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Facts
The Assessee was initially granted a refund including interest u/s 244A following ITAT's order. Later, the Assessing Officer rectified this order u/s 154, reducing the interest by Rs.3.37 crore and raising a demand, citing a subsequent Supreme Court judgment in *Gujarat Fluoro Chemicals Pvt Ltd* which disallowed interest on statutory interest. The revenue challenged the CIT(A)'s order which had ruled against this rectification.
Held
The Tribunal upheld the CIT(A)'s decision, finding that the facts of the assessee's case were distinct from the *Gujarat Fluoro Chemicals* case. It ruled that the issue of interest computation involved debatable and contentious matters, which cannot be rectified under Section 154 as a 'mistake apparent from record.' Therefore, the AO's rectification was deemed bad in law and not sustainable.
Key Issues
Whether the Assessing Officer could invoke Section 154 to rectify an order and reduce interest under Section 244A based on a subsequent Supreme Court judgment, when the issue was debatable and contentious and not a 'mistake apparent from record'.
Sections Cited
250, 154, 143(3), 244A
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Income Tax Appellate Tribunal, “F” BENCH, MUMBAI
Before: SHRI SANDEEP GOSAIN & SHRI OM PRAKASH KANT, ACCOUNTATN MEMBER
Date of Hearing 18.11.2025 Date of Pronouncement 20.11.2025 ORDER Per: SHRI. SANDEEP GOSAIN, J.M.:
The present appeal has been filed by the revenue challenging the impugned order dt. 17.07.2025 passed under section 250 of the Income Tax Act, 1961 (‘the Act’), by the National Faceless Appeal Centre (NFAC) / CIT(A) for the assessment year 2004-05.
We have heard the counsels for both the parties, perused the material placed on record, judgments cited before us and also the orders passed by the revenue authorities. From the records we noticed that as per the facts the impugned order passed by AO was based by applying the ratio of the decision of Hon’ble Supreme Court in the case of Gujraat Fluoro Chemicals Pvt Ltd., [2013] 358 ITR 291 (SC), which was passed subsequent to the date of the order giving effect to ITAT’s order and concluded that the assessee was not eligible for getting interest u/s 244A of the Act as allowed to it.
Whereas the facts of the present case of the assessee was different from that in the case of Gujraat Fluoro Chemicals Pvt Ltd (supra), even otherwise the Ld. CIT(A) has adjudicated this grounds by passing a detailed well reasoned order and the operative portion of the said order is reproduced herein below:
DECISION:- 5.1 I have carefully gone through the rectification order u/s 154, the grounds of appeal and submission made by the appellant in this regard. Briefly stating facts of the case is that appellant's case was assessed u/s 143(3) which went up to ITAT, Mumbai. Both CIT(A) and ITAT had allowed relief to the appellant and the order giving effect to ITAT's order was passed by the assessing officer allowing interest u/s 244A of the Act for a specific amount. This order giving effect was then rectified u/s 154 (order appealed against in this case) by which the interest allowed u/s 244A was reduced and consequential demand of Rs.3.37 crore raised. 5.2 All the grounds of appeal raised by the appellant are against incorrect computation of interest u/s 244A of the I.T. Act allowed by assessing officer against refund arising out of order giving effect to ITAT's order/Facts involved in the issue is that appellant's case was assessed u/s 143(3) of the Act making several additions therein. The order went up to ITAT, Mumbai and both CIT(A) and ITAT had allowed several reliefs to the appellant. Order giving effect to ITAT's order was passed dated 29.06.2012 where refund of Rs.63,99,93,217/- including interest u/s 244A of the Act was allowed to the appellant. Subsequently, the assessing
officer by notice dated 11.12.2014 sought to rectify the order giving effect to ITAT's order dated 29.06.2012. After obtaining appellant's explanation in this regard, the AO passed the order u/s 154 of the I.T. Act dated 08.06.2015 in which he reduced the interest payable to the appellant u/s 244A from the amount computed in earlier order and raised consequential demand of Rs.3,37,44,150/-. The basis for reducing the interest u/s 244A as observed by the AO in the impugned order is as under:- "However, the Ld. CIT(A), in its above-mentioned order dated 28.02.2011, while deciding the issue in favour of the assessee, had relied on the decision of Hon'ble Supreme Court in the case of "Sandvik Asia Ltd.", which was reversed later by the larger bench of Hon'ble Supreme Court in the case of "Gujarat Fluoro Chemicals" [2013] 358 ITR 291 (SC)/(2013) 262 CTR 269 (SC)). The Hon'ble Apex Court held that only interest u/s. 244A of the Act may be claimed by the assessee and no interest on such statutory interest would be available to the assessee. In view of the above, the mistake being apparent from the record is hereby rectified under section 154 of the Income- tax Act and the excess interest granted to the assessee is hereby withdrawn." 5.3 It is clear from AO's observation as above that he had applied the ratio of Hon'ble Supreme Court's judgement passed subsequent to the date of the order giving effect to ITAT's order and observed that although Ld. CIT(A) while deciding the appeal in appellant's favour had directed to allow interest u/s 244A as decided in 'Sandvik Asia Ltd,' case but since the decision given in Sandvik Asia case was reversed by Hon'ble Supreme Court in a subsequent judgement in the case of 'Gujarat Fluoro Chemicals Ltd.', the appellant was not eligible for getting interest u/s 244A as allowed to it. On the other hand, the appellant claimed that facts and legal aspects involved in appellant's case was different from those involved in 'Gujarat Fluoro Chemicals Ltd.' case and that Ld. CIT(A) in his order had directed the correct method of calculation of interest u/s 244A which was allowed by AO in his order giving effect dated 29.06.2012 to ITAT order. After analysing the facts involved in the case and the observation made by AO in the impugned order u/s 154, I find that the assessing officer has resorted to rectifying an earlier order u/s 154 of the Act on the basis of certain judgements of Hon'ble Supreme Court given subsequently. Heere two facts require mention. 1st, that the facts involved in the judgement of 'Sandvik Asia' case [on the basis of which interest u/s 244A was directed to be allowed by Ld. CIT(A) and duly allowed by AO in his earlier order] are distinct from those involved in 'Gujarat Fluoro Chemicals' case. 2nd, that proceedings u/s 154 can be resorted to only where there is some mistake in the earlier order which is sought to be rectified and which is apparent from records. In this case, the proceedings u/s 154 have been resorted to by the AO in the impugned order on some issue which is neither identical to the issue decided by the Supreme Court judgement but is a debatable and contentious issue on which there always exist conflicting and different views. It is therefore in no way any 'mistake apparent from records' within the meaning contained in section 154 of the I.T. Act. The order u/s 154 passed by the assessing officer dated 08.06.2012 is therefore bad in law and not sustainable. The demand raised by the impugned order is directed to be deleted and appeal allowed..
After having heard the counsels for both the parties at length and perusal of the record, we found that the facts of the case of the assessee are different from the facts contained in the case of Gujraat Fluoro Chemicals Pvt Ltd (supra) and the AO had wrongly invoked the provisions of Sec. 154 of the Act as the controversy in question involves debatable and contentious issues which cannot be construed as “mistake apparent from record” within the meaning of Sec. 154 of the Act.
5. No new facts or circumstances have been placed on record before us in order to controvert or rebut the findings so recorded by Ld. CIT(A). Therefore, we see no reasons to Order pronounced in the open court on 20/11/2025