THE BABA NAG RICE & GENRAL MILLS,AMRITSAR. vs. THE COMMISSIONER OF INCOME TAX, AMRITSAR.

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR. BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER AND SH. N. K. CHOUDHRY, JUDICIAL MEMBER I.T.A. No. 375/Asr/2016 Assessment Year: 1998-99

Baba Naga Rice & General Vs. The Asst. Commissioner of Income Mills, Vill. Basarke Bhaini, Tax, Circle-V, Amritsar Chheharta, Amritsar [PAN: AAEFB 8457G] (Appellant) (Respondent)

Appellant by : Sh. Sudarshan Kapoor (Adv.) Respondent by: Sh. Charan Dass (D.R.) Date of Hearing: 04.04.2018 Date of Pronouncement: 24.05.2018

ORDER Per Sanjay Arora, AM: This is an Appeal by the Assessee agitating the Order by the Commissioner of Income Tax (Appeals)-2, Amritsar ('CIT(A)' for short) dated 30.03.2016, dismissing the assessee’s appeal contesting the rejection of its application u/s. 154 of the Income Tax Act, 1961 ('the Act' hereinafter) vide his order dated 24.06.2008 for Assessment Year (AY) 1998-99.

2 ITA No. 375/Asr/2016 (AY 1998-99) Baba Naga Rice v. Asst. CIT 20.03.2006 at an income of Rs.61,29,267/-, entailing an additional tax liability of Rs.20,69,965/-. It is the interest u/s. 234B on this additional tax, computed at Rs.22,45,912/-, that the assessee claims to be a mistake, liable, therefore, for rectification by way of withdrawal.

3 ITA No. 375/Asr/2016 (AY 1998-99) Baba Naga Rice v. Asst. CIT [2016] 382 ITR (St.) 1)]. The Apex Court in Kunahayammed & Ors. v. State of Kerala [2000] 245 ITR 286 (SC) clarified that on account of leave to appeal the finality of a judgment, decree or order appealed against is to put in jeopardy, though it continues to be, unless stayed or suspended, etc. per a speaking order, binding and effective between the parties. The decision in South Indian Bank Ltd. (supra) can therefore no longer be regarded as a judicial precedent. Our first observation is that the assessee in the instant case denies his liability to interest u/s. 234B. It is this that therefore entitles him to contest the said levy in-as-much as otherwise, consequential and compensatory interest cannot be challenged (refer: Central Provinces Manganese Ore Co. Ltd. v. CIT [1986] 160 ITR 961 (SC). The said contest, however, even as noted during hearing, is not by challenging the assessment whereby the same is levied, per se but per an application u/s. 154, the scope of which is severely limited, i.e., to rectify a mistake apparent from record. That is, the challenge, to be successful, has to necessarily exhibit the issue under reference to be a ‘mistake’, i.e., on which two views are not possible or is free from debate. Even if therefore the decision by the tribunal in Datamatics Ltd. (supra), taking the view being advanced by the assessee, was not available, the matter having traveled to the Apex Court – granting leave to appeal against the decision by the Hon'ble Kerala High Court, the same itself shows the matter to be debatable and, in any case, not free from debate. The issue involved, it needs to be appreciated, in both the decisions, i.e., by the tribunal and the Kerala High Court, taking contrary views, is the same, i.e., the true interpretation and scope of section 234B(3) read with section 234B(1). While the tribunals’ view is guided by the language of section 234B(3), the Hon'ble High Court has taken a broader view of the matter. The same therefore is not free from debate, to qualify it as a ‘mistake’ and, thus, liable for rectification u/s. 154. Why, even if therefore both the decisions had subscribed to the same view, say, in favour of the assessee,

4 ITA No. 375/Asr/2016 (AY 1998-99) Baba Naga Rice v. Asst. CIT the matter having reached the tribunal/High Court, on the basis of a different interpretation, it could only be regarded as debatable. It all the more so where, as in the present case, the two have taken different views. The only exception would be where the ‘other view’ is shown, in a particular case, to be completely without any basis. Yes, SLP stands admitted against the decision by the Hon'ble Kerala High Court, but the same does not, for that reason, in any manner, cease to be its view, representing in fact a different view, taken earlier by the tribunal, against whose order the matter traveled to it at the instance of the assessee-appellant in that case. How, then, we wonder, the matter of levy of interest u/s. 234B(3) could be regarded as a ‘mistake’? It is akin to the said levy having been omitted to be charged in assessment, and sought to be imposed through recourse to section 154; the issue in either case, as afore-stated, being the true interpretation of section 234B(3) read with section 234B(1). In fact, the entire section 234B, along with sections 207 to 210, so as to discern the scheme of advance-tax, and the income (base) with reference to which it is to be deposited, would call for being reviewed, besides the relevant case law by the higher courts of law, to some of which reference has been made by the Revenue. Reference in this regard may also be made to the decision in CIT v. Hindustan Bulk Carriers [2003] 259 ITR 449 (SC). The moot question, perhaps, required to be answered is if the obligation to deposit advance-tax, which is on the ‘currrent income’, be construed (for the purpose of charge of interest on the shortfall in advance-tax) as represented by income as originally assessed or as finally assessed. This is as if it is to be as finally assessed, as the reading of the different clauses of section 234B suggests, could the default for the shortfall be restricted to advance-tax on the income as originally assessed? This is particularly so as the charge of interest is mandatory and compensatory. In fact, as a reading of the decision in Datamatics Ltd. (supra) shows, the issue stood advanced as an additional ground, which was admitted as a purely legal ground

5 ITA No. 375/Asr/2016 (AY 1998-99) Baba Naga Rice v. Asst. CIT (para 44), while the analysis as well as the reliance on case law is marked by consideration of the assessee having exercised due diligence while returning his income (para 54) – a matter of fact, which may or may not obtain in a particular case, as the reason/s for reassessment would be different in each case.

Sd/- Sd/- (N. K. Choudhry) (Sanjay Arora) Judicial Member Accountant Member Date: 24.05.2018 /GP/Sr. Ps. Copy of the order forwarded to: (1) The Appellant: Baba Naga Rice & General Mills, Vill. Basarke Bhaini, Chheharta, Amritsar (2) The Respondent: The Asst. CIT, Circle-V, Amritsar (3) The CIT(Appeals)-2, Amritsar (4) The CIT concerned (5) The Sr. DR, I.T.A.T