JCIT, Bangalore V. M/s Canara Bank, Bangalore

ITA 317/BANG/2014

• Counselvise Citation: 31721114 RSA 2014
• Duration Of Justice: 8 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 06-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C H SUNDAR RAO CITIDR
• Assessee Lawyers: S P SRIDHARA MANAGER OF; BALRAM R
• Keywords: Application of stay; Reason to believe
• Section: 143(3); 244A; 6; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER ITA NO.317/BANG/2014 ASSESSMENT YEAR : 2007-08 THE JOINT COMMISSIONER OF INCOME-TAX, LTU, BANGALORE. VS. M/S. CANARA BANK, BALANCE SHEET AND CENTRAL ACCOUNTS SECTION, HEAD OFFICE, 112, J.C. ROAD, BANGALORE 560 002. PAN: AAACC 6106G APPELLANT RESPONDENT APPELLANT BY : SHRI C.H. SUNDAR RAO, CIT-I(DR) RESPONDENT BY : SHRI S.P. SRIDHARA, MANAGER OF ASSESSEE & SHRI BALRAM R. RAO, ADVOCATE DATE OF HEARING : 24.11.2014 DATE OF PRONOUNCEMENT : 28.11.2014 O R D E R PER N.V. VASUDEVAN, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE REVENUE AGAINST TH E ORDER DATED 25.11.2013 OF THE CIT(APPEALS), LTU, BANGALORE RELA TING TO ASSESSMENT YEAR 2007-08. ITA NO. 317/BANG/2014 PAGE 2 OF 8 2. THE ASSESSEE IS A NATIONALIZED BANK. FOR THE A.Y. 2007-08, AN ORDER OF ASSESSMENT U/S. 143(3) OF THE ACT WAS PASS ED ON 26.11.2009. THE SAID ORDER OF THE ASSESSING OFFICER WAS SUBJECT MAT TER OF REVISIONAL PROCEEDINGS U/S. 263 OF THE ACT BY THE CIT, LTU, WH O BY AN ORDER OF 7.3.2011 DIRECTED THE ASSESSING OFFICER TO ASSESS A SUM OF RS.52,77,81,540 REPRESENTING THE WRITE BACK OF STAL E DEMAND DRAFTS. THE SAID ORDER OF THE CIT WAS CHALLENGED BY THE ASSESSE E BEFORE THE TRIBUNAL. BY AN ORDER DATED 8.6.2012 IN ITA NO.390/BANG/2011, THE TRIBUNAL QUASHED THE ORDER OF CIT TO THE EXTENT, IT RELATED TO ASSESSMENT OF WRITE BACK OF STALE DEMAND DRAFTS. 3. THE ASSESSING OFFICER PASSED AN ORDER DATED 27.9 .2012 GIVING EFFECT TO THE ORDER OF TRIBUNAL. IN THE AFORESAID ORDER, THE AO HAD CHARGED INTEREST U/S. 234C OF THE ACT. ACCORDING TO THE AS SESSEE, THE CONDITION PRECEDENT FOR INVOKING PROVISIONS OF SECTION 234C O F THE ACT WAS NOT APPLICABLE, AS THE ASSESSEE HAD PAID 100% OF TAX AS SESSED ON OR BEFORE THE 4 TH INSTALMENT OF ADVANCE TAX. THE ASSESSEE ALSO CHAL LENGED LEVY OF INTEREST U/S. 220(2) OF THE ACT FOR THE PERIOD DURI NG WHICH THE AO HIMSELF GRANTED STAY OF RECOVERY. THE AO ALSO GRANTED REFU ND OF INTEREST U/S. 244A OF THE ACT, WHICH ACCORDING TO THE ASSESSEE, WAS NO T PROPERLY CALCULATED. 4. AGGRIEVED BY THE ORDER DATED 27.9.2012 OF THE AO , THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(APPEALS). ITA NO. 317/BANG/2014 PAGE 3 OF 8 5. WITH REGARD TO CHARGING OF INTEREST U/S. 234C OF THE ACT, THE ASSESSEE FURNISHED A TABLE SHOWING THE DATES OF PAY MENT OF ADVANCE TAX AND AS TO HOW ON OR BEFORE THE DUE DATE OF PAYMENT OF 4 TH INSTALMENT OF ADVANCE TAX, THE ASSESSEE HAD PAID 100% OF THE TAX PAYABLE ON ASSESSED INCOME. THE CHART FILED BY THE ASSESSEE IN THIS RE GARD READS THUS:- 6. THE LD. CIT(APPEALS) WAS OF THE VIEW THAT CONDIT ION PRECEDENT FOR LEVY OF INTEREST U/S. 234C OF THE ACT VIZ., NON-PAY MENT OF ADVANCE TAX TO THE EXTENT REQUIRED ON THE DATES MENTIONED IN SECTION 2 34C OF THE ACT WAS NOT SATISFIED AND THEREFORE INTEREST U/S. 234C COULD NO T HAVE BEEN LEVIED. 7. AS FAR AS GRANT OF INTEREST ON REFUND OF AMOUNT TO THE ASSESSEE U/S. 244A OF THE ACT IS CONCERNED, THE ASSESSEE GAVE A C OMPUTATION OF INTEREST PAYABLE BY DEPARTMENT. THE SAME HAS BEEN EXTRACTED IN PARA 5 OF THE ITA NO. 317/BANG/2014 PAGE 4 OF 8 ORDER OF THE CIT(A), WHICH IS NOT BEING REPEATED. THE CIT(A) DIRECTED THE AO TO VERIFY THE FIGURES GIVEN AND GIVE EFFECT ACCO RDINGLY. 8. AS FAR AS LEVY OF INTEREST U/S. 220(2) OF THE AC T IS CONCERNED, THE LD. CIT(A) HELD AS FOLLOWS:- 4. IN GROUNDS 4 & 5 IT HAS BEEN SUBMITTED THAT T HE AO WAS NOT JUSTIFIED IN CHARGING INTEREST U/S 220(2) OF TH E IT ACT SINCE THE DEMAND HAD BEEN STAYED BY THE AO HIMSELF TILL THE D ISPOSAL OF THE APPEAL. THE FACTS AVAILABLE ON RECORD SHOW THAT THE ASSESSE HAD FILED THE APPLICATION FOR STAY OF DEMAND ON 18.01.2 010 WHICH WAS ALLOWED THROUGH THE AOS LETTER DT. 19.02.2012. THE STAY WAS GRANTED FOR THE DEMAND OF AY 2007-08 TILL THE DISPO SAL OF FIRST APPEAL PENDING FOR AY 2005-06. WITHIN 10 DAYS HOWEV ER, THIS STAY WAS WITHDRAWN BY THE AO THROUGH HIS LETTER DT. 01.03.2010. CONSIDERING THIS SEQUENCE OF EVENTS, THE APPELLANT S CONTENTION IS NOT FULLY SUPPORTED BY FACTS. THE LIABILITY TO PAY INTEREST U/S 220(2) IS, THEREFORE, HELD TO BE EXISTING EXCEPT FO R THE SHORT PERIOD COVERED BY THE STAY AND NOT FOR THE PERIOD FROM DEC EMBER, 2009 TO FEBRUARY, 2010 AS HAS BEEN ASSERTED BY THE APPEL LANT. THIS GROUND, THEREFORE, SUCCEEDS PARTLY. 9. AGGRIEVED BY THE ORDER OF CIT(APPEALS), THE REVE NUE HAS PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL RAISING THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL:- 2. THE CIT(A) ERRED IN DELETING INTEREST U/S 234C , EVEN THOUGH THE SAME WAS CALCULATED WHILE PROCESSING RET URN U/S 143(1). 3. THE CIT(A) ERRED IN HOLDING THAT INTEREST U/S 2 20(2) IS NOT CHARGEABLE DURING THE PERIOD OF STAY, AS THE SAME I S AGAINST THE PROVISION OF INCOME TAX ACT, WHERE THE STAY WAS SOU GHT BY THE ASSESSEE AND NOT GIVEN SUO MOTO BY THE AO. ITA NO. 317/BANG/2014 PAGE 5 OF 8 4. THE LD CIT(A) ERRED IN COMPUTING INTEREST U/S 2 44A PAYABLE TO THE ASSESSEE BY CHARGING INTEREST ON INT EREST, WHICH IS NOT ENVISAGED IN THE INCOME TAX ACT. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE LD. DR REITERATED THE STAND OF REVENUE AS REFLECTED IN THE GROUNDS OF APPEAL. LD. COUNSEL FOR THE ASSESSEE RE LIED ON THE ORDER OF CIT(APPEALS). 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AS F AR AS LEVY OF INTEREST U/S. 234C OF THE ACT IS CONCERNED, FROM THE CHART F ILED BY THE ASSESSEE BEFORE THE CIT(APPEALS), IT IS CLEAR THAT THERE WAS NO DEFAULT IN PAYMENT OF ADVANCE TAX BY THE ASSESSEE SO AS TO ATTRACT LEVY O F INTEREST U/S. 234C OF THE ACT. THEREFORE, THE ORDER OF THE LD. CIT(A) ON THIS ISSUE IS UPHELD. 12. AS REGARDS AWARDING OF INTEREST U/S. 244A ON TH E REFUND DUE TO THE ASSESSEE IS CONCERNED, THE CIT(A) HAS ONLY DIRECTED THE AO TO VERIFY THE FIGURES FURNISHED BY THE ASSESSEE AND ALLOW INTERES T AS REQUIRED BY PROVISIONS OF SECTION 244A OF THE ACT. THE REVENUE CANNOT HAVE ANY GRIEVANCE AGAINST SUCH ORDERS. 13. AS FOR LEVY OF INTEREST U/S. 220(2) OF THE ACT FOR THE PERIOD DURING WHICH THE AO HIMSELF HAS GRANTED AN ORDER OF STAY O F OUTSTANDING DEMAND, THE RELEVANT PROVISIONS OF SEC.220 READ AS FOLLOWS: - ITA NO. 317/BANG/2014 PAGE 6 OF 8 SEC. 220:WHEN TAX PAYABLE AND WHEN ASSESSEE DEEMED IN DEFAULT. (1) ANY AMOUNT, OTHERWISE THAN BY WAY OF ADVANCE TA X, SPECIFIED AS PAYABLE IN A NOTICE OF DEMAND UNDER SECTION 156 SHALL BE PAID WITHIN THIRTY DAYS OF THE SERVICE OF THE NOTICE AT THE PLACE AND TO THE PERSON MENTIONED IN THE NOTICE: PROVIDED THAT, WHERE THE ASSESSING OFFICER HAS ANY REASON TO BELIEVE THAT IT WILL BE DETRIMENTAL TO REVENUE IF T HE FULL PERIOD OF THIRTY DAYS AFORESAID IS ALLOWED, HE MAY, WITH THE PREVIOUS APPROVAL OF THE JOINT COMMISSIONER, DIRECT THAT THE SUM SPECIFIED IN THE NOTICE OF DEMAND SHALL BE PAID WITHIN SUCH P ERIOD BEING A PERIOD LESS THAN THE PERIOD OF THIRTY DAYS AFORESAI D, AS MAY BE SPECIFIED BY HIM IN THE NOTICE OF DEMAND. (2) IF THE AMOUNT SPECIFIED IN ANY NOTICE OF DEMAND UNDER SECTION 156 IS NOT PAID WITHIN THE PERIOD LIMITED UNDER SUB -SECTION (1), THE ASSESSEE SHALL BE LIABLE TO PAY SIMPLE INTEREST AT ONE PER CENT FOR EVERY MONTH OR PART OF A MONTH COMPRISED IN THE PERIOD COMMENCING FROM THE DAY IMMEDIATELY FOLLOWING THE E ND OF THE PERIOD MENTIONED IN SUB-SECTION (1) AND ENDING WITH THE DAY ON WHICH THE AMOUNT IS PAID: PROVIDED THAT, WHERE AS A RESULT OF AN ORDER UNDER SECTION 154, OR SECTION 155, OR SECTION 250, OR SECTION 254, OR SEC TION 260, OR SECTION 262, OR SECTION 264, OR AN ORDER OF THE SET TLEMENT COMMISSION UNDER SUB-SECTION (4) OF SECTION 245D, T HE AMOUNT ON WHICH INTEREST WAS PAYABLE UNDER THIS SECTION HA D BEEN REDUCED, THE INTEREST SHALL BE REDUCED ACCORDINGLY AND THE EXCESS INTEREST PAID, IF ANY, SHALL BE REFUNDED: PROVIDED FURTHER THAT IN RESPECT OF ANY PERIOD COMM ENCING ON OR BEFORE THE 31ST DAY OF MARCH, 1989, AND ENDING AFTE R THAT DATE, SUCH INTEREST SHALL, IN RESPECT OF SO MUCH OF SUCH PERIOD AS FALLS AFTER THAT DATE, BE CALCULATED AT THE RATE OF ONE A ND ONE-HALF PER CENT FOR EVERY MONTH OR PART OF A MONTH. 14. IT IS SEEN FROM THE PROVISIONS OF SECTION 220( 2) THAT LIABILITY TO PAY INTEREST SPRINGS ONLY ON NON-PAYMENT OF AMOUNT DUE SPECIFIED IN THE NOTICE ITA NO. 317/BANG/2014 PAGE 7 OF 8 OF DEMAND U/S. 156 OF THE ACT. WHEN PAYMENT OF SUC H OUTSTANDING DEMAND IS STAYED BY THE AO HIMSELF, THE DEMAND NO L ONGER REMAINS PAYABLE. DURING THE PERIOD WHEN SUCH STAY OPERATES , IT CANNOT BE SAID THAT THERE WAS AN OBLIGATION ON THE PART OF ASSESSEE TO PAY THE OUTSTANDING DEMAND. THEREFORE, INTEREST FOR THE AFORESAID PERI OD WAS RIGHTLY DIRECTED BY THE CIT(APPEALS) TO BE EXCLUDED. 15. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY GROUND S TO INTERFERE WITH THE ORDERS OF THE LD. CIT(APPEALS). CONSEQUENTLY, APPE AL BY THE REVENUE IS DISMISSED . 16. IN THE RESULT, THE APPEAL BY THE REVENUE IS DIS MISSED. PRONOUNCED IN THE OPEN COURT ON THIS 28 TH DAY OF NOVEMBER , 2014 . SD/- SD/- ( ABRAHAM P. GEORGE ) ( N.V. VASUDEVA N ) ACCOUNTANT MEMBER JUDICIAL M EMBER BANGALORE, DATED, THE 28 TH NOVEMBER, 2014 . /D S/ ITA NO. 317/BANG/2014 PAGE 8 OF 8 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR / SENIOR PRIVATE SECRETARY ITAT, BANGALORE.