Mrs. Neeru Gambhir, New Delhi V. ITO, New Delhi

ITA 4908/DEL/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61625 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-04-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 23-04-2012
• Assessment Year: 2000-2001
• Appeal Filed On: 10-11-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R S NEGI
• Assessee Lawyers: ROHIT JAIN
• Section: 143(3); 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E DELHI BEFORE SHRI R.P. TOLANI AND SHRI K.G. BANSAL ITA NO. 4908(DEL)/2010 ASSESSMENT YEAR: 2000-01 NEERU GAMBHIR, INCOME-TAX OFFICER, M-16, MUNISH PLAZA, VS. W ARD 13(2), NEW DELHI. 20, ANSARI ROAD, DARYA GANJ, DELHI-2. PAN: AAHPG8384L (APPELLANT) (RESPONDENT) APPELLLANT BY : SHRI ROHIT JAIN, C.A. RESPONDENT BY : SHRI R.S. NEGI, SR. DR DATE OF HEARIN G : 23.04.2012 DATE OF PRONOU NCEMENT: 23.04.2012. ORDER PER K.G. BANSAL : AM THE ASSESSEE HAD TAKEN UP TWO SUBSTANTIVE GROUN DS IN THE APPEAL THAT THE LD. CIT(APPEALS) ERRED IN CONFIRMING T HE ACTION OF THE ASSESSING OFFICER IN LEVYING-(I) INTEREST OF RS. 3,09,931/- U/S 234C, AND (II) INTEREST OF RS. 1,86,193/- U/S 220(2)(II) OF THE ACT. OTHE R GROUNDS ARE IN SUPPORT OF THESE GROUNDS. IN THE COURSE OF HEARING BEFORE US, THE LD. COUNSEL DID NOT PRESS THE GROUND IN RESPECT OF LEVY OF INTEREST OF RS. 3,09,931/- U/S 234C ITA NO. 4908(DEL)/2010 2 AS ITS CHARGING IS MANDATORY IN NATURE. THEREFOR E, THIS GROUND IS DISMISSED AS NOT PRESSED. 2. COMING TO THE INTEREST U/S 220, IT IS SUBMITT ED THAT THE ASSESSEE HAD FILED HER RETURN DECLARING TOTAL INCOME OF ABOUT RS. 2.08 CRORE. ASSESSMENT U/S 143(3) WAS COMPLETED AT INCOME OF A BOUT RS. 2.41 CRORE. IN APPEAL, THE LD. CIT(APPEALS) DIRECTED TO ASSE SS THE INCOME AT ABOUT RS. 2.08 CRORE. THE TRIBUNAL QUASHED THE ORDER BUT THE HIGH COURT REVERSED THE ORDER OF THE TRIBUNAL WITH A DIRECTION TO PA SS A FRESH ORDER. ACCORDING TO THIS ORDER, THE INCOME OF THE ASSESSE E WAS ASSESSED AT ABOUT RS. 2.17 CRORE. THE AO LEVIED INTEREST OF RS. 1,86,193/- U/S 220(2). THE ASSESSEE MOVED A RECTIFICATION APPLICATION U/S 154. THIS APPLICATION WAS DISPOSED OFF ON 27.04.2009. ONE OF THE SUBMISSIO NS OF THE ASSESSEE WAS THAT INTEREST U/S 220(2) IS NOT CHARGEABLE. THIS SUBMISSION WAS REJECTED AND INTEREST OF RS. 1,86,193/- WAS CHARGED. THE INSTANT APPEAL IS AGAINST CHARGING OF THIS INTEREST. 2.1 THE LD. COUNSEL FOR THE ASSESSEE FAIRLY DREW OUR ATTENTION TOWARDS THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF GIRNAR INVESTMENT LTD. VS. CIT & ANOTHER (2012) 340 IT R 529, IN WHICH IT HAS ITA NO. 4908(DEL)/2010 3 BEEN HELD THAT THE ASSESSEE IS LIABLE TO PAY IN TEREST ON THE AMOUNT OF TAX DUE FROM HIM ON THE BASIS OF THE ASSESSMENT ORDE R PASSED U/S 143(3) FOR THE PERIOD STARTING FROM THE DATE WHEN DEMAND BECAME DUE AS PER ASSESSMENT ORDER TILL THE DATE ON WHICH IT WAS ACTUALLY PAID. WHILE DOING SO, NO NOTICE SHALL BE TAKEN OF THE FACT THAT BY VIRTUE OF THE ORDER OF THE CIT(APPEALS), THERE WAS A REDUCTION OF THE TAX L IABILITY FROM THE DATE OF THE HIS ORDER TILL THE DATE ON WHICH THE TRIBUNA L RESTORED THE ASSESSMENT ORDER. IT IS SUBMITTED THAT THIS DECISION GOES AGAINST THE ASSESSEE. FOR THE SAKE OF READY REFERENCE, THE RELEVANT PORTION OF THE DECISION IS REPRODUCED BELOW:- TO SUM UP, THE FOLLOWING PRINCIPLES CAN BE GLEANED FROM THE DECISIONS NOTICED ABOVE: (A) FRESH NOTICES OF DEMAN D NEED NOT BE ISSUED EVERY TIME THE TOTAL INCOME UNDERGOES A C HANGE DUE TO APPELLATE OR REVISIONAL ORDERS SINCE SECTION 3(B )(III) OF THE VALIDATING ACT PROVIDES THAT ANY PROCEEDING INITIAT ED ON THE BASIS OF THE NOTICE OF DEMAND SERVED UPON THE ASSES SEE BEFORE THE DISPOSAL OF THE APPEAL OR OTHER PROCEEDING MAY BE CONTINUED IN RELATION TO THAT AMOUNT SO REDUCED FROM THE STAG E AT WHICH SUCH PROCEEDINGS STOOD IMMEDIATELY BEFORE SUCH DISP OSAL; (B) A CASE WHERE THE ASSESSEE HAS PAID THE FULL AMOUNT OF TAX DEMANDED BY THE AO PURSUANT TO THE ASSESSMENT ORDER STANDS ON A DIFFERENT FOOTING FROM A CASE WHERE SUCH DEMAN D WAS NOT SATISFIED IN FULL AND DIFFERENT CONSIDERATIONS SHAL L APPLY TO SUCH A CASE; (C) THE ORIGINAL DEMAND MADE BY THE AO ON T HE BASIS OF THE ASSESSMENT ORDER IS MERELY KEPT IN ABEYANCE OR SUSPENSION DURING THE ENTIRE PROCEEDINGS BY WAY OF APPEAL OR R EVISION TAKEN AGAINST THE ASSESSMENT AND GETS REVIVED FROM INCEPTION ONCE THE ASSESSMENT GETS FINALLY CONFIRMED IN THOSE ITA NO. 4908(DEL)/2010 4 PROCEEDINGS; (D) WHEN THE ASSESSMENT ORDER IS FINAL LY AFFIRMED, THE DOCTRINE OF MERGER ALSO APPLIES AND INTEREST BE ING COMPENSATORY IN NATURE, THE REVENUE IS ENTITLED TO CHARGE THE SAME FROM THE DATE OF THE ORIGINAL ORDER WHICH MERG ED WITH THE FINAL APPELLATE ORDER; (E) AS A COROLLARY TO THE AB OVE, IT FOLLOWS THAT WHERE AN ASSESSMENT IS RESTORED AND THE ORIGIN AL DEMAND GETS REVIVED FROM INCEPTION, THE ASSESSEE IS LIABLE TO PAY INTEREST U/S.220(2) OF THE ACT FROM THAT DATE ON THE UNPAID AMOUNT AND ANY VARIATION IN THE AMOUNT OF THE DEMAND FAVOURABL E TO THE ASSESSEE WHICH WAS DIRECTED BY ANY OF THE APPELLATE AUTHORITIES IN THE INTERREGNUM HAS NO EFFECT ON THE LIABILITY O F THE ASSESSEE TO PAY THE INTEREST. 2.2 IT IS FURTHER SUBMITTED THAT IN THE INSTANT CASE THE ASSESSEE HAD FILED A RECTIFICATION APPLICATION IN WHICH THE CLAIM OF THE ASSESSEE WAS DENIED. IN SUCH A SITUATION, THE MATTER CAN BE AGITATED IN APPEAL. SINCE THE TAX PAYABLE BECAME NIL AS PER THE DECISION OF THE LD . CIT(APPEALS), THE TRIBUNAL MAY HOLD THAT INTEREST WAS CHARGEABLE ONL Y FROM THE DATE WHEN TRIBUNAL FINALLY RESTORED THE DEMAND. IN THIS CONNECTION, RELIANCE HAS BEEN PLACED ON THE DECISION OF HONBLE MADRAS HI GH COURT IN THE CASE OF CHENNAI PROPERTIES & INVESTMENT LTD. VS. CIT, (20 01) 247 ITR 226. THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAD PAI D ADVANCE-TAX DURING THE RELEVANT FINANCIAL YEAR WITHOUT RECEIVING ANY NOT ICE FROM THE INCOME-TAX OFFICER. HOWEVER, HE WAS NOT GRANTED INTEREST U/S 214 ON THE AMOUNT REFUNDED OUT OF THE ADVANCE-TAX. THE APPLICATIO N OF THE ASSESSEE FOR RECTIFICATION OF THE ORDER WAS REJECTED BY THE AO . IT HAS BEEN HELD THAT ITA NO. 4908(DEL)/2010 5 APPEAL AGAINST THIS ORDER IS COMPETENT. IT HAS BEEN FURTHER HELD THAT EVEN WHEN ADVANCE-TAX IS PAID WITHOUT ANY NOTICE FRO M THE INCOME-TAX OFFICER, THE ASSESSEE IS ENTITLED TO INTEREST U /S 214 PROVIDED THE TAX WAS PAID BEFORE THE EXPIRY OF THE FINANCIAL YEAR. 2.3 IT IS ALSO SUBMITTED THAT INSTEAD OF ISSUING INTIMATION TO THE ASSESSEE, THE AO ISSUED NOTICE OF DEMAND U/S 156 OF THE ACT , UNDER WHICH THE ASSESSEE WAS DIRECTED TO PAY THE DEMAND WITHIN 30 DAYS OF THE SERVICE OF THE NOTICE. THIS FRESH NOTICE OF DEMAND EFFACED THE ORIGINAL NOTICE OF DEMAND AND, THUS, THE DEMAND RAISED NOW BECAME PAYABLE AS PER TERMS OF THE FRESH NOTICE. IN SUCH A SITUATION, INTERE ST U/S 220(2) WAS NOT CHARGEABLE. IN THIS CONNECTION, RELIANCE IS PLAC ED ON THE DECISION IN THE CASE OF SMT. B. INDIRA RANI VS. CIT, 271 ITR 57 0 (KER.). IN THIS DECISION, IT HAS BEEN HELD THAT AFTER THE ORDER O F THE TRIBUNAL FRESH ASSESSMENT ORDER WAS PASSED IN WHICH DETAILS OF TAX AND INTEREST PAYABLE WERE MENTIONED AND PENALTY PROCEEDINGS WERE ALSO INITIATED. IF THIS ORDER IS TAKEN AS A MERE INTIMATION, THE PROPOSAL OF TAKING PENALTY PROCEEDINGS COULD NOT HAVE BEEN MADE THEREIN. AS PER NOTICE O F DEMAND, THE ASSESSEE WAS REQUIRED TO PAY THE DEMAND WITHIN 35 DAYS OF RECEIPT THEREOF. THEREFORE, IT HAS BEEN HELD THAT WHERE A FRESH A SSESSMENT ORDER IS PASSED ITA NO. 4908(DEL)/2010 6 IN PURSUANCE OF WHICH A FRESH NOTICE OF DEMAND IS ISSUED, INTEREST IS PAYABLE ONLY WHEN THE AMOUNT IS NOT PAID AS PER FRESH NOTICE. FOR THE SAKE OF READY REFERENCE, THE RELEVANT PORTION OF THE DECISION IS REPRODUCED BELOW:- IT WAS ARGUED THAT IT WAS NOT NECESSARY FOR T HE ASSESSING OFFICER TO RE-FRAME THE ASSESSMENT OR PASS A FRESH ASSESSMENT ORDER AS WAS DONE IN THIS CASE, AN D MERE INTIMATION AS MENTIONED IN THE VALIDATION ACT, 1964, WOULD HAVE BEEN ENOUGH. BUT THE FACT IS THAT AFTER T HE TRIBUNALS ORDER FRESH ASSESSMENT ORDER EXHIBIT P5 WAS PASS ED DETAILING TAX PAYABLE, CALCULATING INTEREST UNDER SECTIONS 139(8) AND 217(1A) TILL THE DATE OF FRESH ASSESSMENT AND P ROPOSING FOR PENALTY. IF IT WAS A MERE INTIMATION, THE PROP OSAL OF TAKING PENALTY PROCEEDINGS WOULD NOT HAVE BEEN THERE. PURSUANT TO THE REFRAMING OF ASSESSMENT, A FRESH DEMAND NO TICE WAS ISSUED ASKING TO PAY THE AMOUNT MENTIONED WITHIN 35 DAYS AND THE AMOUNT WAS PAID WITHIN TIME. EXHIBIT P5 (A) DEMAND NOTICE, THEREFORE, SUPERSEDED THE FIRST DEMAND N OTICE. IT IS SETTLED LAW THAT IN A TAXATION STATUTE ONE HAS TO LOOK AT WHAT IS CLEARLY STATED. THERE IS NO ROOM FOR ANY INTEN DMENT. THERE IS NO EQUITY OR PRESUMPTION ABOUT T AX. NOTHING IS TO BE READ IN AND NOTHING IS TO BE IMPLIED. IN VIEW OF THE CLE AR LANGUAGE USED IN SECTION 220(2) WHEN A FRESH DEMAND NOTI CE IS ISSUED IN PURSUANCE OF A FRESH ASSESSMENT ORDER PASSED AS A RESULT OF THE APPELLATE ORDER, INTEREST IS PAYABLE ONLY W HEN THE AMOUNT IS NOT PAID AS PER THE FRESH DEMAND. 2.4 AS AGAINST THE AFORESAID, THE LD. DR RELI ED ON THE IMPUGNED ORDER AS WELL AS ON THE DECISION OF HONBLE DELHI H IGH COURT IN THE CASE OF GIRNAR INVESTMENT LTD. ITA NO. 4908(DEL)/2010 7 3. WE HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSIONS MADE BEFORE US. WE ARE OF THE VIEW THAT THE DECISION IN THE CASE OF CHENNAI PROPERTIES & INVESTMENT LTD.(SUPRA) IS NOT APPLICA BLE. THE REASON IS THAT WHEN EXCESS ADVANCE-TAX IS PAID WHICH IS REFUND ED ON ASSESSMENT OR SUBSEQUENTLY IN APPEAL, THE ASSESSEE IS ENTITLED TO INTEREST U/S 214. THE INCOME-TAX OFFICER FAILED TO GRANT SUCH INTEREST TO THE ASSESSEE. THEREFORE, THE ASSESSEE WAS WITHIN ITS RIGHT TO MOVE AN APP LICATION U/S 154 FOR THE REASON THAT THE MISTAKE WAS APPARENT FROM RECORD. ON THE OTHER HAND, INTEREST U/S 220 IS CHARGEABLE WHEN THE TAX AS PE R ASSESSMENT ORDER IS NOT PAID WITHIN THE STIPULATED PERIOD U/S 156. IT IS A MATTER OF FACT ON RECORD THAT THE TAX HAS NOT BEEN PAID WITHIN THE STIP ULATED PERIOD. IT SO HAPPENED THAT THE LIABILITY OF THE ASSESSEE GOT VARIED IN APPEAL. THE LD. CIT(APPEALS) REDUCED THE LIABILITY BUT THE TRIBUNAL RESTORED T HE LIABILITY TO THE ORIGINAL AMOUNT. IN SUCH A SITUATION, THE DECISION IN THE CASE OF GIRNAR INVESTMENT LTD. (SUPRA) IS APPLICABLE, WHICH SHOWS THAT INTE REST IS PAYABLE FROM THE DATE OF ENFORCEMENT OF THE DEMAND NOTICE TILL TH E DATE OF PAYMENT. THE LEVY OF THIS INTEREST IS MANDATORY IN NATURE AND IT IS ALSO NOT APPEALABLE. THUS, WHAT CANNOT BE ACHIEVED DIRECTLY CANNOT BE ACHIEVED BY FILING AN APPLICATION U/S 154. ITA NO. 4908(DEL)/2010 8 3.1 COMING TO THE DECISION IN THE CASE OF SMT. B . INDIRA RANI (SUPRA), WE ARE OF THE VIEW THAT THE FACTS ARE DISTINGUI SHABLE. IN THAT CASE, THE AO HAD MADE A FRESH ASSESSMENT ORDER IN WHICH PENALT Y WAS ALSO INITIATED. THEREFORE, A FRESH NOTICE OF DEMAND WAS ISSUED WHICH SUPERSEDED THE EXISTING NOTICE OF DEMAND. THE HONBLE COURT H AS MENTIONED THAT IT WAS NOT AN INTIMATION UNDER THE VALIDATION ACT, 1964 . IN THE INSTANT CASE NO FRESH ASSESSMENT HAS BEEN MADE. THUS, THERE WAS NO REQUIREMENT FOR ISSUING A FRESH NOTICE OF DEMAND AS THE ORIGINA L NOTICE REMAINED IN FORCE AS PER DECISION IN THE CASE OF GIRNAR INVESTMEN T LTD. (SUPRA). ISSUING OF A REDUNDANT NOTICE OF DEMAND WILL NOT LEAD TO POS TPONE OF DEMAND. WHAT THE ASSESSING OFFICER HAS DONE WAS TO MERELY CAR RY OUT CLERICAL WORK REQUIRED TO BE DONE ON RECEIPT OF THE ORDER OF THE TRIBUNAL AND HE HAD NO DISCRETION TO EXERCISE IN THE MATTER. THEREFORE, IT IS HELD THAT THE FRESH NOTICE OF DEMAND HAS NO EXISTENCE IN THE EYE OF LAW AND THE SAME IS REQUIRED TO BE IGNORED. THE POSITION WOULD HAVE BEEN DIFFERENT IF THE MATTER HAD BEEN RESTORED TO THE FILE OF THE AO FOR MAKING A FRESH ASSESSMENT GRANTING HIM DISCRETION TO DECIDE THE WHOLE ASSESSMENT AS PER LAW, BUT SUCH IS NOT THE CASE AT HAND. ITA NO. 4908(DEL)/2010 9 3.2 IN VIEW OF THE AFORESAID DISCUSSION, IT IS HELD THAT THE LD. CIT(APPEALS) WAS RIGHT IN SUSTAINING THE LEVY OF INTEREST. 4. IN THE RESULT, THE APPEAL IS DISMISSED. SD/- SD/- (R.P. TOLANI) (K.G. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER SP SATIA COPY OF THE ORDER FORWARDED TO:- MRS. NEERU GAMBHIR, DELHI. ITO, WARD 13(2), NEW DELHI. CIT(A) CIT, THE D.R., ITAT, NEW DELHI. ASSISTANT REGISTRAR.