Late Raj Kumar Dhanuka, Ranchi V. ACIT, Ranchi

ITSSA 1/RAN/2016

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 3773 (ITAT-RANCHI)
• Duration Of Justice: 2 year(s) 5 month(s) 26 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 30-05-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 04-12-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DEEPAK KUMAR SUTARIYA CITA JSR
• Assessee Lawyers: S K PODDAR
• Section: 244A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, RANCHI BENCH, RANCHI BEFORE SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER IT (SS) A NO. 01 /RAN/201 6 BLOCK PERIOD: 1990 - 1991 TO 1999 - 2000(1.4.99 TO 22.9.1999) LATE RAJ KUMAR DHANUKA, LEGAL HEIR - ADITYA DHANKA, PANCHWATI PLAZA, KUTCHERY ROAD, RANCHI. VS. ACIT, CIRCLE - 2, RANCHI PAN/GIR NO. ABTPD 4482 D (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY: SHRI S.K.PODDAR & DEVESH PODDAR, ADV REVENUE BY : SHRI DEEPAK KUMAR SUTARIYA, CIT(A), JSR DATE OF HEARING : 21/05 / 201 8 DATE OF PRONOUNCEMENT : 30 /05/ 2018 O R D E R PER N.S.SAINI, AM THIS IS AN APPEAL FILED BY T HE ASSESSEE AGAINST THE ORDER OF CIT(A) - RANCHI PATNA, DATED 16.9.2015 , F OR THE BLOCK PERIOD 1.4.1989 TO 22.9.1999. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. FOR THAT APPELLANT WAS ENTITLED FOR INTEREST U/S /34B(4). THE ENTITLEMENT OF THE APPELLANT BECAME BY VIRTUE OF ORDER PASSED BY 2 LATE RAJ KUMAR DHANUKA HON'BLE I.T.A.T. ON 28.10.2005. AS PER ORDER OF LD. CIT(A) & HON'BLE I.T.A.T., APPELLANT WAS ENTITLED TO REFUND OUT OF SEIZED AMOUNT. THE APPELLANT, THEREFORE, BECAME ENTITLED TO INTEREST U/S 234B(4). 2. FOR THAT LD. AO FOR SOME REASON OR THE OTHER DELAYED THE REFUND OF ACCRUED INTEREST U/S 34B(4) ABNORMALLY. EVEN THOUGH THE INTEREST BECAME DUE BY NOVEMBER, 2005, IT WAS PAID ON NOVEMBER, 2012. APPELLANT CLAIMED INTEREST ON DELAYED PAYMENT OF REFUND. LD. AO DENIED THE PAYMENT OF INTEREST ON THE DELAYED REFUND. LD. CIT(A) CONFIRMED THE ACTION OF LD. AO. 3. FOR THAT LD. CIT( A) PLACED HIS DECISION BASED ON SOME JUDGMENTS ENUMERATED IN THE ORDER OF ASSESSMENT. ACCORDING TO US, THE JUDGMENTS HAVE BEEN MISINTERPRETED AND LD. CIT(A) WAS FACTUALLY NOT CORRECT IN DISMISSING OUR APPEAL BASED ON THE JUDGMENTS WHICH WERE, AS A MATTER O F FACT, IN FAVOUR OF THE APPELLANT. 4. FOR THAT THE APPELLANT IS ENTITLED TO INTEREST FOR THE DELAY IN REFUND BY 07 (SEVEN) YEARS. THERE WAS NO JUSTIFICATION FOR DEPARTMENT TO WITHHOLD THE REFUND DUE TO THE APPELLANT. LD. AO AS WELL AS LD. CIT(A) WAS NOT JUSTIFIED IN REFUSING TO GIVE INTEREST FOR THE PERIOD UNDER CONSIDERATION. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. IN THIS APPEAL, THE MAIN GRIEVANCE OF THE ASSESSEE IS THAT INTER EST HAS NOT BEEN ALLOWED TO HIM ON THE AMOUNT OF INTEREST WHICH BECAME REFUNDABLE TO HIM IN PURSUANCE TO THE REFUND ALLOWED BY THE APPELLATE AUTHORITIES. IN PURSUANCE TO TRIBUNALS ORDER DATED 28.10.2015, THE ASSESSEE BECAME ELIGIBLE FOR REFUND OF RS.44,7 0,554/ - OUT OF THE SEIZED MONEY. THE ASSESSING OFFICER HAS GRANTED INTEREST U/S.132B(4) ON THE SAID AMOUNT OF RS.44,70,554/ - OF RS.13,97,000/ - . 4. THE GRIEVANCE OF THE ASSESSEE IS THAT ON THIS RS.13,97,000/ - INTEREST SHOULD BE GRANTED TO HIM AS BECAUSE TH E SAID AMOUNT WAS REFUNDED TO HIM IN MAY, 2012 AFTER INORDINATE DELAY. THE ASSESSEE PLACED RELIANCE ON THE 3 LATE RAJ KUMAR DHANUKA DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF UMANG AGRAWAL VS CIT, (2015) 59 TAXMANN.COM 329 (ALL), WHEREIN, IT HAS BEEN HELD AS UNDER: THIS TAKES THE COURT TO THE LAST ISSUE RAISED ON BEHALF OF THE ASSESSEE, NAMELY, THE PAYMENT OF COMPENSATION FOR THE INORDINATE DELAY IN THE PAYMENT OF INTEREST UNDER SECTION 132 (B) (4) AND SECTION 244A OF THE INCOME TAX ACT. THIS COURT MAY RECORD THAT IN THE CASE OF SANDVIK ASIA LTD. (SUPRA) THE APEX COURT HAD HELD THE ASSESSEE AS ENTITLE FOR INTEREST ON THE FAILURE OF THE DEPARTMENT TO PAY THE INTEREST UNDER THE INCOME TAX ACT WITHIN TIME PERMITTED. BUT THE APEX COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. GUJARAT FLOURO CHEMICALS (2012) 348 ITR 319 (SC) IN PARAGRAPH NOS. 5,6, 7 AND 8 HAS HELD AS FOLLOWS: '5. SINCE THERE WAS AN INORDINATE DELAY ON THE PART OF THE REVENUE IN REFUNDING THE AMOUNT DUE TO THE ASSESSEE THIS COURT HAD THOUGHT IT FIT THAT THE ASSESSEE SHOULD BE PROPERLY AND ADEQUATELY COMPENSATED AND, THEREFORE, IN PARAGRAPH 51 OF THE JUD GMENT, THE COURT WHILE COMPENSATING THE ASSESSEE HAD DIRECTED THE REVENUE TO PAY A COMPENSATION BY WAY OF INTEREST FOR TWO PERIODS, NAMELY; FOR THE ASSESSMENT YEARS 1977 - 78, 1978 - 79, 1981 - 82, 1982 - 83 IN A SUM OF RS. 40,84,906 AND INTEREST AT 9 PER CENT. FR OM MARCH 31, 1986 TO MARCH 27, 1998, AND IN DEFAULT, TO PAY THE PENAL INTEREST AT 15 PER CENT. PER ANNUM FOR THE AFORESAID PERIOD. 6. IN OUR CONSIDERED VIEW, THE AFORESAID JUDGMENT HAS BEEN MISQUOTED AND MISINTERPRETED BY THE ASSESSEES AND ALSO BY THE REVE NUE. THEY ARE OF THE VIEW THAT IN SANDVIK CASE ((SUPRA)) THIS COURT HAD DIRECTED THE REVENUE TO PAY INTEREST ON THE STATUTORY INTEREST IN CASE OF DELAY IN THE PAYMENT. IN OTHER WORDS, THE INTERPRETATION PLACED IS THAT THE REVENUE IS OBLIGED TO PAY AN INTER EST ON INTEREST IN THE EVENT OF ITS FAILURE TO REFUND THE INTEREST PAYABLE WITHIN THE STATUTORY PERIOD. 7. AS WE HAVE ALREADY NOTICED, IN SANDVIK CASE ((SUPRA)) THIS COURT WAS CONSIDERING THE ISSUE WHETHER AN ASSESSEE WHO IS MADE TO WAIT FOR REFUND OF INTE REST FOR DECADES BE COMPENSATED FOR THE GREAT PREJUDICE CAUSED TO IT DUE TO THE DELAY IN ITS PAYMENT AFTER THE LAPSE OF STATUTORY PERIOD. IN THE FACTS OF THAT CASE, THIS COURT HAD COME TO THE CONCLUSION THAT THERE WAS AN INORDINATE DELAY ON THE PART OF THE REVENUE IN REFUNDING CERTAIN AMOUNT WHICH INCLUDED THE STATUTORY INTEREST AND, 4 LATE RAJ KUMAR DHANUKA THEREFORE, DIRECTED THE REVENUE TO PAY COMPENSATION FOR THE SAME NOT AN INTEREST ON INTEREST. IN VIEW OF ABOVE, WE ARE OF THE OPINION THAT THIS COURT HAS TO EXAMINE AS TO WHETH ER THERE HAS BEEN UNEXPLAINED INORDINATE DELAY IN THE MATTER OF PAYMENT OF INTEREST WITHIN THE STATUTORY PERIOD BY THE DEPARTMENT OR NOT. FROM THE FACTS WHICH HAVE BEEN NOTICED HEREINABOVE, IT IS APPARENT THAT THE ASSESSEE BECAME ENTITLED TO PAYMENT OF INT EREST AT LEAST FOR THE PRE - ASSESSMENT PERIOD FROM THE DATE HIS APPEAL BY CIT WAS ALLOWED AND THE LIABILITY WAS REDUCED TO 3,15,415/ - ONLY. THIS PAYMENT OF INTEREST HAS BEEN DENIED TO THE ASSESSEE WITHOUT ANY JUSTIFIABLE CAUSE EVEN AFTER EXPIRY OF 9 YEARS F ROM THE DATE INTEREST WAS PAYABLE. SIMILARLY, WE FIND THAT FOR THE POST - ASSESSMENT PERIOD, THE ASSESSEE SHOULD HAVE BEEN PAID INTEREST ON THE SUM OF RS. 37 LACS REFUNDED TO HIM ON 2.2.2007 FROM THE DATE OF THE APPELLATE ORDER TILL THE DATE OF MONEY WAS SO RETURNED. IT HAS TAKEN NEARLY 8 YEARS FOR THE DEPARTMENT TO MAKE THE PAYMENT OF THE INTEREST AND THAT TOO ON WRONG CALCULATION. COUNSEL FOR THE DEPARTMENT HAS HIGHLY RELIED UPON THE JUDGMENT OF THE APEX COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. G UJARAT FLOURO CHEMICALS (SUPRA) FOR THE PURPOSE THAT THERE MAY NOT BE A DIRECTION FOR PAYMENT OF INTEREST OVER INTEREST AND THAT SANDVIK ASIA LTD (SUPRA) HAS NOT LAID DOWN ANY SUCH LAW. WE ONLY RECORD THAT WE ARE NOT DIRECTING PAYMENT OF INTEREST OVER INTE REST, WE HAVE ONLY PROVIDED THAT THE ASSESSEE MUST BE COMPENSATED FOR RETENTION OF MONEY I.E. INTEREST DUE UNDER SECTION 132B (4) AND SECTION 244B OF THE INCOME TAX ACT BY THE DEPARTMENT FOR LONG DURATION, NAMELY, 9 AND 8 YEARS. SUCH PAYMENT OF COMPENSATION HAS BEEN RECOGNIZED AND ACCEPTED IN THE CASE OF SANDVIK ASIA LTD (SUPRA), AS ALSO IN THE SUBSEQUENT JUDGMENT OF THE APEX COURT IN THE CASE OF GUJARAT F LOURO CHEMICALS (II) (SUPRA). THE RELEVANT PARAGRAPHS OF THE SAID JUDGMENT HAVE ALREADY BEEN QUOTED ABOVE. WE ARE OF THE OPINION THAT THE DEPARTMENT WAS LEGALLY NOT JUSTIFIED IN RETENTION OF THE AMOUNT OF INTEREST WHICH WAS PAYABLE TO THE ASSESSEE BOTH UNDER SECTION 134B (4) AS WELL AS UNDER SECTION 243A FOR THE PERIOD OF NEARLY 9 AND 8 YEARS RESPECTIVELY. IN OUR OPINION THE CASE OF THE ASSESSEE FALLS WI THIN THE CATEGORY OF CASES WHERE THERE HAS BEEN INORDINATE DELAY ON THE PART OF THE DEPARTMENT TO PAY THE STATUTORY INTEREST, THEREFORE, THE ASSESSEE IS 5 LATE RAJ KUMAR DHANUKA ENTITLED TO BE COMPENSATED FOR SUCH WRONGFUL RETENTION OF THE MONEY BY THE DEPARTMENT. 5. WE FIND THA T IN THE ABOVE CASE, THE HONBLE ALLAHABAD HIGH COURT HAS NOT LAID DOWN THAT THE ASSESSEE IS ENTITLED TO INTEREST ON INTEREST FOR DELAY IN PAYMENT OF INTEREST. 6. ON THE OTHER HAND, HONBLE ALLAHABAD HIGH COURT HAS GRANTED COMPENSATION TO THE ASSESSEE FOR THE PREJUDICE CAUSE D TO THE ASSESSEE IN AN INORDINATE DELAY IN GRANT OF REFUND ON THE AMOUNT OF INTEREST. THE SAID COMPENSATION WAS NOT GRANTED UNDER ANY PROVISIONS OF INCOME TAX ACT BUT IN EXERCISE OF INHERENT POWER WHICH IS VESTED WITH THE HONBLE HIG H COURT. IN THE ABOVE CIRCUMSTANCES, IN ABSENCE OF ANY SPECIFIC PROVISIONS IN THE INCOME TAX ACT, FOR ALLOWANCE OF INTEREST ON REFUND OR COMPENSATION FOR THE DELAYED PERIOD OF REFUND OF INTEREST, WE ARE CONSTRAINED TO HOLD THAT THE APPEAL OF THE ASSESSEE CANNOT BE ALLOWED. 7 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 0 /05 /201 8 S D / - S D / - (PAVAN KUMAR GADALE) (N.S SAINI) JUDICIAL MEMBER A CCOUNTANT MEMBER RANCHI; DATED 3 0 /05 /201 8 B.K.PARIDA, SPS 6 LATE RAJ KUMAR DHANUKA COPY OF THE ORDER FORWARDED TO : BY ORDER, SR.PS, ITAT, CAMP AT RANCHI 1. THE APPELLANT: LATE RAJ KUMAR DHANUKA, LEGAL HEIR - ADITYA DHANKA, PANCHWATI PLAZA, KUTCHERY ROAD, RANCHI. 2. THE RESPONDENT: ACIT, CIRCLE - 2, RANCHI 3. THE CIT(A), RANCHI 4. PR. CIT , RANCHI 5. DR, ITAT, RANCHI 6. GUARD FILE. //TRUE COPY//