ACIT, Chandigarh V. M/s A.B. Sugar Ltd., Chandigarh

ITA 911/CHANDI/2012

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1639 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 year(s) 1 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 13-10-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 06-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJINDER KUMAR
• Keywords: Rectification of order; Notional interest
• Section: 143(3); 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. RANO JAIN, ACCOUNTANT MEMBER ITA NO.911/CHD/2012 (ASSESSMENT YEAR : 2006-07) THE D.C.I.T, VS. M/S A.B. SUGAR LTD., CIRCLE 1(1), H.NO. 77, SECTOR 11, CHANDIGARH. CHANDIGARH. PAN: AABCG3045M (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAJINDER KUMAR, DR RESPONDENT BY : SHRI T.N.SINGLA DATE OF HEARING : 13.10.2015 DATE OF PRONOUNCEMENT : 20.10.2015 O R D E R PER RANO JAIN, A.M . : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS), CHANDIGARH DATED 28.6.2012 RELATING TO ASSESSMENT YEAR 2006-07. 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT RETURN DECLARING TOTAL INCOME OF RS.2,48,34,354/- FROM BUS INESS AND SHORT TERM CAPITAL GAIN OF RS.4,23,00,358/- WAS FILED BY THE ASSESSEE ON 15.11.2006. THE ASSESSMENT UND ER SECTION 143(3) OF THE ACT WAS COMPLETED AS ON 24.12 .2008 MAKING VARIOUS ADDITIONS AND DISALLOWANCES. LATER ON, A 2 NOTICE UNDER SECTION 154 OF THE ACT WAS ISSUED TO T HE ASSESSEE AS ON 7.3.2011. THE ASSESSEE HAS MADE SE CURITY DEPOSIT WITH NHAI OF RS.1,70,00,000/- FOR A TENDER FILED DURING THE YEAR. IN HIS ORDER DATED 28.3.2011 MAD E UNDER SECTION 154 OF THE ACT, THE ASSESSING OFFICER MADE ADDITION OF RS.20,40,000/- ON ACCOUNT OF INTEREST @ 12% ON THE GROUND THAT THE PAYMENT MADE TO NHAI WAS NOT IN CONNECTION WITH THE ASSESSEES BUSINESS, WHICH WAS MANUFACTURING OF SUGAR, ALCOHOL AND SPIRIT. 3. THE ASSESSEE WENT IN APPEAL BEFORE THE LEARNED CIT (APPEALS) AND SUBMITTED THAT THE ADDITION WAS MADE IN AN ORDER PASSED UNDER SECTION 154 OF THE ACT ON A DEBA TABLE ISSUE OF INTEREST DISALLOWED ON CERTAIN LOANS AND A DVANCES. 4. AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE, THE LEARNED CIT (APPEALS) ALLOWED APPEAL OF THE ASSESSEE HOLDING AS FOLLOWS : 5. I HAVE CONSIDERED THE SUBMISSION OF THE LD. COU NSEL FOR THE APPELLANT. AS PER THE PROVISIONS OF SECTION '15 4 OF THE ACT, ONLY MISTAKE APPARENT FROM RECORD COULD BE RECTIFIE D BY THE ASSESSING OFFICER. IN THE INSTANT CASE, THE ASSESS ING OFFICER HAS RESORTED TO THIS PROVISION FOR DISALLOWING THE NOTIONAL INTEREST ON THE AMOUNT GIVEN TO NHAI. NOT OFFERING THIS AMOUNT FOR TAXATION BY THE APPELLANT CANNOT BE TERMED AS A MISTAKE APPARENT FROM RECORD AND SO THE ASSESSING OFFICER W AS NOT RIGHT IN DISALLOWING THIS AMOUNT U/S 154 OF THE ACT . THE ADDITION MADE BY THE ASSESSING OFFICER OF RS.20,40,0 00/- U/S 154 OF THE ACT IS ACCORDINGLY DELETED. ALL THE GROUN DS OF APPEAL TAKEN BY THE APPELLANT ARE ALLOWED. 3 5. AGGRIEVED BY THE SAID ORDER, THE DEPARTMENT HA S COME UP IN APPEAL BEFORE US RAISING FOLLOWING GROUN DS OF APPEAL : ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LA W, THE LD. CIT(APPEALS) IN APPEAL NO. 169/10-11 , HAS ERRED IN DELETING THE FOLLOWING ADDITIONS:- 1. THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION O F RS. 1,70,00,000/-MADE BY THE AO BY HOLDING THAT AS PER T HE PROVISION OF SECTION 154 OF THE ACT, ONLY MISTAKES APPARENT FRO M RECORD COULD BE VERIFIED AND THE AO HAS RESORTED TO THIS PROVISI ON FOR DISALLOWING THE NATIONAL INTEREST ON THE AMOUNT 'GIVEN TO NHAI. 2. THE LD. CIT(A) HAS ERRED IN 'NOT CONSIDERING THE FACT THAT BY NOT FOLLOWING THE DECISION OF JURISDICTIONAL HIGH C OURT (EVEN IF NOT CITED DURING THE COURSE OF HEARING) IS A MISTAKE AP PARENT FROM THE RECORD CIT VS. RAM LAL (P & H) 234 ITR-776, CIT VS. SUNIL KUMAR (RAJ.) 212 1TR-238 AND CIT VS. KUTCH STOCK EXCHANGE LTD.(SC) 305 ITR-227. 3. THE APPELLANT CRAVES TO ADD OR AMEND ANY GROUND/GRO UNDS OF APPEAL BEFORE THE APPEAL IS HEARD OR DISPOSED OFF. 4. IT IS PRAYED THAT THE ORDER OF THE LD. CIT(A ) BE CANCELLED AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 6. THE LEARNED D.R. RELIED UPON THE ORDER OF THE ASSESSING OFFICER AND SUBMITTED THAT IT WAS INCUMBE NT ON THE PART OF THE ASSESSING OFFICER TO MAKE ADDITION UNDE R SECTION 36(1)(III) OF THE ACT ON THE GROUND THAT THE PAYMEN T MADE TO NHAI WAS NOT IN CONNECTION WITH ASSESSEES BUSINESS . 7. THE LEARNED COUNSEL FOR THE ASSESSEE RELIED UPO N THE ORDER OF THE LEARNED CIT (APPEALS). 4 8. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BO TH THE PARTIES, PERUSED THE FINDINGS OF THE AUTHORITIE S BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECORD. IT I S A TRITE LAW THAT UNDER SECTION 154 OF THE ACT, THE ASSESSING OF FICER CAN MAKE RECTIFICATION IN HIS ORDER EARLIER MADE ONLY O N A MISTAKE APPARENT FROM RECORD. AN ISSUE TO BE DECIDED THROU GH A LONG DRAWN PROCESS CANNOT BE A SUBJECT MATTER UNDER SECT ION 154 OF THE ACT. THE ASSESSING OFFICER HAS THE POWER TO RECTIFY THE MISTAKE, HOWEVER, HE DOES NOT POSSESS THE POWER TO REVIEW HIS ORDER. THE ASSESSING OFFICER CANNOT RAISE AN ISSU E WHICH IS DEBATABLE OR CONTROVERSIAL IN NATURE IN THE PROCEED INGS INITIATED BY ISSUE OF NOTICE UNDER SECTION 154 OF T HE ACT. BY NO STRETCH OF IMAGINATION, IT CAN BE SAID THAT THE ISSUE OF NOTIONAL INTEREST ON THE DEPOSITS OF NHAI BE CONSID ERED AS A MISTAKE APPARENT FROM RECORD. THESE ISSUES CAN BE DECIDED ONLY THROUGH A LONG DRAWN PROCESS AND MAKING SUCH A N ADDITION IN AN ORDER UNDER SECTION 154 OF THE ACT I S NOT TENABLE IN LAW. TO COME UNDER THE PROVISIONS OF S ECTION 154 OF THE ACT, THE MISTAKE HAS TO BE SUCH FOR WHICH NO ELABORATE REASON OR ENQUIRY IS NECESSARY AND WHERE NO TWO VIE WS ARE POSSIBLE ONLY THEN IT CAN BE SAID TO BE AN ERROR AP PARENT ON THE FACE OF THE RECORD. IN VIEW OF THIS, WE DO NO T FIND ANY INFIRMITY IN THE ORDER OF LEARNED CIT (APPEALS) AND CONFIRM THE SAME. 9. BEFORE PARTING, WE WOULD LIKE TO DEAL WITH THRE E JUDGMENTS APPEARING IN THE GROUNDS OF APPEAL FILED BY THE DEPARTMENT. THE FIRST IS THAT OF HON'BLE PUNJAB & HARYANA HIGH 5 COURT IN THE CASE OF CIT VS. RAM LAL (P&H) 234 ITR 776. THE PROPOSITION LAID DOWN BY THE HON'BLE JURISDICTIONAL HIGH COURT IS THAT ON A POINT A SETTLED VIEW TAKEN BY TH E JURISDICTIONAL HIGH COURT HAD NOT BEEN TAKEN NOTE B Y THE ASSESSING OFFICER WHILE FRAMING THE ORIGINAL ASSESS MENT, IT IS OPEN TO THE ASSESSING OFFICER TO PASS RECTIFICATION ORDER UNDER SECTION 154 OF THE ACT DESPITE CONTRARY VIEWS OF OT HER HIGH COURTS. THE FACTS OF THE CASE ARE NOT IN CONSONANC E OF THE CIRCUMSTANCES OF THE PRESENT CASE AS IN THIS CASE, NO JUDGMENT OF ANY OF THE HIGH COURTS LEAVE ASIDE THE JURISDICTIONAL HIGH COURT WAS CITED AT ANY STAGE ON THE ISSUE OF INTEREST BY THE ASSESSING OFFICER. THEREFORE, IT IS NOT A MISTAKE APPARENT FROM RECORD. THE SECOND JUDGMENT GIVEN BY THE DEPARTMENT IN THE GROUNDS OF APPEAL IS THAT OF CIT VS. SUNIL KUMAR (2012) 212 1TR 238 )(RAJ.). THE PROPOS ITION LAID DOWN BY THE RAJASTHAN HIGH COURT IN THIS CASE IS TH AT IN THE FACE OF BINDING DECISION OF JURISDICTIONAL HIGH COU RT, THE QUESTION REGARDING PAYMENT OF INTEREST UNDER SECTIO N 254(2) OF THE ACT IS NOT ON DEBATABLE POINT. HOWEVER, THE OTHER HIGH COURTS MIGHT HAVE TAKEN A DIFFERENT VIEW. IN THIS CONTEXT ALSO, WE OBSERVE THAT NO DECISION OF ANY OF THE COU RTS HAS EVER BEEN CITED BY THE ASSESSING OFFICER. THE LAST JUD GMENT QUOTED BY THE REVENUE IN THE GROUNDS OF APPEAL IS T HAT OF CIT VS. KUTCH STOCK EXCHANGE LTD305 ITR 227 .(SC). IN THIS JUDGMENT, THE HON'BLE APEX COURT HAS HELD THAT EVEN THE SUBSEQUENT DECIDED OF THE SUPREME COURT OR OF THE JURISDICTIONAL HIGH COURT CAN BE REGARDED AS MISTAK E APPARENT FROM RECORD IF IT CHANGES ANY OF THE FINDI NGS GIVEN BY 6 THE LOWER AUTHORITIES. HOWEVER, IN THE PRESENT CAS E, WE SEE THAT THE ISSUE OF INTEREST WAS NEVER RAISED BY THE ASSESSING OFFICER IN THE ORIGINAL ASSESSMENT AND NO SUBSEQUEN T DECISION OF THE HON'BLE SUPREME COURT OR ANY OF THE HIGH COU RTS IS CITED. THEREFORE, ALL THESE CASES ARE NOT APPLICAB LE TO THE PRESENT CASE. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 20 TH DAY OF OCTOBER, 2015. SD/- SD/- (BHAVNESH SAINI) (RANO JAIN) JUDICIAL MEMBER ACOUNTANT MEMBER DATED : 20 TH OCTOBER, 2015 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH