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Before: SHRI SANDEEP GOSAIN & SHRI PRABHASH SHANKAR
Appellant by : Shri Jaiprakash Bairagra Respondent by : Ms. Nidhi Agarwal (Sr. DR) Date of Hearing 08.01.2025 Date of Pronouncement 14.01.2025 आदेश / O R D E R PER PRABHASH SHANKAR [A.M.] :- Present appeal emanating from the appellate order dated 30.09.2024 is filed by the assessee against the order of the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] pertaining to order u/s. 154 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] dated 09.08.2021 as passed by the Income Tax Officer, Ward-15(1)(1), Mumbai for the Assessment Year [A.Y.] 2012-13.
A.Y. 2012-13 Flemingo Liners Pvt. Ltd. 2. The grounds of appeal are as under:-
1. The Learned CIT(A) erred in confirming the order passed u/s 154 of the Income Tax Act, 1961 which is bad in law.
2. The Learned CIT(A) further erred in confirming the finding of the Learned Assessing Officer for rejecting the application for giving credits of the tax deducted at source and issue a refund on account of more taxes paid.
3. The Learned CIT(A) further erred in confirming the finding of the Learned Assessing Officer that the appellant in liable for levy of interest u/s 234B of the Income Tax Act, 1961.
4. The Learned CIT(A) further erred by not considering the submission made by the appellant company vide letter dated 09- 08-2024 and merely relied on the letter dated 26-10-2020 in the order.
5. The Learned CIT(A) erred in not considering the two findings of the Jurisdictional Supreme Court of India 261 ITR 367 & 164 taxmann.com 548 and CBDT Circular No. 551, dated 23-01-1990. According to this if the taxes paid including TDS paid are more than the tax liable to be paid by the appellant company the excess has to be refunded to the appellant.
Facts culled from the order reveal that the assessee had requested the ld. Assessing Officer by way of application u/s 154 of the Act for granting TDS credit of two TDS certificates which were not considered in the assessment order as were not available on income tax portal in Form 26AS at the relevant time. However, the AO granted credit of only TDS of Rs. 9,57,145/- while rejecting the claim of credit for A.Y. 2012-13 Flemingo Liners Pvt. Ltd. the TDS of Rs. 51,39,779/-. The relevant extract of the rectification order is reproduced as under:- “The assessee company has filed letters dated 29.10.2020 and 10.02.2021in this office stating therein that credit for TDS of Rs.51,39,779/- was not given while completing the assessment u/s.143(3) for A.Y. 2012-13 and therefore, requested to issue refund after giving credit for the same which as per the assessee is reflecting in 26AS.On verification of the record, it is seen that the assessment u/s. 143(3) for A.Y. 2012-13 was completed on 25.02.2015. As per provisions of section 154(7) of the Act, no amendment u/s. 154 of the Act can be made after the expiry of four years from the end of the financial year in which the order sought to be amended was passed. In the instant case the order u/s.143(3) was passed on 25.02.2015 and the assessee has not made any application for rectification within the time limit prescribed in sec.154 of the Act. In view of the above, the assessee's request for giving credit to TDS of Rs.51,39,779/- cannot be considered at this stage and, therefore, the same is hereby rejected.”
Concurring with the AO, the ld.CIT(A) held that the order u/s 143(3) was passed on 25.02.2015 and the assessee had not made any application for rectification within the time limit prescribed in section 154. Thus, the appeal was dismissed by him.
Before us, it is submitted by the ld.Authorised Representative that the assessee filed its return of income declaring a loss of Rs 27,68,76,055/-.Assessment order u/s 143(3) dated 25/02/2015 was passed by accepting the returned loss. In the computation sheet attached to the order TDS Credit of Rs. 51,39,779/- was not given in respect of TDS by Solar Infrastructure Projects Pvt. Ltd. Though it was claimed in the return but was not reflecting in the 26AS at the time of passing of the A.Y. 2012-13 Flemingo Liners Pvt. Ltd. assessment order. However, the above TDS was reflecting in Form 26AS from Sept, 2019. Subsequently, the assessee filed an application for giving TDS credits and deleting of erroneously charged interest u/s 234B before the ld. AO, who passed the rectification order u/s 154 of the Act wherein he refused to allow the credit of TDS of Rs. 51,39,779/-on the ground of time limitation u/s 154(7) of the Act. It is argued that TDS paid by the deductor reflected in the Form 26AS of the company only on 28-09-2019 and hence, the rectification application u/s 154 of the Act was correctly made on 09-10-2019 i.e. after the date on which TDS credit reflected in the Form 26AS of the company. Thus, the order passed u/s 154 of the Act rejecting to give credit of the TDS of Rs. 51,39,779/-was not justified. 5.1 In support of above contention, the ld.AR relied on the following decisions: a) Decision of Hon'ble Supreme Court of India in the case of Commissioner of Income-tax Vs. Shelly Products, 261 ITR 367 wherein it has been held under: “Section 240 of the Income-tax Act, 1961, read with article 265 of the Constitution Refunds - Refund on appeal, etc. Assessment year 1976- 77 Whether on failure or inability of authorities to frame a regular assessment after earlier assessment is set aside or nullified, tax /deposited by an assessee by way of advance tax or self-assessment tax, of tax deducted at source is liable to be refunded to assessee, since its retention by revenue would result in breach of article 265 of Constitution which prohibits levy or collection of any tax except by authority of law, Held, no.”
A.Y. 2012-13 Flemingo Liners Pvt. Ltd. b) Decision of Hon'ble Supreme Court of India in the case of Principal Commissioner of Income-tax vs Jaswinder Pal Singh, 164 Taxmann.com 548, dated 10-07-2024 wherein SLP was dismissed against High Court ruling that where assessee, a disabled officer of Indian Army, received disability pension with effect from date of retirement vide order dated 4-12-2017, in view of circular No. 2/2001, dated 2-7-2001, such pension was exempted from income-tax, and thus, amount of income tax paid by assessee for relevant assessment years on exempted income of disability pension was to be refunded to him. 5.2 It is submitted that in the view of Circular No. 551, dated 23- 01-1990 issued by the CBDT and decisions of the Supreme court, it is clearly held that any tax deducted at source is liable to be refunded to the assessee, since its retention by the revenue would result in breach of Article 265 of the Constitution which prohibits levy or collection of any tax except by authority of law. Per contra, the ld.DR relied on the orders of the lower authorities.
We have carefully pondered over the issue in hand, provisions of the Act in the matter, rival contentions and the orders passed by the authorities below. For better appreciation of the law, it would be relevant to reproduce the provisions of Section 154(7) in the Income Tax Act, 1961 which read below: “(7)Save as otherwise provided in section 155 or sub-section (4) of section 186, no amendment under this section shall be made after the expiry of four years [from the end of the financial year in which the order sought to be amended was passed] [ Substituted by Act 67 of 1984, Section 29, for " from the date of the order sought to be amended" (w.e.f. 1.10.1984).].”
A.Y. 2012-13 Flemingo Liners Pvt. Ltd. 6.1 It is evident that the statute here has used the word ‘SHALL’ clearly while laying down the time limit for any rectification u/s 154 of the Act which is mandatory. There are only two exceptions i.e. sections 155 and 186(4) of the Act. Perusal of the provision do not reveal any ambiguity therein as it conveys a strict time limit for any rectification of any other orders u/s 154 of the Act beyond 4 years from the end of the financial year in which the order sought to be amended was passed. The word ‘shall’ prima facie ought to be considered mandatory. It is settled law that when a statute is passed for the purpose of enabling the doing of something and prescribes the formalities which are to be attended for the purpose, those prescribed formalities which are essential to the validity of such thing, would be mandatory. In order to find out the true character of the legislation, the Court has to ascertain the object which the provision of law in question is to subserve and its design and the context in which it is enacted. If the object of a law is to be defeated by non-compliance with it, it has to be regarded as mandatory. Whenever a statute prescribes that a particular act is to be done in a particular manner and also lays down that failure to comply with the said requirement leads to a specific consequence, it would be difficult to hold that the requirement is not mandatory and the specified "In construing a statutory provision the first and foremost rule of construction is the literal construction. All that the Court has to see at the very outset is what does the provision say. If the provision is unambiguous and if from the provision the legislative intent is clear, the Court need not call into aid the other rules of construction of statutes. The other rules of construction are called into aid only when the legislative intent is not clear." 6.2 It may be mentioned in this connection that the first and foremost principle of interpretation of a statute in every system of interpretation is the literal rule of interpretation. The other rules of interpretation e.g. the mischief rule, purposive interpretation etc. can only be resorted to when the plain words of a statute are ambiguous or lead to no intelligible results or if read literally would nullify the very object of the statute. Where the words of a statute are absolutely clear and unambiguous, recourse cannot be had to the principles of interpretation other than the literal rule as held in Swedish Match AB vs. Securities and Exchange Board, India, AIR 2004 SC 4219. It was held in Prakash Nath Khanna vs. C.I.T. 2004 (9) SCC 686, the language employed in a statute is the determinative factor of the legislative intent. The legislature is presumed to have made no mistake. The presumption is that it intended to say what it has said. Assuming there is a defect or an omission in the words used by the legislature, the A.Y. 2012-13 Flemingo Liners Pvt. Ltd. Court cannot correct or make up the deficiency, vide Delhi Financial Corporation vs. Rajiv Anand 2004 (11) SCC.Where the legislative intent is clear from the language, the Court should give effect to it, vide Government of Andhra Pradesh vs. Road Rollers Owners Welfare Association 2004(6) SCC 210, and the Court should not seek to amend the law in the garb of interpretation. Even if the literal interpretation results in hardship or inconvenience, it has to be followed . Where the words are unequivocal, there is no scope for importing any rule of interpretation vide Pandian Chemicals Ltd. vs. C.I.T. 2003(5) SCC 590.It is only where the provisions of a statute are ambiguous that the Court can depart from a literal or strict construction vide Narsiruddin vs. Sita Ram Agarwal AIR 2003 SC 1543. Ordinarily, it is not proper for the Court to depart from the literal rule as that would really be amending the law in the garb of interpretation, which is not permissible vide J.P. Bansal vs. State of Rajasthan & Anr. AIR 2003 SC 1405, State of Jharkhand & Anr. vs. Govind Singh JT 2004(10) SC 349 etc. It is for the legislature to amend the law and not the Court vide State of Jharkhand & Anr. vs. Govind Singh JT 2004(10) SC 349.In Shiv Shakti Co-operative Housing Society vs. Swaraj Developers AIR 2003 SC 2434, the Apex Court observed:
A.Y. 2012-13 Flemingo Liners Pvt. Ltd. "It is a well settled principle in law that the Court cannot read anything into a statutory provision which is plain and unambiguous. A statute is an edict of the legislature. The language employed in a statute is the determinative factor of legislative intent." 6.3 In the present case, the ld.AO has, in view of the time limitation laid down in section 154(7) of the Act rightly rejected the application of the assessee for rectification to allow TDS credit which was not permissible in the light of unambiguous provisions of this section. If we look into the purpose, object, text, and context of section 154(7) ,then it would be clear that the purpose of providing limitation of 4 years is to give certainty and finality to the order passed by the A.O. In this connection,reference is made of the decision of the Co-ordinate Bench of ITAT,Hyderabad in the case of Zintec Software P.Ltd 17- 08.2022 where with regard to these provisions vis-a-vis intimation u/s 143(1),it was observed “ that it is abundantly clear that the ld. CIT(A) relied upon section 154(7) of the Act to deny rectification of the order passed by the CPC u/s 143(1) of the Act. The rectification of a mistake apparent from the record is required to be made by the Income Tax Authorities u/s 154 of the Act either suo moto or on the application of assessee. The limitation for rectification of the apparent mistake has been provided by the Act for a period of 4 years u/s 154(7) of the Act. Though under section 154(7) no separate limitation period had been provided for rectification of intimation, as in this section only "order" had been used, however, the order used in this subsection, in our opinion, shall include the intimation issued under section 143(1) of the Act. Though intimation is not an assessment order but nonetheless it is an order for all purposes under the act including under section 246 of the Act. The intimation is A.Y. 2012-13 Flemingo Liners Pvt. Ltd. nothing but finalization of computation based on the return of income filed by the assessee without providing the opportunity of hearing to the assessee with the limited power to the CPC as provided by the Act. But nonetheless, based on this intimation/order the refunds/demand are raised by the tax authorities. The intimation may not be the assessment order but for all purposes it will be an order under the Act, therefore the limitation provided for rectification of intimation would only be four years, as in the case of order. However, if we accept the logic, that no limitation has been provided u/s 154(7) of the Act for the purpose of rectification then sequel to that would be that Assessing Officer be in liberty to rectify the intimation either suo-moto or on the application even after a period of 4 years. That cannot countenance. As it would lead to unintended results by conferring the powers to Assessing Officer to rectify any mistake apparent from record in respect of intimation beyond a period of 4 years. In the present case, if we look into the purpose, object, text, and context of section 154(7) ,then it would be clear that the purpose of providing limitation of 4 years was to give certainties and finality to the order passed by the CPC/A.O. If we read that the limitation provided under section 154(7) is not be available in the case of passing of any intimation to rectify the order, then chaos would happen and unlimited power would be available to the Assessing Officer/CPC to rectify the mistake even after the lapse of 4 years. In the light of the above, we are of the opinion that limitation for rectification under 154(7) is 4 years even for intimation also.”The decision of the hon’ble ITAT clearly brings out the essence that the provisions of section 154(7) laying down the time limitation for any rectification within a period of 4 years not puts restrictions on the AO 6.4 The co-ordinate bench of ITAT, Mumbai in the case of Naresh Jeramdas Idnani vs ITO, IntTax Ward-2(2)(1), Mumbai dated in 28.11.2024, while deciding a case where the AO tried to travel beyond the provisions of section 154(7) in considering a Valuation report held that “admittedly, the Assessing Officer has exercised powers under Section 154 of the Act. As per Section 154(7) of the Act, no order of rectification can be passed after the expiry of 4 years from the end of the financial years in which order sought to be rectified has been passed. Unlike Section 153 of the Act, which provides the time limit for completion of assessment, Section 154(7) of the Act does not contain any clauses for exclusion of any time taken for obtaining report in reference made Section 142A/55A of the Act. Section 154(7) of the Act prescribes an outer limit within which rectification order must be passed. In the present case, the Assessment Order was passed on 28/12/2018 which falls within the Financial Year 2018-2019. The period of 4 years specified under Section 154(7) lapsed on 31/03/2023. Since the Rectification Order was passed on 25/07/2023, the same is barred by limitation prescribed in Section 154(7) of the Act. Even if the contention of the contention of the Revenue is accepted that there is no time limit prescribed to give effect to the report received from DVO in a reference made under Section 55A of the Act, there is time limit prescribed in Section 154(7) of the Act to pass a rectification order in terms of Section 154(1) of the Act. Admittedly, the Assessing Officer has exercised powers of rectification to pass order A.Y. 2012-13 Flemingo Liners Pvt. Ltd. under Section 154(1) of the Act which should have been passed within the time limit of 4 years prescribed under Section 154(1) of the Act. In any case, it is settled law that where no time limit has been prescribed, the order should be passed within a reasonable time. In our view, unless the facts and circumstances of the case provide otherwise, a period of 4 years from the end of relevant previous year in which order sought to be rectified has been passed is a reasonable time. Therefore, we reject the contention of the Revenue that the Assessing Officer can pass an order under Section 154 of the Act any time as the Assessing Officer may deem fit since no time limit has been prescribed.”
6.5 The ld.AR in support of his arguments, has also relied on the decision of hon’ble Supreme Court in the case of Shelly Products(supra).We find ratio of the case is not applicable to the facts of the case. The question that arose for consideration in these appeals was whether on the facts and in the circumstances of the case the respondents were entitled to the refund of income-tax paid by them by way of advance tax and self-assessment tax in the event of assessment framed being nullified by the Tribunal on the ground of jurisdiction and there being no possibility of framing a fresh assessment. Apparently, there is no similarity in the facts of the cited decision vis-a-vis case of the assessee. Likewise the decision in the case of Jaswinder Pal Singh (supra),facts are clearly distinguishable. Hon’ble Apex Court dismissed SLP in the case where the hon’ble High Court of Punjab and Haryana A.Y. 2012-13 Flemingo Liners Pvt. Ltd. Court directed the Revenue for refund of tax paid by assessee with interest on the ground that the Disability pension was held to be exempt by the CBDT itself.
6.6 In the appeal under consideration, the only moot issue to be decided is whether the authorities below could pass rectification order ignoring the time limitation provided in the statute u/s 154(7) or not? In view of the position of law emerging from the cited decisions (supra) on interpretation of the provisions of section 154(7) and the wordings therein making it mandatory, action of the AO in rejecting the application for allowing TDS credit u/s 154 of the Act beyond the period of 4 years from the end of the relevant financial year is absolutely in accordance with the provisions of the Act. The assessee having failed in its legal obligation to move an application within the timeframe of 4 years cannot take recourse to the provisions howsoever its claim might have merits. The authorities could not have gone beyond the provisions contained in the statute, in entertaining its belated claim which was not in consonance with the Act.
To conclude, we are of the considered view that there is no infirmity in the appellate order or the order passed by the ld.AO in rejecting the rectification application of the assessee in view of A.Y. 2012-13 Flemingo Liners Pvt. Ltd. mandatory provisions of section 154(7) of the Act. It was incumbent on the assessee to move application u/s 154 within the time frame and having delayed the same, it cannot expect the authorities to allow such belated claim in contravention of the provisions of section 154(7). Accordingly, the order need no interference and is upheld dismissing the ground of appeal in this regard.
8. The ground relating to charging of interest u/s 234B of the Act is consequential in nature and is also dismissed.
In the result, the appeal of the assessee is dismissed.
Order pronounced in the open court on 14/01/2025.