ITO WARD 16(1)(5), MUMBAI V. M/S VIDEO MASTER, MUMBAI

ITSSA 2/MUM/2019

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 5270 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 20 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 27-01-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: misc
• Appeal Filed On: 06-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: DEEPAK TRASHWALA
• Keywords: Set aside
• Section: 154; 143(3); 158BC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “F” BENCH, MUMBAI BEFORE SHRI AMARJIT SINGH, JM AND SHRI AMARJIT SINGH, AM आयकर अपील सं/ I.T.A. No.02/Mum/2019 (निर्धारण वर्ा / Assessment Year: 01.01. 1985 to 24.08.1995) ITO, Ward-16(1)(5) Room No.439, 4 th Floor, Aayakar Bhavan, M. K. Road, Mumbai-400020. बिधम/ Vs. M/s. Video Master 104, Rachna, Opp. Ishwar Garden. V. P. Road, Vile Parle West, Mumbai- 400056. स्थायी लेखा सं./जीआइआर सं./PAN/GIR No. : AAAFV7223N (अपीलाथी /Appellant) .. (प्रत्यथी / Respondent) सुनवाई की तारीख / Date of Hearing: 11/01/2022 घोषणा की तारीख /Date of Pronouncement: 28/01/2022 आदेश / O R D E R PER AMARJIT SINGH, JM: The revenue has filed the present appeal against the order dated 29.08.2019 passed by the Commissioner of Income Tax (Appeals) -04 Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the A.Y.1985- 86. 2. The revenue has raised the following grounds: - "1. On the facts and circumstances of the case and in law, whether the Ld. CIT(A) was justified in allowing the claim of the assessee for taking the date of completion of assessment as 29.03.2000 rather than 001.11.1996 relying on the judgement in the case of Narad Investments & Trading Pvt. Ltd despite the fact that revenue challenged the appeal in the High Court of Bombay? Revenue by: Shri S. N. Kabra (Sr. AR) Assessee by: Shri Deepak Trashwala ITA No. 02/Mum/2019 A.Y.1.1.1985 to 24.8.1995 2 2. On the facts and circumstances of the case and in law, whether the Ld.CIT(A) was justified in holding that the interest levied u/s 220(2) to be levied from the date of the fresh assessment order and not from the date of original assessment order? 3. The appellant prays that the order of Ld. CIT(A) on the above grounds be set-aside and that of the assessing officer be restored. 4. The appellant craves leave to amend or alter any ground or add a new ground which may be necessary.” 3. The brief facts of the case are that the assessment order u/s 143(3) r.w.s. 158BA was passed on 25.09.1996 assessing the total income to the tune of Rs.2,84,37,080/-. After CIT(A) order, the Hon’ble ITAT Ç’Bench partly set aside the order to examine undisclosed income from ‘Sabse Bada Khiladi’after considering the relevant material on record. Thereafter, the Hon’ble ITAT has partly set aside the order u/s 158BA r.w.s. 254(1). Thereafter, order u/s 158BC r.w.s. 254(1) was passed on 29.03.2000 raising the demand of Rs.1,33,72,290/-. Thus the original demand revised after giving effect to the Hon’ble ITAT order. The assessee vide application dated 11.04.2018 the interest charged u/s 220(2) calculated w.e.f. July 2000 is not correct as original order u/s 143(3) r.w.s. 158BA passed on 25.09.1996 where part demand was still outstanding till order u/s 158BC r.w.s. 254 passed on 29.03.2000. Further, the order passed on 30.01.2016 u/s 220(2) r.w.s. 143(3) is also rectified now at flat rate @ 1% was taken and period of charging interest from 01.07.2000 was also not correct. The application for rectification of mistake dated 11.04.2018 was rejected and revised interest was calculated to the tune of Rs.2,60,55,075/-. that the original order u/s 143(3) r.w.s. 158BA passed on 25.09.1996 raising the demand of Rs.2,84,37,080/-. After deducting the interest paid i.e. to the ITA No. 02/Mum/2019 A.Y.1.1.1985 to 24.8.1995 3 tune of Rs.1,68,04,107/-, the interest was payable to the tune of Rs.92,50,968/- i.e. (Rs.2,60,55,075 – Rs. 1,68,04,107/-) Feeling aggrieved, the assessee filed an appeal before the CIT(A) who allowed the claim of the assessee, therefore, the revenue has filed the present appeal before us. ISSUE NOS. 1 & 2 4. We have heard the arguments advanced by the Ld. Representative of the parties and perused the record. Before going further, we deem it necessary to advert the finding of the CIT(A) on record.:- t3.2 We have perused the records and considered the rival contentions carefully The dispute is regarding levy of interest u/s. 220(2) of the Income Tax Act. 1961 Under the said section, interest at a specified rate is chargeable in case the demand raised on the assessee as per the demand notice 1s not paid within the time allowed in the notice The issue raised in this ground is as to when the original assessment has been set aside by Tribunal and fresh assessment has been made by the A.O., the period for levy of interest u/s.220(2) should be reckoned from the date of default as per the onginal assessment order or as per the fresh assessment order. We find that this issue has already bee examined by the CBDT who had clarified the issue vide Circle No.334 Dt 3.4.1982. the relevant portion of which is reproduced below for ready reference: " (2) These issues were comprehensively examined in consultation with the Ministry of Law and the Board has been advised: (i) Where an assessment order is cancelled under section 146 or cancelled / set aside by an appellate/ revisional authority and the cancellation / setting aside becomes final it is not vaned as a result of further appeals / revisions). no interest under section 220(2) can be charged pursuant to the original demand notice. The necessary corollary of this position will be that even when the assessment is reframed, interest can be charged only after the ITA No. 02/Mum/2019 A.Y.1.1.1985 to 24.8.1995 4 expiry of 35 days from the date of service of demand notice pursuant to such fresh assessment order. (ii) Where the assessment made originally by the Income Tax Officer is either varied or even set aside by one appellate authority but, on further ITA No.3360/Mum/2010 appeal. the original order of the Income Tax Officer is restored either in part or wholly, the interest payable under section 220(2) will be computed with reference to the due date reckoned from the original demand notice and with reference to the tax finally determined. The fact that during an intervening period, there was no tax payable by the assessee under any operative order would make no difference to this position. (3) The foregoing legal position will apply mutatis mutandis to the proceedings under other direct taxes also." 3.3 In view of the Circular No.334 Dt.3.4.1982 of CBDT, in case, the assessment 1s set aside by CIT(A) and setting aside become final, interest under section 220(2) has to be charged only after expiry of 35 days from the date of service of demand notice pursuant to the fresh assessment order. But in case the order of CIT(A) is subject matter of further appeal and the Tribunal has restored the order of Assessing Officer either in part or wholly, the interest payable under section 220(2) will be computed with reference to the due date reckoned from original demand notice and with reference to the tax finally determined in the assessment. In the present case, the original order of assessment was confirmed by CIT(A) but on further appeal, the Tribunal set aside the order of CIT(A) and the issue restored to the Assessing Officer. Therefore in terms of the Circular of CBDT (supra), the interest under section 220(2) has to be charged only in ITA No.3360/Mum/2010 respect of demand raised as per the fresh assessment order. The CIT(A) following certain judgments has held that interest under section 220(2) has to be, levied from date of default of demand notice issued as per the original assessment order. We have perused the judgments cited by CIT(A) and the same are found to be distinguishable. In case of Pitamber Das Duli (supra), Hon'ble High Court of Madhya Pradesh has held that in ITA No. 02/Mum/2019 A.Y.1.1.1985 to 24.8.1995 5 case the order of CIT(A) is set aside and the order of Assessing Officer is restored, then, the demand raised on the basis of original assessment order will get revived and the assessee is liable to pay interest on that demand from the date of original order. Obviously, the case is not applicable to the present situation as the assessment order in this case has not been restored by the Tribunal but the matter has sent Date: 29.08.2019 been sent back to the Assessing Officer for fresh assessment and therefore the demand in terms of the circular of CBDT has to be levied from the date of the fresh assessment order. Similarly, in the case of Super Spinning (supra), the addition made by Assessing Officer in assessment had been deleted by C/T(A) but on further appeal. the Tribunal set aside the order of CIT(A) which meant thal the order of Assessing Officer was restored it was therefore held by the Hon'ble High Court of Madras that the original assessment got revived due to the order of Tribunal and the interest ITA No 3360/Mum/2010 under section 220(2) would be levied from the date of original assessment order This is the position as per the CBDT circular also on which the assessee has relied Similarty. the judgment of Hon'ble High Court of Delhi in case of Bharat Commerce & Industries Ltd (supra) is also distinguishable. In that case, as per the original assessment under section 143(3), there was no demand raised and subsequently order under section 154 was passed raising demand of Rs. 1,24,56,311 which included interest under section 220{2) of Rs.11,83,631 charged from the date of default as per the original assessment order. The demand had arisen vide order under section 154 and therefore it was held by the Hon'ble High Court that interest under section 220(2) will be charged from date of default as per the demand notice issued pursuant to section 154 order. The said judgment ts therefore not applicable to the facts of the present case in which the original assessment order has been set aside by the Tribunal and matter restored to the Assessing Officer for fresh assessment and therefore in view of the circular of CBDT (supra). the interest can be levied only from the date of default of the demand notice issued in pursuance of the fresh assessment order. The order of CIT(A) holding that interest under section 220(2) has to ITA No. 02/Mum/2019 A.Y.1.1.1985 to 24.8.1995 6 be levied from the date ITA No.3360/Mum/2010 of default as per the original assessment order therefore cannot be sustained. The same is set aside and the claim of the assessee is allowed. 4. In the result, the appeal of assessee is partly allowed.” 5. On appraisal of the above mentioned finding, we noticed that the CIT(A) has decided the matter of controversy on the basis of the decision of the Hon’ble ITAT in the case of M/s. Narad Investments & Trading Pvt. Ltd. Vs. DCIT in ITA. No.3360/Mum/2010 dated 19.10.2011. Merely on this fact that the said decision was not accepted by the revenue nowhere arise the claim. There is nothing on record to which it can be assumed that the order of the M/s. Narad Investments & Trading Pvt. Ltd., has been changed or varied, therefore, we are of the view that the finding of the CIT(A) is quite correct which is not liable to be interfered with at this appellate stage. Accordingly, we affirm the finding of the CIT(A) on this issue and dismissed the appeal of the revenue. ISSUE Nos. 3 & 4 6. Issue nos. 3 & 4 are formal in nature which nowhere required for adjudication. 7. In the result, the appeal filed by the revenue is hereby dismissed. Order pronounced in the open court on 28/01/2022 Sd/- Sd/- (AMARJIT SINGH) (AMARJIT SINGH) लेखध सदस्य / ACCOUNTANT MEMBER न्यधनिक सदस्य/JUDICIAL MEMBER मुंबई Mumbai; ददनांक Dated :28/01/2022 Vijay Pal Singh (Sr. P.S.) ITA No. 02/Mum/2019 A.Y.1.1.1985 to 24.8.1995 7 आदेश की प्रनिनलनि अग्रेनर्ि/Copy of the Order forwarded to : 1. अपीलाथी / The Appellant 2. प्रत्यथी / The Respondent. 3. आयकर आयुक्त(अपील) / The CIT(A)- 4. आयकर आयुक्त / CIT 5. दवभागीय प्रदतदनदध, आयकर अपीलीय अदधकरण, मुंबई / DR, ITAT, Mumbai 6. गार्ड फाईल / Guard file. आदेशधिुसधर/ BY ORDER, सत्यादपत प्रदत //True Copy// उि/सहधिक िंजीकधर /(Dy./Asstt. Registrar) आिकर अिीलीि अनर्करण, मुंबई / ITAT, Mumbai