THE COMMISSIONER OF INCOME TAX V. M/S M N DASTUR & CO PVT LTD

ITA/802/2008

AI Insights

The case involves an appeal by the revenue against the decision of the Income Tax Appellate Tribunal (ITAT), which had set aside the order of the Assessing Authority that withdrew excess interest granted on a tax refund. The refund in question, amounting to Rs.1,59,58,769, included interest calculated from April 1, 1998, to March 3, 2005. The Assessing Authority later sought to withdraw Rs.29,20,056 of this interest, citing a delay in the assessee's tax return filing, which was not excluded in the interest calculation. The Tribunal reversed this decision, leading to the revenue's appeal to the High Court. The main legal contention was whether the prior approval of the Commissioner was necessary for such a withdrawal, which the Tribunal and the High Court affirmed as essential.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 700951 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 19-08-2014
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: S R ANURADHA
• Assessee Lawyers: K V ARAVIND
• Keywords: Income tax appeal; Interest; Jurisdiction; Rectification; Refund
• Section: 154; 260-A; 244A(1)(3)

Judgement Text

" IN THE HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS THE 19TH DAY OF AUGUST, 2014 PRESENT THE HON' BLE MR. JUSTICE N.KUMAR AND THE HON' BLE MRS. JUSTICE RATHNAKALA Income Tax Appeal No 802 OF 2008 BETWEEN 1. THE COMMISSIONER OF INCOME TAX C R BUILDING QUEENS ROAD BANGALORE 2. THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-12(1) BANGALORE APPELLANTS (BY SRI K V ARAVIND, ADVOCATE) AND M/S M N DASTUR & CO PVT LTD 7TH FLOOR, RAHEJA TOWERS 26/27, M.G.ROAD BANGALORE RESPONDENT 2 (BY SMT : S R ANURADHA, ADVOCATE) This Income Tax Appeal is filed under Section 260-A of Income Tax Act, 1961 praying to formulate the substantial questions of law and to allow the appeal and set aside the Order passed by the ITAT Bangalore in ITA No. 500/BNG/2007 dated 28-03-2008 confirm the orders of the Assistant Commissioner of Income Tax , Circle-12(1), Bangalore in the interest of justice and equity. This Income Tax Appeal coming on for Hearing this day, N. Kumar J., delivered the following: JUDGMENT The revenue has preferred this appeal challenging the order passed by the Tribunal which has set aside the order passed under Section 154 of the Income Tax Act by the Assessing Authority. 2. The refund of Rs.1,59,58,769 was issued on 3.3.2005 to the assessee which included the interest under Section 244A(1)(3) of the Act granted from 1.4.1998 till 3.3.2005. The Assessing Authority initiated proceedings under Section 154 of the Act on the ground that there was a delay attributed to the assessee while granting refund. The return of income was due 3 on 30.11.1998 but the return was filed on 6.5.1999. Therefore, the delay in filing the return from 1.12.1998 to 30.4.1998 was attributable to the assessee, but the delay was not excluded for calculation of interest on refund. Therefore the Assessing Authority proceeded to pass an order to rectify the aforesaid mistake under Section 154 of the Act in order to withdraw the excess of interest granted i.e., Rs.29,20,056/-. Aggrieved by the said order, the assessee preferred an appeal to the Tribunal. 3. The Tribunal held that there was no occasion for withdrawing the interest already granted to the assessee in accordance with the provisions of the Income Tax Act duly approved by the Commissioner of Income Tax and definitely not for carrying out rectification under Section 154 for withdrawing the same. Therefore, the appeal filed by the assessee was allowed and direction was issued to the assessing authority to grant refund so withdrawn. Aggrieved by the said order, the revenue has preferred this appeal. 4 4. It was contended on behalf of the revenue that prior permission of the Commissioner is not required under law and, therefore, the Tribunal erred in passing the impugned order. 5. Sub-section (2) of Section 244A of the Act provides that, if the proceedings resulting in the refund are delayed for reasons attributable to the assessee, whether wholly or in part, the period of the delay so attributable to him shall be excluded from the period for which interest is payable. It further provides that, where any question arises as to the period to be excluded, it shall be decided by the Chief Commissioner or Commissioner whose decision thereon shall be final. Therefore, as rightly held by the Tribunal as the prior approval of the Commissioner is not obtained, the order passed by the assessing authority is one without jurisdiction and unsustainable in law. Therefore, the Tribunal was justified in setting aside the orders passed by the lower authorities and, 5 hence, cannot be found fault with. There is no merit in this appeal and accordingly it is dismissed. Sd/- Judge Sd/- Judge "