ITO, PALI V. Prem Cables (P) Ltd., PALI

ITA 58/JODH/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 5750 (ITAT-JODHPUR)
• Duration Of Justice: 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 1996-1997
• Appeal Filed On: 29-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMITH NIGAM
• Keywords: Difference of opinion
• Section: 154

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI K.G. BANSAL, ACCOUNTANT MEMBER ITA NO: 58/JU/2010 ASSTT. YEAR:1996-97 I.T.O., WARD-1, PALI. VS PREM CABLES (P) LTD., PIPALIA KALAN, MAIN ROAD, PALI. C.O.NO.03/JU/2010 ASSTT. YEAR. 1996-97 M/S. PREM CABLES (P) LTD., VS I.T.O., WARD-1, PA LI. PIPALIA KALAN, MAIN ROAD, PALI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AMITH NIGAM, D.R., RESPONDENT BY: NONE ORDER PER SHRI K.G. BANSAL, A.M., 1. THIS APPEAL OF THE REVENUE EMANATES FROM THE ORD ER OF THE CIT (A), JODHPUR, PASSED IN APPEAL NO.78/2009-10 ON 30-11-2009, PERTA INING TO ASSESSMENT YEAR 1996- 1997. THREE GROUNDS HAVE BEEN TAKEN UP, THE SUM AN D SUBSISTENT OF WHICH IS THAT THE LD. CIT (A) ERRED IN HOLDING THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN REJECTING THE APPLICATION OF THE ASSESSEE, MADE BY IT U/S 154 OF ACT, ON THE GROUND THAT THE CALCULATION OF INTEREST U/S 220 (2) FOR DEFAULT IN THE EVENT O F RESTORING OF THE ORDER OF THE ASSESSING OFFICER BY THE HONBLE TRIBUNAL IS NOT A DEBATABLE ISSUE. 2. (I) THE FACTS OF THE CASE, AS MENTIONED IN THE I MPUGNED ORDER, ARE THAT THE ORIGINAL ASSESSMENT WAS COMPLETED IN WHICH DEMAND O F RS.47,06,130/- WAS RAISED ON 08- 01-1999. THE ASSESSEE PAID A SUM OF RS.33,74,184/- IN FOUR INSTALLMENTS BETWEEN 08-03- 1999 AND 03-05-1999. THE ASSESSMENT WAS CHALLENGED IN APPEAL. THE LD. CIT (A) 2 GRANTED RELIEF TO THE ASSESSEE OF A SUM OF RS.60,78 ,937/-. EFFECT WAS GIVEN TO THIS ORDER ON 09-05-2000, LEADING TO REFUND OF RS.37,11,389/-. THE REVENUE CHALLENGED THE ORDER OF THE LD. CIT (A) BEFORE THE TRIBUNAL. THE HONBLE T RIBUNAL RESTORED THE ORDER OF ASSESSING OFFICER AND SET ASIDE THAT OF THE LD. CIT (A). THIS LED TO RESTORATION OF THE DEMAND RAISED IN THE ASSESSMENT ORDER. THE ASSESSI NG OFFICER PASSED THE FURTHER ORDER IN WHICH INTEREST WAS CHARGED U/S 220 (2) ON THE FOOTI NG THAT THE DEMAND ARISING ON GIVING EFFECT TO THE ORDER OF THE TRIBUNAL STOOD REVIVED F ROM THE DATE OF DEMAND ARISING FROM ISSUANCE OF THE NOTICE OF DEMAND U/S 156 ON COMPLET ION OF ORIGINAL ASSESSMENT. THE ASSESSEE MOVED AN APPLICATION U/S 154 REQUESTING FO R THE DELETION OF THE INTEREST U/S 220. THE ASSESSING OFFICER REJECTED THE APPLICATION BY S TATING THAT THE ISSUE IS NOT COVERED BY THE PROVISION CONTAINED IN SECTION 154. (II) AGAINST THE AFORESAID ORDER U/S 154, THE APPE AL WAS MOVED BEFORE THE LD. CIT (A). HE INTER ALIA REFERRED TO THE PROVISIONS C ONTAINED IN TAXATION LAWS (CONTINUATION AND VALIDATION OF RECOVERY PROCEEDING S) ACT, 1964. AFTER CONSIDERING THE FACTS AND SUBMISSIONS AND THE AFORESAID PROVISIONS, HE CAME TO THE CONCLUSION THAT CONSEQUENT UPON THE ORDER OF THE CIT (A) NOT ONLY T HE DEMAND CEASED TO EXIST BUT THE ASSESSEE WAS FOUND TO BE ENTITLED TO REFUND OF RS.3 8,11,389/-. THEREFORE, THE DEMAND RAISED ON GIVING EFFECT TO THE ORDER OF THE TRIBUNA L CAME INTO FORCE ON ISSUANCE OF NOTICE OF DEMAND AT THAT POINT OF TIME. IN SUCH CIRCUMSTA NCES, THE INTEREST COULD NOT HAVE BEEN CHARGED FROM THE DATE OF COMING INTO FORCE OF THE D EMAND ON THE BASIS OF THE NOTICE ISSUED AT THE TIME OF PASSING THE ORIGINAL ASSESSME NT ORDER. 3. BEFORE US, THE LD. SENIOR DEPARTMENTAL REPRESENT ATIVE RELIED ON THE ORDER OF THE ASSESSING OFFICER. NONE ATTENDED ON BEHALF OF THE ASSESSEE. 3 4. (A) WE HAVE CONSIDERED THE FACTS OF THE CASE, TH E ORDERS OF THE LOWER AUTHORITIES AND THE SUBMISSIONS MADE BEFORE US. PR IOR TO THE ENACTMENT OF TAXATION LAWS (CONTINUATION AND VALIDATION OF RECOVERY PROCEEDING S) ACT, 1964, THERE WAS DIFFERENCE OF OPINION ON SUBSISTENCE OF DEMAND WHEN IT WAS INC REASED OR REDUCED IN APPELLATE PROCEEDINGS. THIS CONTROVERSY WAS SET AT REST BY T HE AFORESAID ACT. THE POSITION WHICH OBTAINS NOW IS AS UNDER:- (I) WHEN THE DEMAND IS REDUCED, THE REDUCED DEMAND STANDS FROM THE DATE OF ORIGINAL DEMAND AND THERE IS NO NEED TO ISSUE ANY F URTHER DEMAND NOTICE; (II) WHEN THE DEMAND IS INCREASED, THE ORIGINAL DEM AND SUBSISTS BUT THE AUTHORITY WILL HAVE TO ISSUE NOTICE OF DEMAND FOR T HE INCREASED AMOUNT. (B) IN THIS CASE THE PROVISION OF THE AFORESAID ACT WILL HAVE TO BE SEEN IN THE LIGHT OF THE FACT THAT THE WHOLE DEMAND WAS REDUCED BY THE LD. CIT (A). IN FACT HIS ORDER LED TO THE REFUND OF THE TAX PAID BY THE ASSESSEE W ITH INTEREST. THUS, NO DEMAND SUBSISTED ON GIVING EFFECT TO THE ORDER OF THE LD. CIT (A). THE ORDER OF HONBLE TRIBUNAL LED TO CREATION OF DEMAND WHICH WAS THE SAME AS RAISED IN THE ORIGINAL ASSESSMENT ORDER. THAT, HOWEVER, DOES NOT MEAN THAT THE DEMAND CREATED IN O RIGINAL ASSESSMENT GOT REVIVED RETROSPECTIVELY. THIS DEMAND CAME INTO EXISTENCE A S PER THE TERMS OF NOTICE ISSUED ON GIVING EFFECT TO THE ORDER OF THE TRIBUNAL. THEREF ORE, WE AGREE WITH THE LD. CIT (A) THAT INTEREST COULD NOT HAVE BEEN CHARGED ON THE BASIS O F DEMAND CREATED AT THE TIME OF PASSING THE ORIGINAL ORDER. 5. IN VIEW OF OUR FINDINGS GIVEN ABOVE, THE CROSS O BJECTIONS OF THE ASSESSEE BECOME INFECTIOUS. 6. IN THE RESULT THE APPEAL AND THE OBJECTIONS ARE DISMISSED. 4 THIS ORDER WAS PRONOUNCE IN THE OPEN COURT ON 30-0 9-2010. SD/- SD/- (JOGINDER SINGH) (K.G. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBE R DATED: 30-09-2010 KAMAL KUMAR COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE CIT (A)/TH E D.R.,