ACIT, Ludhiana V. M/s Vardhman Textiles Limited, Ludhiana

ITA 552/CHANDI/2015

• Counselvise Citation: 55221514 RSA 2015
• Duration Of Justice: 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 20-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Assessee Lawyers: SUBHASH AGGARWAL; VINEET J AIN
• Section: 143(3); 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI H.L.KARWA, VICE PRESIDENT AND MS. RANO JAIN, ACCOUNTANT MEMBER ITA NO.552/CHD/2015 (ASSESSMENT YEAR : 2006-07) THE A.C.I.T., VS. M/S VARDHMAN TEXTILES LIMITED, CIRCLE-1, CHANDIGARH ROAD, LUDHIANA. LUDHIANA. PAN: AABCM4692E (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.K.MITTAL, DR RESPONDENT BY : S/SHRI SUBHASH AGGARWAL & VINEET JAIN DATE OF HEARING : 31.08.2015 DATE OF PRONOUNCEMENT : 03.09.2015 O R D E R PER RANO JAIN, A.M . : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-I, LUDHIANA DATED 23.2.2015 FOR ASSESSMEN T YEAR 2006-07. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSMENT I N THIS CASE WAS MADE UNDER SECTION 143(3) OF THE INCOME TA X ACT, 1961 (IN SHORT THE ACT) AS ON 26.12.2008 AND DEMA ND OF RS.8,93,73,180 WAS DETERMINED TO BE PAYABLE BY THE ASSESSEE. 2 THE DEMAND NOTICE UNDER SECTION 156 OF THE ACT WAS SERVED ON THE ASSESSEE ON 31.12.2008. THE DEMAND WAS DUE TO BE PAID BY THE ASSESSEE ON OR BEFORE 31.3.2009. THE ASSESS EE PAID THE AMOUNT/REFUND ADJUSTED ON 13.3.2009 (ASSESSMENT YEAR 2007-08 REFUND OF RS.5,22,11,150/-) AS WELL AS REFU ND ADJUSTED ON 10.6.2009 (ASSESSMENT YEAR 2005-06 REFU ND OF RS.1,29,47,398/-), TOTALING AMOUNT OF RS.6,51,58,54 8/-. THE ASSESSEE WENT IN APPEAL BEFORE THE LEARNED CIT (APP EALS) AGAINST THE QUANTUM ADDITION, WHO GRANTED THE RELIE F TO THE ASSESSEE. AFTER APPEAL EFFECT, THE FINAL DEMAND CO MPUTED BY THE ASSESSING OFFICER CAME TO RS.2,53,57,326/-. I T APPEARS THAT THE ASSESSING OFFICER MADE THE COMPUTATION OF THE SAID DEMAND AS UNDER : TAXABLE INCOME AFTER CIT(A)'S ORDER DT 15.10.10 170,82,44,990 TAX @ 33.66% 57,49,95,264 ADD: 234B INTEREST LESS TAX ALREADY CHARGED 96,48,195 (TDS + ADVANCE TAX + SELF ASSTT TAX) 55,92,86,133 BALANCE PAYABLE 2,53,57,326 INTEREST @ 1% PER MONTH FOR 2 MONTHS 5,07,147 (FEBRUARY AND MARCH, 2009) 3. AS PER THE ASSESSING OFFICER, THE ASSESSEE WAS HELD TO BE IN DEFAULT AND LIABLE TO PAY THE INTEREST UND ER SECTION 220(2) OF THE ACT ON THE FINAL AMOUNT OF RS.2,53,57 ,326/- @ 1% OF EVERY MONTH OR PART OF A MONTH FROM THE EXPI RY OF 30 DAYS FROM THE SERVICE OF DEMAND NOTICE. 4. THE ASSESSEE WENT IN APPEAL BEFORE THE LEARNED CIT (APPEALS) CHALLENGING THE LEVY OF INTEREST UNDER SE CTION 220(2) OF THE ACT AMOUNTING TO RS.5,07,140/- AS COMPUTED B Y THE ASSESSING OFFICER. BEFORE THE ASSESSING OFFICER, THE MAIN CONTENTION OF THE ASSESSEE WAS THAT THE REFUND FOR ASSESSMENT 3 YEAR 2007-08 AMOUNTING TO RS.5,22,11,150/- WAS LYIN G WITH THE DEPARTMENT SINCE 31.10.2007 I.E. THE DATE ON WH ICH THE ASSESSEE HAD FILED ITS RETURN FOR ASSESSMENT YEAR 2007-08. HOWEVER, THE ASSESSING OFFICER PREFERRED TO ADJUST THE SAID REFUND AGAINST THE DEMAND FOR 2006-07 ONLY ON 17.2. 2009. IN VIEW OF THIS, IT WAS CONTENDED THAT THERE WAS NO DEFAULT ON THE PART OF THE ASSESSEE AND IT WAS ONLY THE ASSESS ING OFFICERS DECISION TO ADJUST THE REFUND LATE, ON WH ICH HE HAS LEVIED INTEREST UNDER SECTION 220(2) OF THE ACT. A LTERNATIVELY, IT WAS PLEADED THAT IF AT ALL THE INTEREST WAS TO B E LEVIED, THE SAME SHOULD HAVE BEEN LEVIED ONLY FOR ONE MONTH I.E . FEBRUARY, 2009. IT WAS SUBMITTED ON THE BASIS OF P ROVISIONS OF SECTION 220(2) OF THE ACT, WHEREBY THE INTEREST TO BE LEVIED FOR THE PERIOD COMMENCING AFTER THE EXPIRY OF THE T IME MENTIONED IN THE DEMAND NOTICE I.E. 30 DAYS. IN AS SESSEES CASE, THE SAID PERIOD COMMENCED ON 1.2.2009 AND END ED ON 17.2.2009. THEREFORE, IT WAS CONTENDED THAT THE IN TEREST SHOULD BE LEVIED FOR THE MONTH OF FEBRUARY, 2009 ON LY. 5. THE LEARNED CIT (APPEALS) AFTER CONSIDERING THE SUBMISSIONS SO MADE BY THE ASSESSEE DECIDED THE ISS UE IN FAVOUR OF THE ASSESSEE AND DIRECTED THE ASSESSING O FFICER TO RECTIFY THE ORDER BY DELETING THE INTEREST UNDER SE CTION 220(2) OF THE ACT LEVIED BY HIM. 6. NOW, THE DEPARTMENT HAS COME UP IN APPEAL BEFOR E US RAISING THE FOLLOWING GROUNDS OF APPEAL : 1. WHETHER IN THE LAW AND CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN DELETING THE INTEREST OF RS.5,07,140 /- U/S 4 220(2) HOLDING THAT THE REFUND WAS ADJUSTED LATE NOT CONSIDERING THE FACT THAT IF THE INTEREST IS CHARGED F ROM THE ASSESSEE ON LATE PAYMENT OF DEMAND, THE ASSESSEE IS ALSO PAID THE REFUND AMOUNT WITH DUE INTEREST. 2. THAT THE ORDER OF THE LD. CIT(A) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY GROUND OF APPEAL BEFORE IT IS FINALLY DISPOSED OFF. 7. THE LEARNED D.R. WHILE ARGUING BEFORE US SUBMIT TED THAT THE ORDER PASSED BY THE ASSESSING OFFICER LEVY ING INTEREST UNDER SECTION 220(2) OF THE ACT IS AS PER LAW AS TH E REFUND ARISING OUT OF THE ASSESSMENT MADE FOR ASSESSMENT Y EAR 2007- 08 WAS ADJUSTED AGAINST THE DEMAND FOR ASSESSMENT Y EAR 2006-07 ONLY ON 17.2.2009. AS PER THE PROVISIONS OF SECTION 220(2) OF THE ACT, THE INTEREST HAS TO BE LEVIED FO R TWO MONTHS IN THE SAID CIRCUMSTANCES. 8. THE LEARNED COUNSEL FOR THE ASSESSEE VEHEMENTLY ARGUED THAT THE LEVY OF INTEREST UNDER SECTION 220( 2) OF THE ACT ON THE FACTS AND CIRCUMSTANCES OF THE CASE IS I LLEGAL GIVEN THE FACT THAT THE REFUND FOR ASSESSMENT YEAR 2007-0 8 WAS LYING WITH THE DEPARTMENT SINCE 31.10.2007 I.E. THE DATE ON WHICH THE ASSESSEE HAD FILED ITS RETURN FOR ASSESS MENT YEAR 2007-08. IT WAS ONLY ASSESSING OFFICERS DECISION TO ADJUST THE SAME AS ON 17.2.2009. THEREFORE, THE ASSESSEE SHOULD NOT BE TREATED AS ASSESSEE IN DEFAULT. IN THE ALTERNAT IVE, IT WAS ALSO ARGUED THAT IN THE BACKGROUND OF THE CHRONOLOG Y OF THE CASE, EVEN IF THE INTEREST UNDER SECTION 220(2) OF THE ACT HAS TO BE LEVIED, IT SHOULD BE CALCULATED ONLY FOR ONE MONTH. 5 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS A FACT ON REC ORD THAT THE DEMAND FOR THE CURRENT YEAR I.E. ASSESSMENT YEAR 20 06-07 WAS COMPUTED BY THE ASSESSING OFFICER AS ON 12.8.2011. THIS IS ALSO A FACT THAT THERE WAS A REFUND DUE TO THE ASSE SSEE FOR ASSESSMENT YEAR 2007-08 AND THE SAME WAS LYING WITH THE DEPARTMENT SINCE 31.10.2007 I.E. THE DATE ON WHICH THE ASSESSEE HAD FILED ITS RETURN FOR ASSESSMENT YEAR 2007-08. THERE IS A LETTER FROM THE ASSESSING OFFICER TO THE ASSESSEE DATED 17.2.2009, TO WHICH OUR ATTENTION WAS INVITED AT THE TIME OF HEARING AND WHICH IS ALSO A PART OF THE PAP ER BOOK FILED BY THE ASSESSEE, WHEREBY THE ASSESSING OFFICE R INTIMATED THE ASSESSEE THAT THE REFUND OF RS.5,22,11,150/- AS DETERMINED UNDER SECTION 143(1) OF THE ACT FOR ASSE SSMENT YEAR 2007-08 WAS ADJUSTED AGAINST THE DEMAND FOR AS SESSMENT YEAR 2006-07 AS ON 17.2.2009. FROM THESE FACTS, IT IS QUITE CLEAR THAT THE REFUND FOR ASSESSMENT YEAR 2007-08 W AS LYING WITH THE DEPARTMENT SINCE 31.10.2007. THE DEMAND FOR ASSESSMENT YEAR 2006-07 WAS DUE TO BE PAID BY THE A SSESSEE ON OR BEFORE 31.1.2009. HOWEVER, THE ASSESSING OFF ICER CHOSE TO ADJUST THE SAID REFUND ONLY ON 17.2.2009. IN V IEW OF THE SAME, IT CANNOT BE SAID THAT IT WAS THE ASSESSEE WH O DELAYED THE PAYMENT OF DEMAND OR ADJUSTMENT OF REFUND. IT WAS ONLY THE ASSESSING OFFICERS DECISION TO DELAY THE SAID ADJUSTMENT, THE REASONS FOR WHICH WE DO NOT UNDERSTAND. THE L EARNED CIT (APPEALS) ONLY AFTER PROPERLY ANALYZING THE SAID FA CTS AND THE DATES DIRECTED THE ASSESSING OFFICER TO RECTIFY THE ORDER. IN 6 VIEW OF THIS, WE DO NOT FIND ANY INFIRMITY IN THE O RDER OF THE LEARNED CIT (APPEALS) AND UPHELD THE SAME. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 3 RD DAY OF SEPTEMBER, 2015. SD/- SD/- (H.L.KARWA) (RANO JAIN) VICE PRESIDENT ACOUNTANT MEMBER DATED : 3 RD SEPTEMBER, 2015 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH