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Income Tax Appellate Tribunal, MUMBAI BENCH “B” MUMBAI
ORDER PER RAVISH SOOD, J.M: The present appeal filed by the assessee is directed against the order passed by the CIT(A)-24, Mumbai, dated 10.05.2019, which in turn arises from the order passed by the A.O under Sec. 154 of the Act, dated 08.03.2018. The assessee has assailed the impugned order on the following grounds before us: “Being aggrieved by the order passed by the Learned Commissioner of Income-tax (Appeals) - 24, Mumbai (hereinafter referred to as "the CIT(A)") your Appellant submits, among others, following grounds for your sympathetic consideration:-
1. On the facts and in law, the Ld. CIT(A) erred in confirming the order of the Ld. Assessing Officer denying interest allowable to the Appellant Company u/s 244A on the self-assessment/regular tax of Rs.50 lakhs paid by the Company. Hon'ble
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CIT(A), while rejecting interest claimed by Appellant, erred in considering the order passed by the AO as rectification order u/s 154 whereas the Ld. AO had in fact passed order giving to the order of the Hon'ble CIT(A).
2. The Appellant further prays that interest under clause (b) of sub-section (1) of section 244A be allowed for the period from date of payment of tax i.e 05/06/1997 to date of granting refund i.e 7/03/2002 and in view of inordinate delay in granting interest, allow further interest on interest till the actual date of payment of interest as held by Hon'ble Supreme Court in the case of CIT Vs Gujarat Fluro Chemicals [2014] 42 Taxmann.com 1 (SC). The Appellant craves leave to add to, alter or amend above grounds of appeal, if necessary.”
Before us, the issue involved in the present appeal lies in a narrow compass i.e as to whether or not the assessee is entitled for interest u/s 244A on the amount of self-assessment tax of Rs.50 lac. Briefly stated, the assessee company had filed a revised return of income for A.Y 1997-98 on 31.12.1997, wherein against its tax liability of Rs.6,54,574/- it had after claiming credit for taxes of Rs.1,11,38,699/- paid had raised a claim for refund of an amount of Rs.1,04,84,127/-. Intimation u/s 143(1)(a), dated 30.03.1998 was issued to the assessee wherein credit for the amount of self-assessment tax of Rs.50 lac was not given. On a rectification application filed by the assessee u/s 154 of the Act, the A.O though vide his order dated 07.03.2002 allowed credit of the self- assessment tax of Rs.50 lac but did not grant interest u/s 244A on the said amount.
Aggrieved, the assessee assailed the order passed by the A.O u/s 154 before the CIT(A). The CIT(A) vide his order dated 04.02.2010 directed the A.O to verify the facts and grant interest u/s 244A of the Act, as per law.
The A.O vide his order u/s 154, dated 08.03.2018, therein, inter alia, declined the assessee‟s claim for grant of interest on the amount of the self- assessment tax.
Aggrieved, the assessee assailed the aforesaid impugned order passed by the A.O u/s 154, dated 08.03.2018 i.e the Order Giving Effect (OGE), dated
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08.03.2018 (which is claimed by the assessee to have been wrongly mentioned by the A.O as an order u/s 154) before the CIT(A). It was the claim of the assessee company before the CIT(A) that the A.O had on the basis of misconceived and incorrect facts failed to give effect to the directions of the order of the CIT(A), dated 04.02.2010. On merits, it was the claim of the assessee that it was duly entitled for interest on the self-assessment tax of Rs.50 lac. In support of his aforesaid contentions the assessee had relied on the following judicial pronouncements:
(i). Stock Holding Corporation of India ltd. Vs. CIT [2015] (2015) 373 ITR 282 (Bom.) (ii). CIT vs. Sutlej Industries Ltd. [2010] 325 ITR 331 (iii). Grasim Industries Limited V. Dy. CIT, Central Circle 1(4), Mumbai [2021] 123 taxmann.com 312 (Mumbai). Also, support was drawn by the assessee from the CBDT Circular No. 549, dated 31.10.1989. Further, it was also claimed by the assessee that it was entitled for interest on interest on the aforesaid amount of refund. In support of his aforesaid contention reliance was placed by the assessee on the following judicial pronouncements :
(i). CIT vs. Gujrat Fluro Chemicals [2014] 42 taxmann.com 1 (SC) (ii). CIT Vs. Narendra Doshi [2002] 122 taxman 717 (SC)
However, it was observed by the CIT(A) that as the issue raised by the assessee was not in the nature of a mistake apparent from the record, therefore, no infirmity, did arise from the order of the A.O who had rightly declined to rectify the order u/s 154 of the Act. Backed by his aforesaid observation, the CIT(A) being of the view that there was no mistake apparent from record which could be rectified under the provisions of Sec.154 of the Act, thus, dismissed the appeal:
The assessee being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. It was submitted by the ld. Authorized Representative (for short „A.R‟) for the assessee that both the lower authorities had proceeded on the basis of absolutely misconceived and incorrect facts. It was submitted by 4 Nileto Systems limited Vs. ACIT, Circle -15(2)(2) the ld. A.R that as the A.O while disposing off the assessee‟s application for rectification u/s 154 of the Act, vide his order dated 07.03.2002 had failed to grant interest on the self-assessment tax of Rs.50 lac, therefore, the assesse had assailed the said order before the CIT(A). It was submitted by the ld. A.R that the CIT(A) vide his order dated 04.02.2010 had restored the matter to the file of the A.O with a direction to him to verify the facts and grant interest u/s 244A, as per law. It was submitted by the ld. A.R that the A.O instead of passing the consequential “Order Giving Effect” (OGE) pursuant to the aforesaid order of the CIT(A), dated 04.02.2010, had wrongly passed the order u/s 154 of the Act, dated 08.03.2018. It was submitted by the ld. A.R that the A.O instead of passing the “OGE” i.e u/s 154 r.w.s 250, had wrongly passed the order u/s 154, dated 08.03.2018 and declined the assessee‟s claim for interest u/s 244A on the amount of self-assessment tax of Rs.50 lac. It was submitted by the ld. A.R that the mistake on the part of the A.O in wrongly passing the order u/s 154, dated 08.03.2018 (as against u/s 154 r.w.s 254 of the Act) was thereafter allowed to perpetuate by the CIT(A). It was submitted by the ld. A.R that the CIT(A) had failed to appreciate that the impugned order in question was in pith and substance an OGE giving effect to the order passed by the CIT(A), dated 04.02.2010, and had wrongly upheld the view taken by the A.O, on the ground, that as there was no mistake apparent from record which could be rectified under the provisions of Sec. 154 of the Act, therefore, no infirmity did emerge from the order of the A.O. Backed by his aforesaid contentions, it was submitted by the ld. A.R that both the lower authorities had proceeded with the matter on the basis of absolutely incorrect and misconceived facts, as a result whereof, the issue in question i.e the entitlement of the assessee towards interest u/s 244A on the self-assessment tax had remained un-adjudicated.
Per contra, the ld. Departmental Representative (for short „D.R‟) relied on the orders of the lower authorizes.
5 Nileto Systems limited Vs. ACIT, Circle -15(2)(2) 8. We have heard the ld. Authorized Representatives for both the parties, perused the orders of the lower authorities and the material available on record. As is discernible from the records, the assessee had filed an application u/s 154 of the Act, wherein, it had, inter alia, sought credit for the amount self- assessment tax of Rs.50 lac that was omitted to be given in the intimation issued by the department u/s 143(1)(a), dated 30.03.1998. Although, the A.O vide his order u/s 154, dated 07.03.2002 had allowed credit of the self-assessment tax of Rs.50 lac (supra), however, failed to grant interest u/s 244A on the said amount. That as the A.O vide his order u/s 154, dated 07.03.2002 had not allowed interest u/s 244A on the amount of the self assessment tax of Rs. 50 lac that was refunded to the assessee, therefore, the latter had assailed the said order before the CIT(A). On appeal, the CIT(A) vide his order dated 04.02.2010 directed the A.O to verify the facts and grant the interest u/s 244A as per law. On a perusal of the records, we find that the A.O instead of giving effect to the aforesaid order of the CIT(A), dated 04.02.2010, had instead passed an order u/s 154 of the Act, dated 08.03.2018, wherein he had declined the assessee‟s claim for interest u/s 244A for the reasons, viz. (i) that interest was to be calculated only on the refund arising out of TDS, TCS and Advance Tax paid by the assessee; and (ii). that as the issue in question was not a mistake apparent from the record, thus, the same could not be rectified. As observed by us hereinabove, on appeal, the CIT(A) vide his order dated 10.05.2019 had upheld the order passed by the A.O u/s 154, dated 08.03.2018, for the reason, that as there was no mistake apparent from record, therefore, no infirmity did emerge from the order passed by the A.O u/s 154 of the Act, dated 08.03.2018 declining the assessee‟s application u/s 154 of the Act.
After giving a thoughtful consideration to the issue in hand in the backdrop of the aforesaid facts, we find substantial force in the claim of the ld. A.R that both the lower authorities had proceeded on the basis of misconceived and 6 Nileto Systems limited Vs. ACIT, Circle -15(2)(2)
incorrect facts. As stated by the ld. A.R, and rightly so, the A.O instead of giving effect to the directions that were issued by the CIT(A), vide his order dated 04.02.2010, wherein he was directed to verify the facts and grant interest u/ 244A as per law, had instead passed an order u/s 154 of the Act, dated 08.03.2018. On a perusal of the order passed by the A.O u/s 154, dated 08.03.2018 [which is a supposedly the order passed by him giving effect to the order of the CIT(A), dated 04.02.2010], we find, that he despite having been specifically directed by the CIT(A) to verify the facts and grant the interest u/s 244A as per law, however, had failed to give effect to the said directions by way of a speaking order and had summarily observed that interest under the said statutory provision was only to be calculated on the refund arising out of TDS, TCS and Advance Tax paid by the assessee company. On appeal, we find that the CIT(A), being of the view that the impugned order before him was an order passed by the A.O u/s 154 of the Act declining the assessee‟s request for rectification, had thus, proceeded with on the basis of the said misconceived factual position and had dismissed the assessee‟s appeal, for the reason, that the claim of the assessee did not fall within the realm of a mistake apparent from the record within the meaning of Sec. 154 of the Act.
Backed by the aforesaid facts, we concur with the claim of the ld. A.R that both the lower authorities had proceeded with the matter on the basis of misconceived and incorrect facts. We, thus, in the totality of the facts involved in the case before us restore the issue to the file of the A.O who shall comply with the directions given by the CIT(A) in his order dated 04.02.2010, which read as under:
“2.1 The appellant has pointed out that A.O has not granted interest u/s. 244A on the refund ranted on rectification order passed u/s 154 of the I.T. Act, 1961. It has been pointed that the A.O has passed the rectification order u/s 514 of the I.T. Act, 1961 giving credit of Rs. 50 lacs paid as self assessment tax by the appellant without granting interest u/s 244A of the income-tax Act.
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2.2.1 The A.O is directed to verify the facts and grant of the interest u/s 244A as per law.” At this stage, we may herein clarify that the assessee shall in the course of the set-aside proceedings remain at a liberty to substantiate its entitlement for interest u/s 244A on the amount of the self-assessment tax of Rs. 50 lac. As we have restored the matter to the file of the A.O for re-adjudication, therefore, we refrain from adverting to the contentions advanced by the ld. A.R as regards the merits of the case. Accordingly, the impugned order passed by the CIT(A) is set- aside to the file of the A.O in terms of our aforesaid observations. The Grounds of appeal Nos.1 & 2 are allowed for statistical purposes in terms of our aforesaid observations.
Resultantly, the appeal filed by the assessee is allowed for statistical purposes in terms of our aforesaid observations.
Order pronounced in the open court on 23.11.2021