M/S. M.N. DASTUR & CO. PVT. LTD,BANGALORE vs DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-4(1)(1), BANGALORE

Income Tax Appellate Tribunal, “B’’ BENCH: BANGALORE

Before: SHRI CHANDRA POOJARI

For Appellant: Shri B.K. Manjunath, A.R

For Respondent: Shri Subramanian S., D.R

Hearing: 06.12.2023Pronounced: 14.12.2023

Date of Hearing : 06.12.2023 Date of Pronouncement : 14.12.2023 O R D E R PER MADHUMITA ROY, JUDICIAL MEMBER:

This appeal by assessee is directed against order of NFAC for the assessment year 2011-12 dated 276.2023 passed u/s 250 of the Income-tax Act,1961 ['the Act' for short]. The assessee has raised following grounds: 1. “That the order passed by Authorities below in so far as it is against the appellant is against the law, facts, circumstances, natural justice, without jurisdiction, bad in law and all other known principles of law.

2. The learned CIT-Appeals (NFAC) erred in holding the appeal filed by the appellant as infructuous in nature and dismissing the same.

3. The learned CIT-Appeals (NFAC) erred in not granting reasonable and sufficient opportunity to the appellant thus violating the principles of natural justice 4. That the learned CIT-Appeals (NFAC) failed to appreciate that the Order Giving Effect to VSVS was combined order giving effect to VSVS and rectification petition filed by the appellant.

M/s. M.N. Dastur & Co Pvt. Ltd., Bangalore Page 2 of 8

5. That the learned CIT-Appeals (NFAC) failed to appreciate that the AO had erred in not granting correct interest u/s 244A of the Act and failed to provide the quantification of interest u/s 244Aof the Act.

6. For the above and other grounds and reasons which may be submitted during the course of hearing of this appeal, the assessee requests that the appeal be allowed as prayed and justice be rendered.”

The brief facts of the case are that the assessee company is in the business of providing consulting engineering services. For the above assessment year, the return of income was filed on 30.09.2011 declaring income of Rs. 14,77,54,697/- and with refund due of Rs. 14,00,21,440/-. The assessment u/s 143(3) of the Act was completed on 17.03.2014. In the said order it was mentioned that refund of Rs. 15,37,12,280/- has been already issued on 31.03.2014, however, the assessee had not received any refund till the date of assessment made on 17.03.2014. The refund voucher was issued on 19.04.2014 for Rs. 14,59,90,351/-. The assessee moved an application on 13.10.2014 as there were certain mistakes/errors which required to be rectified i.e, to grant full credit for taxes paid, interest wrongly levied u/s 234D of the Act, etc., and also the fact interest u/s 244A of the Act had not been correctly quantified. On 26.12.2016 an OGE was passed giving effect to order of ld. CIT(A), even in the said order the mistakes pointed out was not considered. Again on 13.04.2017 one more reminder in form of rectification petition was filed pointing out the mistakes/errors in the assessment order. The assessee again filed a petition on 23.02.2021 requesting for granting of interest u/s 244A of the Act until date of refund i.e. 19.04.2014. However, in the order passed u/s 154 of the Act dated: 07.04.2021 once again the interest was wrongly quantified it was considered only for the period 01.04.2011 to 31.03.2013 instead of till 19.04.2014, thus the interest considered was short to the extent of Rs. 89,57,225/-. The assessee moved an application on 08.04.2021 pointing out non consideration of request for granting of M/s. M.N. Dastur & Co Pvt. Ltd., Bangalore Page 3 of 8 interest u/s 244A of the Act up to the date of actual issue of refund. On 02/06/2022 an order giving effect consequent to VSV Scheme 2020 has been passed without considering the assessee's request for granting interest up to the actual date of issue of refund. Once again, the assessee moved an application dated 29.07.2022 which was filed on 0108.2022 requesting for correctly quantifying the interest u/s 244A of the Act on amounts due and also enclosed quantification of interest as annexure. In the order passed on 12.08.2022 for the above assessment year the ld. AO once again has erred in not properly quantifying the interest u/s 244A of the Act and in doing so he has also erred in not considering the submissions dated: 29.07.2022 mentioned supra wherein the assessee had furnished the calculation of interest u/s 244A of the Act on the amounts due to it and no reasons or explanations have been furnished by the AO for not considering the submissions made by the assessee. Further the AO erred in not providing opportunity to the appellant as required under law before passing of the order thus violating the principles of nature justice. Being aggrieved by the order and interest having not correctly quantified u/s 244A of the Act on the amounts due, the assessee went in appeal before NFAC. The ld. NFAC observed that the assessee has filed the appeal against the Order Giving Effect consequent to VSV Scheme, 2020 dated 12.8.2022 and dismissed the appeal of the assessee. Aggrieved, the assessee is in appeal before us.

The ld. A.R. submitted that the return of income for the above assessment year was filed on 30.09.2011 declaring income of Rs. 14,77,54,697/- and with refund due of Rs. 14,00,21,440/-. The assessment u/s 143(3) of the Act was completed on 17.03.2014 wherein refund due was quantified at Rs. 15,37,12,280/- which consisted of tax portion and interest u/s 244A as under: Tax portion Rs.13,20,28,267/- Interest u/s 244A Rs. 1,58,43,384/- (13,20,28,267 x 24 x ½ %) __________________ Total refund due quantified Rs.15,37,12,280/-

M/s. M.N. Dastur & Co Pvt. Ltd., Bangalore Page 4 of 8 3.1 He submitted that there was an error in the quantification of interest u/s 244A of the Act, the interest upto date of issue of refund works out to Rs. 2,37,65,088/- instead interest granted was only Rs. 1,58,43,387/-, thus interest granted was short to the extent of Rs. 79,21,701/- in the assessment order. The error is due to granting interest only for the period April 2011 to March 2013, i.e., for 24 months instead for the period April 2011 to March 2014, i.e., for 36 months till the date of issue of refund. The above refund was issued to the assessee only in the month of April 2014 after adjusting demands of other assessment years. Thus, the interest granted u/s 244A was short to the extent of 12 months. He submitted that over a period of last eight years the assessee filed several rectification applications and grievance petitions for granting correct interest up to the date of issue of refund i.e, April 2014; Finally, after 100 months the AO vide his order dated: 12/08/2022 granted the correct interest u/s 244A i.e., up to the date of actual issue of refund voucher which resulted in refund of Rs. 88,96,325/-, the relevant portion of the order is extracted hereunder for the sake of convenience: Particulars Amount (Rs.) 13,78,03,902 Excess tax refundable as per order dated: 12/08/022 2,48,04,702 Add: Interest u/s 244A (April 2011 to till the date of issue i/e April 2014 - 36 months) 16,26,08,605 Refund due Less: Refund already issued 15,37,12,280 88,96,325 Balance refundable 3.2 He submitted that the above balance refund of Rs. 88,96,325/- was due to the assessee as on April 2014 which has been issued only on 12/08/2022, however, the ld. AO failed to grant interest u/s 244A of the Act on the delayed issue of refund M/s. M.N. Dastur & Co Pvt. Ltd., Bangalore Page 5 of 8 amount of Rs. 88,96,325/- which works out to Rs. 44,92,644/- ( 88,96,325 X 101 months X 1/2%). 3.3 The ld. A.R. prayed for issuing suitable directions to the Assessing officer to correctly quantify the interest u/s 244A of the Act and also to grant interest for the period of delay (101 months) in granting interest of Rs. 88,96,325/-which partook the character of amount due as per the provisions of section 244A of the Act in the interests of justice and in support he relied on the decision of the Co-ordinate Bench of this Tribunal, Chandigarh in the case of Ambuja Darla Kashlog Mangoo Transport Cooperative Society Ltd. vs DCIT in dated 30.10.2017.

On the other hand, the ld. D.R. submitted that the assessee company filed its return of income for AY 2011-12 declaring income of Rs. 14, 77,54, 697/-with a refund due of amount Rs. 14,00,21,440/- Subsequently the assessment u/s. 143{3) of the Act was concluded on 17.03.2014. As could be seen from the first para of the body of the assessment order passed in this case on 17.03.2014 for the A.Y. 2011-12 that the return of income was processed u/s. 143{1) of the Act, on 31.03.2013 which has been wrongly mentioned as 31.03,2014, a typographical error evidently, while reducing the refund of Rs.15,37,12,280/-against the total amount refundable of Rs.14,78,71, 651/-), wherein it was noted that order u/s. 143(1) was passed on 31.03.2013 resulting in refundable amount of Rs. 15,37,12,280/- including interest u/s 244A of Rs.1,64,69,172/-. He submitted that the assessee in his Letter to DCIT, C-4(1)(1), Bangalore dated 29.07.2022, has raised the issue that in assessment order dated 17.03.2014, it is mentioned that a refund of Rs. 15,37,12,280/-has been already issued, however, the assessee had not received any refund till the date of assessment made on 17.03.2014. The refund voucher was issued on 19.04.2014 for Rs.14,59,90,351/-.

M/s. M.N. Dastur & Co Pvt. Ltd., Bangalore Page 6 of 8 Details of order passed by department a. Order u/s. 143(1) passed by CPC, Bangalore on 31.03.2013: 4.1 The ld. D.R. submitted that as per the said order the assessee is entitled to a refund of Rs.15,37,12,280/-including interest u/s. 244A. However, assessee has been issued a refund of Rs. 14,59,90,351/- in his bank account and the remaining amount i.e. Rs. 77,21,930/-has been adjusted with his demand outstanding for AYs. 2007-08, 2008-09 & 2010-11. As seen in ITBA/OLTAS module, a refund of Rs. 15,52,889/-, Rs.20,12,996/- & Rs. 41,56,044/-has been adjusted with demand of AY 2007-08, 2008-09 & 2010-11 respectively. b. Order u/s. 143(3) passed by DCIT, C-12(1) Bangalore on 17.03.2014 4.2 The ld. D.R. submitted that in this order, the assessee only contended that the refund already issued is considered at Rs. 15.37.12,280/, however, as per assessee the only refund of Rs.14,59,90,351/-has been issued on 19.04.2014. He submitted that as evident from page 5 of the assessment order u/s. 143(3) dated 17.03.2014 that due to the above, the determination of excess refund issued arose and therefore resulting in charging of interest U/S.234D of the Act. The issue has been clearly mentioned in above para. Hence, he submitted that the assessee has been issued a total refund of Rs. 15,37,12,280/- out of which an amount of Rs. 77,21,930/-has been adjusted with outstanding demand and remaining has been credited to their bank account. c. Order u/s, 250 of the Act, passed by DCIT, C-4(1)(2), Bangalore on 26.12.2016 4.3 The ld. D.R. submitted that the order giving effect is passed u/s. 250 of the Act after reducing the income to the extent of the relief allowed by ld. CIT(A) on 26.12.2016. As per the said giving effect order the refund amount is calculated as Rs. 13,71,61,006/-after granting the relief and giving the TDS credit of Rs. 18,58,84,500/-.

M/s. M.N. Dastur & Co Pvt. Ltd., Bangalore Page 7 of 8 d. Order u/s. 154 of the Act, passed by DCIT, C-4(1)(1), Bangalore dated 07.04.2021 4.4 The ld. D.R. further submitted that an order u/s. 154 of the Act dated 07.04.2021 has been passed considering the issues mentioned in their rectification application. e. Order u/s. 5(2) of VSVS Act, passed by DCIT, C-4(1)(1), Bangalore dated 12.08.2022 4.5 He lastly submitted that the assessing officer has passed order giving effect consequent to VSVS Scheme, 2020 dated 12.08.2022 with calculating the amount of interest u/s. 244A.

We have heard the rival submissions and perused the materials available on record. In this case, assessee has filed appeal against the order giving effect consequent to VSVS Scheme 2020 dated 12.8.2022. The grievance of the assessee herein is that the interest u/s 244A of the Act has been quantified at Rs.88,96,325/- as on this date. However, the same has been quantified at Rs.1,58,43,384/- vide assessment order dated 17.3.2014 and this interest has been accrued to the assessee up to April, 2014, which has not been given to the assessee in April, 2014. However, the same has been granted to the assessee only on 12.8.2022. Thus, it was delayed for a period of 101 months for which assessee is entitled to the interest at ½ % worked out at Rs.44,92,644/-.

5.1 Contrary to this, the ld. D.R. submitted that this appeal filed against the order giving effect consequent to VSVS Scheme, 2020 for which assessee have no right to appeal either u/s 250 or u/s 253 of the Act. In our opinion, while passing the consequent order the ld. AO has considered various payment of tax and interest thereon which he required to calculate the same correctly and it is the duty of the ld. CIT(A)/NFAC to correct any error crept in the order passed by ld. AO in OGE, consequent to filing VSVS Scheme, 2020 with regard to the computation of refund due to the assessee, which is emanated from M/s. M.N. Dastur & Co Pvt. Ltd., Bangalore Page 8 of 8 the order of the ld. AO. Hence, in the interest of justice, we remit this issue to the file of ld. AO to recalculate the interest u/s 244A of the Act in accordance with law.

In the result, appeal of the assessee is partly allowed for statistical purposes. Order pronounced in the open court on 14th Dec, 2023

M/S. M.N. DASTUR & CO. PVT. LTD,BANGALORE vs. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-4(1)(1), BANGALORE