DCIT, CIRCLE - 3(1), KOLKATA, KOLKATA vs. M/S. THE PEERLESS GENERAL FINANCE & INVESTMENT CO. LTD., KOLKATA

PDF · subscribers
ITA 901/KOL/2018Status: DisposedITAT Kolkata20 February 2019AY 2006-074 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that interest under Section 244A is mandatory and its denial due to oversight constitutes a rectifiable mistake. They upheld the CIT(A)'s decision to allow the interest, following Supreme Court and their own previous rulings.

What were the facts?

The Assessing Officer (AO) gave effect to a Settlement Commission order, initially determining a refund for the assessee. However, the AO failed to grant mandatory interest under Section 244A on this refund, and later rejected the assessee's rectification petition. The CIT(A) allowed the interest, which the Revenue appealed.

What were the issues?

Whether mandatory interest under Section 244A is allowable on a refund determined after a Settlement Commission order, and if its denial is rectifiable.

Which sections of the Income-tax Act were involved?

Section 244A,Section 245D,Section 245F,Section 154

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.

Income Tax Appellate Tribunal, ‘D’ BENCH, KOLKATA

Before: Sri J. Sudhakar Reddy & Sri S.S. Viswanethra Ravi

Date of concluding the hearing : January 16th, 2019 Date of pronouncing the order : February 20th, 2019 O R D E R Per J. Sudhakar Reddy :- This appeal is filed by the Revenue and is directed against the order of the ld. Commissioner of Income Tax (Appeals) - 1, Kolkata (hereinafter the ‘ld. CIT (A)’), passed u/s 250 of the Income Tax Act, 1961 (the ‘Act’), dated 25/01/2018.

2.

There is a delay of 17 days in filing of the appeal by the Revenue. After perusing the petition for condonation of delay, we are convinced that the Revenue was prevented by sufficient cause in filing the appeal in time. Hence, we condone the delay and admit the appeal.

3.

The sole ground of appeal

that arises for our adjudication reads as follows: “01. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) is justified in allowing interest u/s 244A ignoring the order passed by the Hon’ble Settlement Commission and ignoring the provision of Section 245D?”

4. After hearing rival contentions, perusing the papers on record and the orders of the authorities below as well as case laws cited, we hold as follows.

5. The facts are stated at Para 3 Page 2 & 3 of the order of the ld. CIT(A) which is extracted for the ready reference:

2 M/s The Peerless General Finance & Inv. Co. Ltd Assessment Year: 2006-07

“The Assessing Officer vide an order passed u/s 245F(1) of the Income Tax Act, 1961 (the Act) dated 31.03.2017 gave effect to an order passed by the Income-tax Settlement Commission (the ITSC) u/s 245D(6B) dated 23.05.2016. In the said order initially an amount of Rs.9.30.36,776/- was determined as refundable to the company. The said amount was determined as refundable after considering credit for TDS (Rs.2,78,95,043/- ), Advance Tax (Rs.7,50,00,000) and Self Assessment Tax (Rs.17,11,50,735) as indicated in the order dated 23.05.2016 passed u/s 245D(6B) by the Income Tax Settlement Commission. Though there was nothing mentioned about any refund to be issued to the assessee in the order passed by the Settlement Commission, in the said order dated 31.03.2017 passed u/s 245F(1), the Assessing Officer suo moto adjusted refund aggregating to Rs.11,51,46,370 issued to the assessee earlier and worked out a net payable arising out of giving effect to the said order passed by the ITSC dated 23.05.2016 at Rs.2,21,09,594. It may be noted that although the Assessing Officer adjusted refunds issued to the assessee while giving effect to the order dated 23.05.2016 passed by the ITSC on his own motion, he however, through oversight omitted to allow interest u/s 244A of the Act on the amount of Rs.9,30,36,776/- determined initially as refundable to the assessee on giving effect to the order dated 23.05.2016 passed by the ITSC. Since, interest u/s 244A is of mandatory nature and not allowing the same constitutes a mistake apparent from the records which is rectifiable u/s 154 of the Act, vide a petition dated 22.05.2017, the assessee requested the Assessing Officer, who is an Income Tax Authority as per Se.116, to rectify the order dated 31.03.2017 passed by him u/s 245F(1) of the Act and allow interest in terms of the said provisions and moreover, as there was a delay of more than 3 months in giving effect to the order dated 23.05.2016 passed u/s 245D(6B) of the Act by the ITSC, he was also requested to allow additional interest @ 3 per cent p.a. in terms of Se. 244A(1A) of the Act and in this regard a statement showing computation of such interest at an aggregate amount of Rs.3,21,27,956 was also enclosed with the said rectification petition. The Assessing Officer has since passed an order dated 14.08.2017 u/s 154/245D(4)/6B/245F(1) of the Act (being the order under appeal), rejecting the above petition for rectification filed by the assessee. While rejecting the petition, the Assessing Officer referred to the provisions contained in section 245I of the Act which provides that the order of settlement passed u/s 245D(4) of the Act shall be conclusive as to the matters stated therein and no matter covered by such order said as otherwise provided in this Chapter, be re-opened in any proceedings under this Act or under any law for the time being in force and came to the conclusion that the order passed u/s 245F(1) dated 31.03.2017 cannot be rectified to allow further interest u/s 244A of the Act, It is submitted that the above contentions of the Assessing Officer has no legs to stand and is legally untenable. Interest u/s 244A is statutory and a mandatory provision which operates in a case when refunds be come due to an assessee. There is a mistake in the order dated 31.03.2017 inasmuch that such statutory and mandatory interest u/s 244A of the Act was not allowed to the assessee through oversight, and such mistake is very much rectifiable u/s 154 of the Act by the Income Tax Authority passed in the said order. The appellant does not agree with the above action of the Assessing Officer. Hence this appeal, the appellant craves leave to make detailed submission at the time of hearing of this appeal before the ld. CIT(Appeals).”

3 M/s The Peerless General Finance & Inv. Co. Ltd Assessment Year: 2006-07

6.

On appeal, the ld. CIT(A) followed the judgment of the Hon’ble Supreme Court in the case of K. Lakshmanya & Co. vs. CIT 87 taxmann.com 190(SC) and the decision of the Tribunal in the assessee’s own and allowed the appeal of the assessee. We find no infirmity in the same. This Bench of the Tribunal in the assessee’s own case in dated 02.06.2017 for the Assessment Year 2002-03 allowed a similar issue in favour of the assessee.

7.

Consistent with the view taken therein, we uphold the following finding of the ld. CIT(A): “I have considered the material before me. It is found that there is merit in the contention of the appellant that the grant of interest u/s 244A is of mandatory nature on the issue of delay in issue of refunds in consequence to an order passed by the Settlement Commission under section 245D(4) of the I.T. Act, 1961 as held by the Hon’ble Supreme Court in the case of K. Lakshmanya & Co. vs. CIT reported in 87 taxmann.com 190 (SC). In addition, reliance was also placed on the decision by the ITAT, Kolkata A-Bench in ITA No.50/Kol/2009 dated 02.06.2017 for A.Y 2002-03 in the appellant’s own case on similar issue, wherein the appeal of the assessee was allowed on the issue of grant of mandatory interest u/s 244A. Therefore, the denial of mandatory interest u/s 244A by the A.O on delayed refund in consequence to giving effect of order in consequence to an order passed by the Settlement Commission under section 245D(4) of the I.T. Act 1961 is found to be a prima facie mistake from the face of record. Accordingly, the A.O is directed to allow interest u/s 244A on the delayed refund in accordance with the observations of the Hon’ble ITAT vide its order in ITA No.50/Kol/2009 dated 02.06.2017 (supra) on the same issue in the appellant’s own case for A.Y 2002-03. Thus, ground no.1 & 2 are allowed for statistical purposes.”

8.

In the result, the appeal of the Revenue is dismissed. Kolkata, the 20th February, 2019.

More judgments on Section 244A

All 1,186 judgments and leading authorities on Section 244A →

Latest GST High Court judgments

Search GST case law →