Pala Marketing Co- Op Society Ltd., Kottayam V. Assistant Commissioner of Income Tax, Kottayam

ITA 50/COCH/2009

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0892 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 11 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 11-01-2011
• Assessment Year: 1997-1998
• Appeal Filed On: 04-02-2009
• Court: TRIBUNAL
• Department Lawyers: T J VINCENTJR
• Assessee Lawyers: Z T ZACHARIAHCA
• Keywords: Condonation of delay; Set aside
• Section: 244A; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.VIJAYAKUMARAN & SHRI SANJAY ARORA I.T.A.NO.50/COCH/2009 ASSESSMENT YEAR:1997-98 PALA MARKETING CO - OPERATIVE SOCIETY LTD.,NO.4214, PALA. PA NO. AACEP 2988G VS. THE ASSIST .COMMISSIONER OF INCOME-TAX, CIRCLE-1, KOTTAYAM. (APPELLANT) ( RESPONDENT ) APPELLANT BY SHRI Z.T. ZACHARIAH,CA RESPONDENT BY SHRI T.J.VINCENT,JR.DR O R D E R PER N.VIJAYAKUMARAN,J.M: THIS APPEAL IS DIRECTED AGAINST THE ORDER OF THE L D. CIT(APPEALS)-IV, KOCHI, DATED 11-11-2008, RELATING TO THE ASSESSMENT YEAR 1997-98. THIS APPEAL IS FOR THE CLA IM OF INTEREST ON REFUND. 2. THE FACTS RELEVANT ARE THAT THE ASSESSEE CLAIMED REFUND ON TAX BY FILING A DELAYED RETURN OF INCOME. THE H ONBLE HIGH COURT VIDE ITS JUDGMENT DATED 26 TH NOVEMBER,2007 HAS CONDONED THE DELAY IN FILING THE RETURN AND FINALLY HELD THAT THE PETITIONER IS ENTITLED FOR CONDONATION OF DELAY U/S.119(2)(B) OF THE ACT AND CONSEQUENTLY DIRECTED THE JOINT ITA NO. 50/COCH/2009 2 COMMISSIONER OF INCOME-TAX (ASSTT.), SPL.RANGE, KOT TAYAM, TO PROCESS THE PETITIONERS CLAIM FOR REFUND U/S.2 37 AND GRANT REFUND TO THE EXTENT FOUND ELIGIBLE WITHIN A PERIOD OF THREE MONTHS FROM THE DATE OF PRODUCTION OF COPY OF THIS JUDGMENT BY THE PETITIONER. THE ASSIST. COMMISSIO NER OF INCOME-TAX, CIRCLE-I, KOTTAYAM, VIDE HIS ORDER DATE D 11-02- 2008 WHILE GIVING EFFECT TO THE ORDER OF HONBLE HI GH COURT CITED ABOVE, GRANTED REFUND DUE AT RS.10,47,957/- O N WHICH THERE IS NO QUARREL AND THE REAL DISPUTE IS ON THE INTEREST U/S.244A WHICH WAS DECLINED BY THE DEPARTMENT ON TH E REASON THAT THE ASSESSEE DID NOT FILE A VALID RETUR N OF INCOME. 3. AGGRIEVED BY THIS ORDER OF THE ASSIST.COMMISSIO NER OF INCOME-TAX, THE MATTER WAS CARRIED IN APPEAL BEFORE THE CIT(APPEALS), WHO UPHELD THE FINDINGS OF THE ASSESS ING OFFICER. HENCE, THE ASSESSEE IS ON SECOND APPEAL BEFORE THE TRIBUNAL. 4. THE ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE IS THAT ONCE THE DELAY HAS BEEN CONDONED, LATER ON IT CANNO T BE HELD THAT THE RETURN IS NOT A VALID RETURN AND THAT THE REFUND ITA NO. 50/COCH/2009 3 BECAME DUE IT IS MANDATORY THAT THE ASSESSEE BE PAI D INTEREST AS PRESCRIBED IN SECTION 244A. 5. THE CONTENTION OF THE LD. D.R. WOULD BE THAT THE RETURN ITSELF IS NOT VALID, NO INTEREST IS TO BE PAID U/S. 244A OF THE ACT AND FOR THAT THE LD. D.R. QUOTED EXPLANATION (2 ) TO SECTION 244A, WHICH READS AS UNDER: IF THE PROCEEDINGS RESULTING IN THE REFUND ARE DEL AYED FOR REASONS ATTRIBUTABLE TO THE ASSESSEE, WHETHER W HOLLY OR IN PART, THE PERIOD OF THE DELAY SO ATTRIBUTABLE TO HIM SHALL BE EXCLUDED FROM THE PERIOD FOR WHICH INTEREST IS P AYABLE, AND WHERE ANY QUESTION ARISES AS TO THE PERIOD TO B E EXCLUDED, IT SHALL BE DECIDED BY THE CHIEF COMMISSI ONER OR COMMISSIONER WHOSE DECISION THEREON SHALL BE FINAL. 6. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD INCLUDING THE PRECEDE NCE. THE QUANTUM OF REFUND IS NOT IN DISPUTE. ONLY THE INT EREST ON SUCH REFUND ALONE IS THE DISPUTE BEFORE US. IN PR INCIPLE, AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. NARENDRA DOSHI REPORTED IN 254 ITR 606 INTEREST UPON INTEREST IS TO BE PAID. HENCE, WE HAVE TO SEE WHE THER THE INTEREST IS CONSEQUENTIAL TO THE REFUND OR THE REAS ONS ATTRIBUTABLE BY THE PARTIES TO BE EXCLUDED FROM THE PERIOD FOR ITA NO. 50/COCH/2009 4 WHICH INTEREST IS PAYABLE. THE HONBLE HIGH COURT FOUND THAT THE PEPTITIONER WAS PREVENTED FROM FILING THE RETURN OF INCOME IN TIME ON ACCOUNT OF DELAY IN COMPLETION OF STATUTORY AUDIT AND PARTICULARLY IF THE REFUND IS R EJECTED, THE SAME WILL AFFECT PETITIONERS FINANCIAL CONDITION C AUSING GENUINE HARDSHIP TO IT AND THE ASSESSEE HAS SUFFERE D HEAVY LOSSES IN THE IMMEDIATELY SUCCEEDING FIVE YEARS. THEREFORE, THE HONBLE HIGH COURT WAS PLEASED TO CONDONE THE D ELAY AND THE DEPARTMENT HAS TO BE CONSIDERED A VALID RET URN AND IN ORDER TO CONSIDER BELATED RETURN FOR REFUND ON M ERIT, DELAY HAS TO BE NECESSARILY CONDONED BY THE BOARD U/S.119 (2)(B) OF THE ACT. BY APPLYING SECOND PROVISO TO SECTION 244A(B), THE DELAY ATTRIBUTABLE HAS TO BE SEEN. THE STATUT E SPECIFICALLY PROVIDES AND EMPOWERS THAT SUCH A QUES TION ARISES AS TO THE PERIOD TO BE EXCLUDED. IT SHALL BE DECIDED BY THE CHIEF COMMISSIONER OR COMMISSIONER AND THAT DECISION SHALL BE FINAL. IN THIS VIEW OF THE MAT TER, WE SET ASIDE THE ORDER OF THE LOWER AUTHORITIES AND REMIT THIS ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER, WHO WILL DECIDE IN ACCORDANCE WITH EXPLANATION (2) TO SECTION 244A(B) OF THE ACT AND THE DECISIONS OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. NARENDRA DOSHI REPORTED IN 254 ITR 606 AND IN THE CASE OF CIT VS. SHELLY PRODUCTS REPORTED IN 261 ITA NO. 50/COCH/2009 5 ITR 376, AFTER AFFORDING ADEQUATE OPPORTUNITY OF BEING HEAR D TO THE ASSESSEE. THE ASSESSEE IS ALSO AT LIBERTY TO MOVE TO THE CHIEF COMMISSIONER OR COMMISSIONER FOR THE APPR OPRIATE DECISION FOR THE CALCULATION OF INTEREST WHICH IS O NLY CONSEQUENTIAL TO THE REFUND. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TRE ATED AS ALLOWED FOR STATISTICAL PURPOSES. SD/- SD/- (SANJAY ARORA) (N.V IJAYKUMARAN) ACCOUNTANT MEMBER JUDICIAL M EMBER ERNAKULAM, DATED THE 13 TH JANUARY,2011. PM.3 COPY FORWARDED TO: 1. PALA MARKETING CO-OPERATIVE SOCIETY LTD.,NO.4214, PALA. 2. THE ACIT, CIRCLE-1, KOTTAYAM. 3. CIT(A)-IV, KOCHI. 4. CIT, KOTTAYAM. 5. D.R.