BANSILA MOHANLAL MALANI REP.BY L/R SMT. ARUNA MALANI ,HYDERABAD vs. INCOME TAX OFFICER, WARD-10(1), HYDERABAD

ITA Nos. 1279 & 1280/Hyd/18 for AY 1993-94 and 1994-95 Bansilal Mohanlal Malan Rep. by L/R Smt.Aruna Malani,Hyd. AYs 1991-92 to 1994-95 against which the assessee preferred an appeal before the CIT(A) and thereafter before the Tribunal in ITA Nos. 1199, 1200 and 1202/2008. The Tribunal considered the issue and observed that the direction of the Tribunal in the appeal for AY 1995-96 was to give credit of Rs.42 lakhs for A.Y. 1995-96 and there was no other direction given by either the CIT(A) or the Tribunal and no such matter was adjudicated either by the CIT(A) or by the Tribunal, and, therefore, held that the AO cannot travel beyond the extent of giving credit of Rs.42 lakhs for the A.Y. 1995-96. The Tribunal held that the AO exceeded his jurisdiction by passing a consequential order for A.Y. 1991-92 to 1995-96 in the case of giving effect to the order of CIT(A) for the A.Y. 1995-96. The Tribunal also observed that credit should not be given twice for the amount paid by the assessee. The Tribunal further held that for the A.Y. 1991-92 to 1994-95 order was passed in the year 2002, and, therefore mistake has to be rectified within 4 years from the date of order, and since this has not been done in the impugned A.Y., the order is barred by limitation. The Tribunal accordingly set aside orders of the lower authorities. The AO passed consequential order dated 22.6.2010 by adjusting the sum of Rs.42 lakhs towards the outstanding demand for AY 1995-96 and recomputing interest u/s 220(2) of the Act. 2.2. Aggrieved by this consequential order, the assessee filed an appeal before the CIT(A) who directed the AO to follow the directions of Hon’ble ITAT by not giving double credit and by not waiving interest levied u/s 234A, B and C of the Act. Consequent to the order of CIT(A), the AO passed consequential order dt. 22.6.2010 against charging interest u/s 220(2) of the Act and against this order assessee filed an appeal before the CIT(A), who dismissed the same by holding that the order passed charging interest u/s 220(2) of the Act is not an appealable order u/s 234A of the Act. Against this order of CIT(A), the assessee is in appeal before us. 3. The Ld.Counsel for the assessee submitted that the assessee has paid little more than the entire tax demand in the year 2002 itself and the interest u/s 220(2) for the years before the Settlement Commission was waived off by the CIT(A) after directions of the Hon’ble Supreme Court remanding the

ITA Nos. 1279 & 1280/Hyd/18 for AY 1993-94 and 1994-95 Bansilal Mohanlal Malan Rep. by L/R Smt.Aruna Malani,Hyd. matter to the file of CIT(A). He submitted that the assessee is challenging the levy of interest u/s 220(2) of the Act itself, and not just the computation and, therefore, it is an appealable order u/s 246 of the Act. In support of his contention that it is an appealable order, he placed reliance on the decision of Jurisdictional High Court in the case of Bakelite Highlam Ltd. Vs. CIT reported in 171 ITR 344 (AP). 4. The Ld.DR, on the other hand, supported the orders of the CIT(A) and placed reliance upon the decision of Hon’ble High Court of Calcutta in the case of ANZ Grindlays Bank PLC vs. CIT reported on 241 ITR 269(2000) (Calcutta) wherein it has been held that the order charging interest u/s 220(2) of the Act is neither a part of assessment order, nor there is any appeal provided u/s 246 of the Act and, therefore, the order charging interest u/s 220(2) of the Act is not an appealable order. 5. Having regard to the rival contentions and material placed on record, we find that the interest u/s 220(2) which has been charged in the initial consequential order passed by the AO has been waived by the CIT(A)-V, Hyderabad. Subsequently, pursuant to directions of ITAT to treat the advance amount paid by assessee, as advance tax for the A.Y. 1995-96, the AO has passed the consequential order. We find that in the case of Bakelite Hylam Ltd. (supra), the Hon’ble Jurisdictional High Court was considering the case of an assessee wherein while giving effect to the order of the ACIT in the quantum appeal, the interest on refund was not allowed u/s 244 of the Act. The Hon’ble High Court held that the order passed by the ITO giving effect to the decision of appellate authority is as much an assessment order as the one passed by him by way of regular assessment u/s 143 of the Act. It was also held that in the absence of specific right of appeal conferred by S.246, no appeal lies to the appellate authority against refusal to grant interest, but where there is total denial of liability to pay interest, the order is liable to be challenged in an appeal although there can be no appeal if dispute is only regarding the quantum of interest payable. There is a distinction between the principle of law, i.e. where there is total denial of assessee’s claim, it is open to him to show that the claim for interest was well

ITA Nos. 1279 & 1280/Hyd/18 for AY 1993-94 and 1994-95 Bansilal Mohanlal Malan Rep. by L/R Smt.Aruna Malani,Hyd.

founded. For the sake of ready reference, the relevant paras are reproduced hereunder:

“An order of assessment is one in which there is computation of income or computation of tax or both. The computation of income and tax can be made by the Income-tax Officer not only in regular assessment made under section 143 of the Act but also in orders passed from time to time giving effect to the decision of the appellate authorities. The order passed by the Income Tax Officer giving effect to the decision of the appellate authority is as much an assessment order as the one passed by him by way of regular assessment under section 143 of the Act.

In the absence of a specific right of appeal conferred by section 246, no appeal lies to the appellate authority against refusal to grant interest. Where there is total denial of the liability to pay interest, the order is liable to be challenged in an appeal although there can be no appeal if the dispute is only regarding the quantum of interest payable. There is a distinction where, on principle of law, there is a total denial of the assessee’s claim, it is open to him to show that the claim for interest is well founded. If however, on principle, there was no objection to the grant of interest but the dispute related only to the quantum, then the assessee has no right of appeal against the order on the ground that interest was inadequately granted.

The Tribunal granted certain reliefs to the assessee and in giving effect to the Tribunal’s order, the Income tax Officer passed a modification order granting refund to the assessee. The assessee preferred an appeal to the Commissioner (Appeals) against the modification order and claimed that the Income tax Officer was in error in not granting interest on refund under section 244 of the Income Tax Act, 1961. The Commissioner (Appeals) held that no appeal lay against an order giving effect to the appellate order of the Tribunal and that, in any event, no right of appeal was provided against the Income tax Officer’s omission to grant refund u/s 244. The Tribunal upheld the view taken by the Commissioner (Appeals). On a reference:

ITA Nos. 1279 & 1280/Hyd/18 for AY 1993-94 and 1994-95 Bansilal Mohanlal Malan Rep. by L/R Smt.Aruna Malani,Hyd.

Held, (i) that the assessee had a right of appeal against the modification order as if it were an assessment order itself and the appellate authority was bound to entertain the appeal and decide it on merits.

(ii) That since there was total denial of liability on the part of the Revenue to pay interest on the refund, an appeal lay to the next appellate authority.” 5.1. The Ld.Counsel submitted that this very same logic is applicable to the interest charged u/s 220(2) of the Act as well, therefore, is an appealable order. We find that the decision of the Jurisdictional High Court is binding on the Subordinate Courts and Tribunals as against the decision of a different High Court. Therefore, respectfully following the decision of the Jurisdictional High Court in the case of Bakelite Hylam Ltd. (cited Supra) we set aside the issue to the file of CIT(A) with a direction to reconsider and adjudicate the issue on merits. 6. In the result, appeals of the assessee for both the AYs are treated as allowed for statistical purposes. Order pronounced in Open Court on 23rd October, 2019. Sd/- Sd/-

(S.RIFAUR RAHMAN) (P MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 23rd October, 2019. *GMV

ITA Nos. 1279 & 1280/Hyd/18 for AY 1993-94 and 1994-95 Bansilal Mohanlal Malan Rep. by L/R Smt.Aruna Malani,Hyd.