Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, MUMBAI BENCH “A”, MUMBAI
Before: SHRI KULDIP SINGH & SHRI OM PRAKASH KANT
Per : Kuldip Singh, Judicial Member:
For the sake of brevity aforesaid cross appeals bearing common question of law and facts are being disposed of by way of composite order.
Appellant M/s. ARCH Pharmalabs Ltd. (hereinafter referred to as the assessee) and appellant DCIT, Central Circle-5(1), Mumbai (hereinafter referred to as the Revenue) by filing aforesaid cross appeals sought to set aside the impugned order dated 25.02.2022 passed by Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)], on the grounds inter alia that: (Assessee’s grounds of appeal
) “1. The order of the Ld. CIT(A) is bad in law and on facts
2. (i) The Ld. CIT(A) erred in not allowing the adjustment of Refund of AY 2004-05 to AY 2011-12 against the shortfall of payment of Advance Tax & Self-Assessment Tax on the cutoff datei.e 15.12.2011. (ii) The refund of earlier years should be adjusted on the cuf-off date i.e 15.12.2011 (date of short fall in advance tax of AY 2012-13) as the said amount was already lying with Income Tax Department, which was collected by the Income Tax Department due to erroneous assessment proceedings of previous years.
3. (i) The Ld. CIT(A) erred in law and on facts in confirming the Ld. AO's action of rejecting the application U/s. 154 of the Income Tax Act, 1961, without considering the principle of natural justice. (ii) The Ld. CIT(A) erred in not considering the fact of our case that there was genuine hardship and situation beyond the control, which resulted in delay in payment of Advance Tax / Self-Assessment Tax (iii) The CIT(A) erred in not considering the fact the demand of AY 2004-05 to AY 2011-12 was raised due to high pitch Assessment on the grounds of unjustified Addition to the total income and the said demand was also recovered by the department fearfully. Subsequently & ors. 3 M/s. ARCH Pharmalabs Ltd. that was adjudicated and relief was granted by the Hon*ble ITAT Mumbai as a result of which refund has arised of AY 2004-05 to AY 2011-12. (iv) The CIT(A) erred in not considering the fact that department is giving interest U/s. 244A @ 6 % pa on the refund amount and contrary charging interest @ 12% pa on the demand amount, which is again against the principle of Natural justice, as the refund amount was already lying with department.
4. The appellant craves leave to add, amend. Alter or delete any of the above grounds of the appeal.”
(Revenue’s grounds of appeal)
“1. On the facts and circumstances of the case and in low, Whether the Ld. CIT(A) is justified in directing the adjustment of refund of AY 2008-09 against demand u/s 143(1) of AY 2012-13, from the date of demand, ignoring the fact that the refund was issued to the assessee earlier though not encashed by him. 2 On the facts and circumstances of the case and in law, Whether the Ld. CIT(A) is justified in directing the adjustment of refund of AY 2008-09 against demand u/s 143(1) of AY 2012-13, from the date of demand, ignoring the fact that there was no claim by the assessee for the adjustment of the same.
3. On the facts and circumstances of the case and in law, Whether the Ld.CIT(A) is justified in directing the adjustment of refund of AY 2008-09 against demand u/s 143(1) of AY 2012-13, from the date of demand, ignoring the fact that the refund has already been issued to the assessee and collected by him as well as on date.
4. On the facts and circumstances of the case and in law, Whether the Ld.CIT(A) is justified in directing to charge the interest u/s.234B of the act for A.Y. 2012-13 till 30.03.2015 Le date of regular assessment order u/s 143/3) of the Act, ignoring the fact that in the case of assessee order u/s 147 r.ws 143(3) was completed on 21.12.2019.
The applicant craves to leave, to added, to amend and/or to alter any of the ground of appeal, if need be.”
Briefly stated facts necessary for adjudication of the controversy at hand are : the assessee filed return of income for A.Y. 2012-13 the year under consideration, which was processed & ors. 4 M/s. ARCH Pharmalabs Ltd.
under section 143(1) of the Income Tax Act, 1961 (for short ‘the Act’) on 28.08.2013 determining a demand of Rs.23.07 crores. Thereafter, assessment was framed under section 143(3) of the Act vide order dated 30.03.2015 by determining the demand of Rs.27.48 crores. Thereafter, on the basis of search and seizure operation block assessment from A.Y. 2004-05 to 2010-11 proceedings were completed on 27.12.2011 and the assessee had paid the demand of Rs.3,35,00,000/- and Rs.9,40,00,000/- for A.Y. 2004-05 & 2005-06 respectively. Then assessee challenged the assessment order before the Ld. CIT(A) and before the Tribunal against the block assessment from A.Y. 2004-05 to 2008-09 and the Tribunal vide order dated 07.04.2021 deleted the addition for A.Y. 2004-05, 2005-06 & 2008-09 making the assessee eligible for refund against the said assessment years. Accordingly, assessee made a request for adjustment of refund in its favour after giving effect to the order of Tribunal as against advance tax for A.Y. 2012-13.
For the year under consideration i.e. A.Y. 2012-13 there was a shortfall on the part of the assessee in payment of advance as on 15.12.2011. Assessee by moving an application under section 154 of the Act before the Assessing Officer (AO) sought to adjust refund due to it for A.Y. 2004-05 & 2008-09 against the demand of A.Y. 2012-13 as on 15.12.2011, which was required to be paid before filing the return of income by the assessee for A.Y. 2012-13 and the very demand for A.Y. 2004-05 & 2008-09 existed on the dated of 15.12.2011 till the determination of refund in July – August 2021. So the AO rejected the rectification application filed by the assessee. & ors. 5 M/s. ARCH Pharmalabs Ltd.
5. Assessee carried the matter before the Ld. CIT(A) by way of filing appeal who has partly allowed the same. Feeling aggrieved the assessee as well as Revenue have come up before the Tribunal by way of filing cross appeal.
We have heard the Ld. Authorised Representatives of the parties to the appeal, perused the orders passed by the Ld. Lower Revenue Authorities and documents available on record in the light of the facts and circumstances of the case and law applicable thereto.
Undisputedly, assessee had defaulted in the payment of advance tax and self assessment tax of the returned income for A.Y. 2012-13. It is also not in dispute that assessee’s refunds for A.Y. 2004-05 to A.Y.2008-09 were determined in the month of July – August 2021 on giving effect to the order passed by the Tribunal dated 07.04.2021.
In the backdrop of the aforesaid undisputed facts the Ld. CIT(A) decided the issue by returning following findings: “5.3 The findings of the AO in the rectification order and the submissions of the appellant have been considered. The facts of the case of the appellant are that for A.Y. 2012-13, the appellant filed return of income on 29.09.2012. The return for A.Y. 2012-13 was processed u/s. 143(1) on 28.08.2013 determining demand of Rs. 23.07 crore. Further, the assessment order u/s. 143(3) for A.Y. 2012-13 was passed on 30.03.2015 and demand of Rs. 27.48 crore was determined. Further, consequent to the search and seizure action, block assessments from A.Y. 2004-05 to 2010-11 were completed on 27.12.2011. The appellant had paid the demand of Rs. 3,35,00,000/- for A.Y. 2004 05 and Rs.9,40,00,000/- for A.Y. 2005-06. The appellant preferred the appeal before the CIT(A) and Hon'ble ITAT against the block assessment from A.Ys. 2004-05 to 2008-09. The ITAT vide order dated 07.04.2021 has deleted the additions for A.Ys. 2004-05, 2005-06, 2006-07 and 2008-09 and thus, the assessee & ors. 6 M/s. ARCH Pharmalabs Ltd.
was eligible for refund against the assessment years. Thus, the assessee had requested for adjustment of refund arising after giving effect to the order of the Hon'ble ITAT as against the advance tax for A.Y. 2012-13 on 15.12.2011.
5.3.1 The assessee is eligible for refund due to it after giving effect to the order of the Hon'ble ITAT in the month of July/August, 2021. For A.Y. 2012-13, there was shortfall in payment of Advance Tax as on 15.12.2011 by the appellant. There is no provision in the Act to adjust the refund determined by the AO against the Advance Tax and Self-Assessment tax liability of the appellant for any assessment year. Further, the refund became due to the appellant only in July/Aug. 2021, therefore, it can only be adjusted against the demand existing as on the date of the determination of the refund, related to A.Y. 2012-13, if any. Thus, the request of the that the refund determined for A.Y. 2004-05, 2005-06, 2006-07 and 2008 09 in July/Aug. 2021 should be adjusted against the shortfall in Advance Tax as on 15.12.2011 for A.Y. 2012-13, is not supported by any provisions of the I.T. Act and it cannot be entertained legally.
5.3.2 However, the appellant has brought to my notice that the refund of Rs. 96,43,769/- for A.Y. 2008-09 was determined on 31.03.2011 and the cheque was also issued to the appellant. The refund was not encashed by the appellant and the 'issued refund cheque' was shown in the ITBA system as 'out-of-date' cheque. This fact was informed by the AO to the appellant in response to the grievance application Imade by the appellant vide letter dated 28.06.2021. Thus, the refund of Rs. 96,43,769/- for A.Y. 2008-09 was determined on 31.03.2011 and the assessee was eligible to refund amounting to Rs. 96,43,769/- for A.Y. 2008-09 as on 31.03.2011. Accordingly, the AO is directed to adjust the refund of Rs. 96,43,769/- for A.Y. 2008 09 against the demand of Rs. 23.07 crore for A.Y. 2012-13 determined on 28.08.2013 by an order u/s. 143(1) of the Act.
5.3.3 ……. ……..
5.3.4 Accordingly, the AO is directed to (i) not to adjust the refund determined in July/Aug. 2021 for A.YS. 2004-05 to 2008-09 against the Advance Tax as on 15.12.2011 for A.Y. 2012-13, (1) to adjust the refund of Rs. 96,43.789, alongwith interest, of A.Y. 2008-09 determined on 31.03.2011, against the demand for AY 2012-13 determined u/s. 143(1) on 28.08.2013 and (ii) charge interest us. 2348 of the Act for A.Y. 2012-13 till 30.03.2015, i.e. the date of regular assessment for AY 2012-13 us. 143(3) of the Act.
Accordingly, Ground Nos. 2 & 4 of the appeal is partly allowed.”
& ors. 7 M/s. ARCH Pharmalabs Ltd.
So far as question of adjusting the refund of A.Y. 2004-05 to A.Y. 2011-12 as fought for by the assessee, against the shortfall of payment of advance tax and self assessment tax is concerned, it is settled principle of law that it can only be adjusted when it is determined by the department. Pursuant to the order passed by the Tribunal dated 07.04.2021 approving refund to the assessee for A.Y. 2004-05 to A.Y. 2008-09, the refund was determined for A.Y. 2004-05, 2005-06 & 2006-07 in the month of July-August 2021 whereas payment of advance tax and self assessment tax of the returned income of the assessee qua A.Y. 2012-13 was due as on 15.12.2011. When on 15.12.2011 refund in favour of the assessee was not determined it was not liable to be adjusted.
However, the Ld. CIT(A) by taking note of the fact that the refund of Rs.96,43,769/- for A.Y. 2008-09 was determined on 21.03.2011, of which cheque was issued but is not encashed by the assessee and in ITBA system cheque was shown as out of date cheque. So taking note of the fact that refund of Rs.96,43,769/- for A.Y. 2008-09 was determined on 31.03.2011 the same was allowed to be adjusted as on 31.03.2011 for A.Y. 2008-09 against the demand of Rs.23.7 crores, for A.Y. 2012-13 determined on 28.08.2013 vide order passed under section 143(1) of the Act. So we find no illegality or perversity in the order passed by the Ld. CIT(A) qua rejecting the adjustment of refund determined for A.Y. 2004-05 to A.Y. 2006-07 and allowing the adjustment of refund for A.Y. 2008-09.
So far as question of charging interest under section 244B of the Act for A.Y. 2012-13 up to 30.03.2015 the date of regular & ors. 8 M/s. ARCH Pharmalabs Ltd.
assessment under section 143(3) of the Act is concerned, the Ld. CIT(A) has rightly directed the AO to charge the interest under section 234B for A.Y. 2012-13 till 30.03.2015.
In view of what has been discussed above, finding no illegality or perversity in the impugned order passed by the Ld. CIT(A) both the appeals filed by the assessee as well as Revenue are hereby dismissed.
Order pronounced in the open court on 25.08.2022.