IKG ASSOCIATES, MUMBAI V. ASST CIT 23(1), MUMBAI

ITA 3140/MUM/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1874 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 07-09-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 25-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: COMMISSIONER OF INCOME
• Keywords: Rectification of order
• Section: 154

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI . . , , , , BEFORE SHRI G.S.PANNU, AM AND SHRI AMARJIT SINGH, JM / I.T.A. NO.3140/MUM/2015 & 3169/MUM/2015 ( / ASSESSMENT YEAR: 2008-09) IKG ASSOCIATES THE IL & FS FINANCIAL CENTRE PLOT NO.C-22, G BLOCK, BANDRA-KURLA COMPLEX, BANDRA (E), MUMBAI - 400051 / VS. ASSISTANT COMMISSIONER OF INCOME TAX RANGE 23(1) (ERSTWHILE ASSISTANT COMMISSIONER OF INCOME TAX 19(3)) ROOM NO.122, 1 ST FLOOR, MATRU MANDIR, GRANT ROAD, MUMBAI - 400007 ./ ./ PAN/GIR NO. : AAAAI1978E ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING: 20.07.2016 /DATE OF PRONOUNCEMENT: 18.11.2016 / O R D E R PER AMARJIT SINGH, JM: THE ASSESSEE HAS FILED THE ABOVE MENTIONED TWO APPEALS AGAINST THE ORDER DATED 13.03.2015 PASSED BY THE COMMISSIONER OF INCOME ASSESSEE BY: SHRI DILIP V. LAKHANI DEPARTMENT BY: SHRI B.C.S.NAIK ITA NO.3169&3140/M/15 A.Y. 2008-09 2 TAX (APPEALS) 32, MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO THE ASSESSMENT YEAR 2008-09. 2. THE BRIEF FACTS OF THE CASE ARE THAT AN ORDER U/S.143(3) OF THE INCOME TAX ACT, 1961( IN SHORT THE ACT) WAS PASSED ON 21.12.2010 U/S.143(3) OF THE ACT DETERMINING TOTAL INCOME TO THE TUNE OF RS.1222,29,16,295/-. THE ASSESSEE HAD FILED THE RETURN OF INCOME SHOWING INCOME TO THE TUNE OF RS.1222,29,16,295/- ALONG WITH 3CD REPORT. AS PER NOTE PLACE IN COLUMN 17(F) OF 3CD REPORT THE AUDITORS HAVE PLACED REMARK IN THE COLUMN. AMOUNT INADMISSIBLE U/S.40(A) INTEREST ON DELAYED PAYMENT OF TAX DEDUCTED AT SOURCE 11,89,845/- THE SAME WAS NOT ADDED BACK BY THE ASSESSEE AND REMAINED TO BE ADDED BACK IN ORDER PASSED U/S.143(3) OF THE ACT ON 21.12.2010. THE MISTAKE WAS PRIMA FACIE ON RECORD, AS NOTICE WAS ISSUED U/S.154 OF THE ACT ON 22.08.2012 FOR PROPOSED RECTIFICATION. AFTER FILING THE REPLY DATED 30.08.2012 THE MISTAKE WAS RECTIFIED U/S.154 OF THE ACT AND THE INCOME OF THE ASSESSEE WAS RECOMPUTED AS UNDER:- TOTAL INCOME AS PER ASSESSMENT ORDER U/S.143(3) DT. 21.12.2010 : RS.1222,29,16,295/- ADD: - DISALLOWANCE U/S. 40(A)(IA) ON ACCOUNT OF INTEREST ON DELAYED PAYMENT OF TAX DEDUCTED AT SOURCE : RS. 11,89,845/- REVISED TOTAL INCOME : RS.1222,41,06,140 ITA NO.3169&3140/M/15 A.Y. 2008-09 3 3. THEREAFTER, IN PURSUANCE OF THE SAID ORDER AND DURING THE COURSE OF WORKING OUT OF THE TAX ASSESSMENT OF THE ASSESSEE AN AMOUNT OF RS.11,05,38,735/- WAS ADDED ON ACCOUNT OF NON-PAYMENT OF ADVANCED TAX ON 15.09.2007 AND 15.12.2007 U/S.234C OF THE ACT. THEREAFTER, THE SAID ORDER WAS CHALLENGED AND THE CIT(A) HAS CONFIRMED THE SAID ORDER, THEREFORE, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. THE ONLY DIFFERENCE IN THE OTHER ITA NO. 3169/M/15 IS THAT THE ASSESSING OFFICER PASSED AN ANOTHER RECTIFICATION ORDER U/S.154 OF THE ACT, AFTER THE ISSUANCE OF THE NOTICE DATED 04.07.2014 AND AFTER OBTAINING THE REPLY, THE SAID ADDITION I.E. RS.11,05,38,735/- WAS ADDED ON ACCOUNT OF NON-PAYMENT OF ADVANCED TAX ON 15.09.2007 AND 15.12.2007 AND THE SAID ORDER WAS ALSO UPHELD BY THE CIT(A), HENCE THE ASSESSEE FILED AN APPEAL BEFORE US IN THIS CASE ALSO. ITA NO.3140/M/2015 & ITA NO.3169/MUM/2015 4. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED UNDER SECTION 154 DATED 14.11.2013 AND CONFIRMED BY LEARNED COMMISSIONER OF INCOME TAX (APPEAL) CONFIRMING THE PASSING OF THE ORDER UNDER SECTION 154 BE CANCELLED AS THE LEARNED ASSESSING OFFICER HAD NOT GIVEN SHOW CAUSE NOTICE FOR LEVY OF INTEREST UNDER SECTION 234C. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE LEARNED ASSESSING OFFICER UNDER SECTION 154 DATED 14.11.2013 AND CONFIRMED BY LEARNED COMMISSIONER OF INCOME TAX (APPEAL) BE DELETED AS THERE IS NO MISTAKE APPARENT FROM RECORD. ITA NO.3169&3140/M/15 A.Y. 2008-09 4 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE APPELLANT WAS NOT LIABLE TO MAKE THE PAYMENT OF ADVANCE TAX ON ADVANCE TAX ON 15.09.2007 AND 15.12.2007 AND CONSEQUENTLY IS NOT LIABLE TO PAY INTEREST UNDER SECTION 234C AMOUNTING TO RS.11,05,38,735/-. 4. THE APPELLANT PRAYS THAT THE ORDER PASSED UNDER SECTION 154 DATED 14.11.2013 BE CANCELLED AND INTEREST LEVIED UNDER SECTION 234C BE DELETED. 5. ALL THE ISSUES ARE INTERCONNECTED, THEREFORE ARE BEING TAKEN UP TOGETHER FOR ADJUDICATION. UNDER THESE ISSUES THE ASSESSEE HAS CHALLENGED THE ORDER DATED 14.11.2013 PASSED U/S.154 OF THE ACT. IN THE INSTANT CASE THE ASSESSMENT WAS COMPLETED ON 21.12.2010 RAISING DEMAND TO THE TUNE OF RS.9.46 CRORES (INCLUDING AN INTEREST LIABILITY OF RS.11.05 CRORES FOR DEFERMENT OF ADVANCE TAX FOR THE QUARTERS ENDED SEPTEMBER 2007 AND DECEMBER 2007). SUBSEQUENTLY, THE ASSESSEE MOVED AN APPLICATION U/S.154 OF THE ACT ON 16 TH FEBRUARY 2011 AND THE SAID APPLICATION WAS IN CONNECTION WITH THE DELETION OF ADDITION ON ACCOUNT OF THE PAYMENT OF ADVANCE TAX TO THE TUNE OF RS.11.05 CRORES. THE CONTENTION OF THE ASSESSEE WAS THAT THE ASSESSEE DID NOT EARN ANY INCOME, THEREFORE, THE ASSESSEE WAS NOT LIABLE TO PAY DEFERMENT ADVANCE TAX UP TO 15 TH DECEMBER 2008. THE CONTENTION OF THE ASSESSEE WAS ACCEPTED BY VIRTUE OF ORDER DATED 25.02.2011. HOWEVER, THE DEPARTMENT ALSO ISSUED THE REFUND TO THE TUNE OF RS.1,59,14,979/- VIDE RO NO.854733. THEREAFTER, ON 22.08.2012, THE ASSESSING OFFICER ISSUED THE NOTICE PROPOSING TO ADD BACK THE CLAIM OF INTEREST ITA NO.3169&3140/M/15 A.Y. 2008-09 5 EXPENSES TO THE TUNE OF RS.11,89,845/-, BEING INTEREST PAID ON DELAYED PAYMENT ON TDS. THE ASSESSING OFFICER NO DOUBT RAISED THE SAID DEMAND TO THE TUNE OF RS.11,89,845/- BUT HAVE ALSO RECOMPUTED THE INTEREST ON THE DEFERMENT OF ADVANCED TAX AT RS.11.05 CRORES U/S.234C OF THE ACT. HERE IT IS PERTINENT TO MENTIONED THAT THE NOTICE DOES NOT CONTAINS THE CONTENTS FOR THE RE-COMPUTATION OF THE INTEREST OF DEFERMENT ON ADVANCED TAX AT RS.11.05 CRORES U/S.234C OF THE ACT. IN THE INSTANT APPEAL BEFORE THE ITAT THE ASSESSEE HAS CHALLENGED THE SAID ORDER ON THE GROUND OF NON-ISSUANCE OF NOTICE AND ON THE GROUND OF THIS FACT THAT THIS MATTER HAD ALREADY BEEN ADJUDICATED BY VIRTUE OF ORDER DATED 25.02.2011 AND IT IS NOT A MISTAKE APPARENT ON RECORD. WHAT HAS BEEN DECIDED BY THE ASSESSING OFFICER BY PASSING THE ORDER DATED 25.02.2011 IS REQUIRED TO BE PRODUCED ON RECORD FOR READY REFERENCE:- THE ASSESSEES REPRESENTATIVE VIDE LETTER DATED 16.02.2011 HAS STATED THAT WHILE PASSING THE ORDER U/S.143(3) INTEREST IS LEVIED U/S.234C AT RS.11,05,38,735/- AND THE SAME IS NOT LEVIABLE STATING THAT THE ASSESSEE IS NOT LIABLE TO MAKE THE PAYMENT OF ADVANCE TAX U/S.208 OF THE I. T. ACT 1961, THERE WILL BE NO QUESTION OF FAILURE TO MAKE THE PAYMENT OF ADVANCE TAX OR FAILURE TO MAKE THE SHORT PAYMENT OF ADVANCE TAX ON THE SUE DATES. FOR THE PURPOSE OF LEVY OF INTEREST U/S.234C(1)(A)(I) IF THE ASSESSEE FAILS TO MAKE THE PAYMENT OF ADVANCE TAX ON OR ITA NO.3169&3140/M/15 A.Y. 2008-09 6 BEFORE 15 TH JUNE, 15 TH SEPTEMBER AND 15 TH DECEMBER, OF THE PRESCRIBED PERCENTAGE BEING 15%, 45% AND 75% RESPECTIVELY OF THE TAX DUE ON THE RETURNED INCOME THEN HE IS LIABLE TO PAY INTEREST. THE BASIC CONDITION FOR LEVY OF INTEREST U/S.234C(1)(A)(I) IS THAT THE ASSESSEE SHOULD BE LIABLE TO PAY ADVANCE TAX U/S.208 OF THE I.T. ACT AT THE PRESCRIBED RATE ON 15 TH JUNE, 15 TH SEPTEMBER AND 15 TH DECEMBER. SECTION 210(1) PROVIDES THAT EVERY PERSON WHO IS LIABLE TO PAY ADVANCE U/S.208 SHALL, OF HIS OWN ACCORD, PAY, ON OR BEFORE EACH OF THE DUE DATE SPECIFIED U/S.211, THE APPROPRIATE PERCENTAGE SPECIFIED IN THAT SECTION OF THE ADVANCE TAX OF HIS CURRENT INCOME AS INCOME CALCULATED IN THE MANNER LAID DOWN U/S.209. SECTION 209 CLEARLY PROVIDES THAT THE ASSESSEE WILL HAVE TO ESTIMATE HIS CURRENT INCOME FOR THE PURPOSE OF THE ADVANCE TAX. IF THE ASSESSEE HAS NOT EARNED ANY INCOME ON THE DATE WHEN THE INSTALLMENT FOR PAYMENT OF ADVANCE TAX. IF THE ASSESSEE HAS NOT EARNED ANY INCOME ON THE DATE WHEN THE INSTALLMENT FOR PAYMENT OF ADVANCE TAX HAS BECOME DUE AND THE ASSESSEE IS IN A POSITION TO DEMONSTRATE THIS FACT, THEN HE WAS NOT LIABLE TO MAKE PAYMENT OF ANY ADVANCE TAX ON THE DUE DATES AND CONSEQUENTLY WILL NOT BE LIABLE TO PAY INTEREST. 2. ON GOING THROUGH THE RECORDS, THE ASSESSEES CONTENTION IS FOUND TO BE CORRECT. THE ASSESSEE IS NOT LIABLE FOR INTEREST ITA NO.3169&3140/M/15 A.Y. 2008-09 7 U/S.234C OF THE I.T.ACT. THE MISTAKE BEING APPARENT FROM THE RECORDS IS RECTIFIED U/S.154 OF THE I.T.ACT. THE TOTAL INCOME REMAINS UNCHANGED AT RS.1222,29,16,295/- AS PER ORDER U/S.143(3) DATED 21.12.2010. 3. REVISED ACCORDINGLY, CALCULATE TAX AND INTEREST. GIVE CREDIT FOR TDS AND PREPAID TAXES AFTER DUE VERIFICATION. ISSUE REVISED D. N/R O ACCORDINGLY. 6. ON APPRAISAL OF THE SAID ORDER, IT IS QUITE CLEAR THAT THE ASSESSING OFFICER HAS ARRIVED AT THIS CONCLUSION THAT THE ASSESSEE WAS NOT UNDER OBLIGATION FOR THE PAYMENT OF ADVANCED TAX, THEREFORE ON 15 TH JUNE, 15 TH SEPTEMBER AND 15 TH DECEMBER, THEREFORE NO INTEREST CAN LEVIABLE U/S.234 OF THE ACT. FINDING MISTAKE APPARENT ON RECORD, THE APPLICATION OF THE ASSESSEE WAS ALLOWED. NO DOUBT SUBSEQUENTLY THE ORDER UNDER CHALLENGED HAS BEEN PASSED ON THE BASIS OF THE NOTICE ISSUED FOR THE AMOUNT INADMISSIBLE U/S.40(A)(IA) OF THE ACT I.E. INTEREST DELETED PAYMENT ON DEDUCTED AT SOURCE OF RS.11,89,845/-. THE ASSESSEE DID NOT CHALLENGED THE SAID ADDITION BUT CHALLENGED THE WORKING OF INTEREST U/S.234C OF THE ACT ON ACCOUNT OF NON-PAYMENT OF ADVANCED TAX UP TO 15 TH DECEMBER 2007 ON WHICH THE MATTER OF CONTROVERSY HAD ALREADY BEEN ADJUDICATED BY VIRTUE OF ORDER DATED 25.02.2012. THE ORDER IS NOT SUSTAINABLE IN THE EYES OF LAW ON ACCOUNT OF NON-ISSUANCE OF NOTICE WITH REGARD TO THE SAID ADDITIONS U/S.234C OF THE ACT. FURTHER, THE ASSESSING OFFICER HAD ALREADY TAKEN THE VIEW ITA NO.3169&3140/M/15 A.Y. 2008-09 8 U/S.154 OF THE ACT BY VIRTUE OF ORDER DATED 25.02.2011. IT CANNOT BE TREATED AS MISTAKE APPARENT ON RECORD WHERE TWO VIEWS HAVE BEEN TAKEN SPECIFICALLY IN VIEW OF THE LAW SETTLED IN BEENA RAHUL MISHRA VS. CIT [53 TAXMAN 163, 185 ITR 361] BOMBAY HIGH COURT AND RAJASTHAN HIGH COURT IN CASE OF ADDL. COMMISSIONER OF INCOME TAX VS. CHEMICAL LIMES DECIDED ON 16 TH APRIL 1984. 7. MOREOVER, IT HAS BEEN SPECIFICALLY HELD BY THE ASSESSING OFFICER THAT THE ASSESSEE WAS NOT LIABLE TO PAY THE ADVANCED TAX UP TO 15.12.2007 AS THE ASSESSEE DID NOT EARN ANY INCOME, THEREFORE, HE WAS NOT LIABLE TO PAY THE ADVANCE TAX BY VIRTUE OF ORDER DATED 25.02.2011. IT CANNOT BE TREATED THE MISTAKE APPARENT ON RECORD. NO DOUBT IN THE SAID CIRCUMSTANCES THE ORDER IN QUESTION CANNOT BE TREATED AS JUSTIFIABLE IN ACCORDANCE WITH LAW. THEREFORE, THE SAME IS HEREBY ORDERED TO BE SET ASIDE. MOREOVER, IN APPEAL WITH REGARD TO THE LEGALITY OF THE ORDER U/S.154 OF THE ACT DATED 28.07.2014 IS CONCERNED, NO DOUBT IN THE INSTANT CASE THE ASSESSING OFFICER NOT ONLY HAS ISSUED THE NOTICE BUT ALSO CALLED SOME DOCUMENTS FOR VERIFICATION. IN THE SAID SITUATION IT IS NOT A RECTIFICATION AS HELD IN [1966] 60 ITR 28, MADHYA PRADESH HIGH COURT IN CASE OF COMMISSIONER OF INCOME TAX, MADHYA PRADESH, NAGPUR AND BHANDARA VS. HARNANDRAI SHRIKISHAN AKODIA. AT THE COST OF REPETITION THE MATTER OF CONTROVERSY HAS BEEN ADJUDICATED BY ONE OF THE SPEAKING ORDER BY VIRTUE OF ORDER DATED 25.02.2011. SUBSEQUENTLY, THE ORDER DATED 14.11.2013 HAS BEEN PASSED WHICH HAS ITA NO.3169&3140/M/15 A.Y. 2008-09 9 BEEN DISCUSSED ABOVE. WHEREAS IN THE INSTANT CASE THE ORDER DATED 28.07.2014 HAS BEEN PASSED, THIS ORDER IS ON THE SAME FOOTING AS OF THE EARLIER ORDER. AS DISCUSSED ABOVE BOTH THE ORDERS CANNOT BE SAID AS MISTAKE APPARENT ON RECORD WHICH REQUIRES RECTIFICATION U/S.154 OF THE ACT. IT IS ALSO STRANGE THAT BY VIRTUE OF BOTH THE ORDERS I.E.14.11.2013 AND 28.07.2014 ,THE DEMAND TO THE TUNE OF RS.11.05 CRORES EXISTS. ON MERITS, THE ASSESSING OFFICER TREATED THE SOLE TRANSACTION OF SALE BY VIRTUE OF AGREEMENT DATED 25-03-2008. IN THE SAID TRANSACTION LAST INSTALLMENT WAS PAID ON 28-02-2008 THEREFORE TAX BECAME PAYABLE WHEN THE TRANSACTION WAS COMPLETE. PAYMENT RECEIVED BY WAY OF INSTALLMENT DOES NOT ITSELF LEADS TO THE LIABILITY TO PAY THE ADVANCE TAX RELIANCE PLACED UPON THE LAW SETTLED IN CIT V/S PREM LATA JALANI 2003 ITR744 RAJ HC. THEREFORE IN THE SAID CIRCUMSTANCES NO LIABILITY OF ADVANCE TAX EXIST. 8. IN VIEW OF THE DISCUSSION MADE ABOVE, WE ARE OF THE VIEW THAT BOTH THE ORDERS DATED 13-03-2015 ARE NOT LIABLE TO BE SUSTAINABLE IN THE EYES OF LAW. HENCE IS HEREBY ORDERED TO BE SET ASIDE AND WE ALLOWED THE APPEAL OF THE ASSESSEE. 9. IN THE RESULT BOTH THE APPEALS OF THE ASSESSEE ARE HEREBY ALLOWED. ITA NO.3169&3140/M/15 A.Y. 2008-09 10 ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH NOVEMBER, 2016 SD/- SD/- (G.S.PANNU) (AMARJIT SINGH) / ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI; DATED : 18 TH NOVEMBER, 2016 MP / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A)- 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI