THE COMMISSIONER OF INCOME TAX vs. M/S PIONEER SPORTS WORKS LTD

ITA/88/2003HC Punjab & HaryanaPHHC01029952200321 March 2011Author: MR. JUSTICE ADARSH KUMAR GOEL,MR. JUSTICE AJAY KUMAR MITTAL4 pages
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What were the facts?

The assessee, M/s Pioneer Sports Works (P) Ltd., filed a return declaring a loss for assessment year 1981-82. The Assessing Officer (AO) made additions and assessed the net income under Section 143/144B. The CIT(A) upheld the assessment with some modifications. The Income Tax Appellate Tribunal (ITAT) initially held the assessment to be barred by limitation. However, the Punjab and Haryana High Court, on reference, reversed this view and held the assessment to be valid. Consequently, the assessment was restored, and the amount refunded based on the ITAT's earlier order was sought to be recovered with interest under Section 214 read with Section 244(1A). In subsequent proceedings, the ITAT upheld the assessee's objection, deeming the recovery illegal, relying on the case of Deep Chand Jain Vs. ITO.

What did the High Court hold?

The High Court held that once an assessment was validly made and tax was due, there was no reason to exclude the applicability of interest liability under Section 214/244(1A). The Court found that the revenue was justified in effecting recovery. However, it clarified that the interest liability would only be for the period the department was deprived of the tax amount it was entitled to recover, specifically the period between the refund pursuant to the ITAT's order and the recovery as per the High Court's order. The questions raised were decided against the assessee and in favour of the revenue. The High Court did not expressly leave any issue undecided.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the ITAT was right in law in concurring with the CIT(A) by relying on Deep Chand Jain Vs. ITO (1984) 145 ITR 676, when the assessment order annulled by the ITAT was revived by the High Court in the assessee's own case? 2. Whether, on the facts and in the circumstances of the case, the ITAT was right in law in allowing interest under Section 214/244(1A) of the Income-Tax Act, 1961, when, as a result of the revival of the assessment order annulled by the ITAT, the assessee was not entitled to any refund? Assessee's contentions: The assessee relied on the case of Deep Chand Jain Vs. ITO, arguing that since the assessment became barred by limitation, the collection and detention of advance tax were illegal, and thus interest should be payable on the refund. Revenue's contentions: The revenue argued that the judgment in Deep Chand Jain Vs. ITO was distinguishable because, in that case, the demand was set aside due to no assessment being made, whereas in the present case, the assessment was upheld by the High Court. The revenue contended that the ITAT erred in holding the recovery to be illegal by ignoring the High Court's order and incorrectly applying the Deep Chand Jain judgment.

Which sections of the Income-tax Act were involved?

Section 260A,Section 143,Section 144B,Section 214,Section 244(1A)

AI-generated summary — verify with the full judgment below

Income-tax Appeal No.88

of 2003

-1- *** IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Income-tax Appeal No.88 of 2003 Date of decision: 21.3.2011. The Commissioner of Income-tax, Jalandhar-I, Jalandhar ...Appellant Versus M/s Pioneer Sports Works (P) Ltd., Jalandhar ...Respondent CORAM: HON'BLE MR.JUSTICE ADARSH KUMAR GOEL HON'BLE MR.JUSTICE AJAY KUMAR MITTAL Present: Mr. Vivek Sethi, Senior Standing Counsel for the appellant. Mr. Rohit Sood, Advocate for the respondent.

**** ADARSH KUMAR GOEL, J (

Oral)

.

1.

This appeal has been preferred by the revenue under Section 260A of the Income Tax Act, 1961 against order dated 30.12.2002 passed by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar in ITA No.584(ASR)1996, for the assessment year 1981-82, claiming following substantial question of law:- “i). Ld. ITAT was revived by the Hon'ble Punjab and Haryana High Court vid

The order continues below.

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