon Ltd. A.Y. 2010-11 of assessee's case. The case law relied upon by the appellant tries to clarify the meaning of the expression 'regular assessment' in the context of section 273. Be that as it may, on the perusal of the above discussions it is apparent that there are varying opinions about the meaning of 'regular assessment'. That being so the rectification of the order u/s 154 withdrawing the interest granted u/s 244A, is not a mistake apparent from record. For the simple reason that there are more than one opinion on the meaning of 'regular assessment', which is a critical issue for deciding whether or not the assessee is eligible for interest u/s 244A. There are number of judgments which have said that u/s 154 only mistakes apparent from record can be done. The Supreme Court in the case of T. S. Balaram, ITO v Volkart Bros (1971) 82 ITR 40 (SC), held that; "a mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long-drawn process of reasoning on points on which there may be conceivably two opinions. A decision on a debatable point of law is not a mistake apparent from the record. A look at the records must show that there has been an error and that error may be rectified." In view of this the Assessing Officer was wrong in resorting to rectifying the order u/s 154 of the Act to withdraw the excess interest granted u/s 244A to the assessee, as it was not a mistake apparent from record. therefore, the order of the AO u/s 154 is missed. Accordingly, the ground of appeal of the appellant is allowed. 4. We observe from the facts that the assessee got a refund of Rs. 1,31,70,894/- on which interest u/s 244A of the Act amounting to Rs. 11,42,680/- was given under order passed u/s 143(2) r.w.s. 147 of the Act. Subsequently, the ld. A.O was of the opinion that if the resultant refund is less than 10% of the assessed tax then the assessee was not entitled to receive interest u/s 244A of the Act. Therefore, the A.O rectified the order u/s 143(3) r.w.s. 147 by an order u/s 154 of the Act and withdrew the excessive interest u/s 244A of the Act. On the refund granted to the assessee the assessee contended that as per proviso to section 244A clause (1) sub-section (b) of the Act excludes grant of interest for those cases where the tax was determined under sub-section (1) of section 143(3) or on regular assessment. In support of his argument, the assessee relied on decision of the Hon‟ble Bombay High court in the case of D. Swarup ITO Vs. Gammon India Ltd. (1983) 141 ITR 841 (Mum). However, the A.O held that this case law is not applicable to the facts of the assessee‟s case and that the meaning of expression “regular assessment” is in the context of section 273. In this background, it was held by the ld. CIT(A) that there are varying opinions regarding the meaning of term “regular assessment”. There are more than one opinion on the meaning of “regular 4 ITA 03//PUN/2022 Ashoka Buildcon Ltd. A.Y. 2010-11 assessment” which is critical issue for deciding whether or not the assessee was eligible for interest u/s 244A of the Act. In such scenario the scope of rectification proceedings u/s 154 of the Act spells out that only mistake apparent from record can be rectified. The Hon‟ble Apex Court in the case of T.S. Balram, ITO v Volkart Bros (1971) 82 ITR 40 (SC), held that mistake apparent on record must be obvious and patent mistake and not something which has to be established by a long drawn process of reasoning on the points on which there may be conceivably two opinions. Therefore, the A.O was wrong in resorting to section 154 of the Act to withdraw the excess interest granted u/s 244A of the Act to the assessee as it was not something mistake apparent from record. Hence, the ld. CIT(A) dismissed the order of the A.O passed u/s 154 of the Act. We do not find any infirmity with the findings of the ld. CIT(A) and the relief provided to the assessee is sustained. The grounds of appeal of the Revenue are dismissed. 9. In the result, appeal of the revenue is dismissed. Order pronounced in the open court on 31 st January 2023 Sd/- sd/- (R.S. SYAL) (PARTHA SARATHI CHAUDHURY) VICE PRESIDENT JUDICIAL MEMBER Pune; Dated : 31 st January 2023 Ankam Copy of the Order forwarded to : 1. The Assessee 2. The Respondent 3. The CIT(A)-12 Pune 4. The Pr. CIT Central Nagpur. 6. DR, ITAT, „B‟ Bench Pune Guard File. //सत्यापित प्रपत// True Copy// BY ORDER, Sr. Private Secretary ITAT, Pune /// TRUE COPY /// 5 ITA 03//PUN/2022 Ashoka Buildcon Ltd. A.Y. 2010-11 Date 1 Draft dictated on 27-01-2023 Sr.PS 2 Draft placed before author 30-01-2023 Sr.PS 3 Draft proposed and placed before the second Member JM/AM 4 Draft discussed/approved by second Member AM/JM 5 Approved draft comes to the Sr. PS/PS Sr.PS/PS 6 Kept for pronouncement on 31-01-2023 Sr.PS/PS 7 Date of uploading of order 31-01-2023 Sr.PS/PS 8 File sent to Bench Clerk 31-01-2023 Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order