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Income Tax Appellate Tribunal, MUMBAI BENCHES “E”, MUMBAI
Before: SHRI B.R.BASKARAN (AM) & SHRI RAM LAL NEGI (JM)
The present appeal has been filed by the assessee against order dated 26/03/2014 passed by the Ld. CIT(A)-2 Mumbai for the Asst. Year 2007-08 u/s 263 of the Income Tax Act, 1961 (in short ‘the Act’), whereby the Ld. CIT(A) set aside the order passed by the A.O u/s 147(3)of the Act and directed the A.O to conduct de novo enquiry.
Brief facts of the case are that the assessee (Bank of Baroda) filed its return for the A.Y. 2007-08 on 30/10/2007 declaring the total income of Rs. 997,10,30,681/-, subsequently a revised return was filed declaring total income or Rs. 615,19,97,000/- on 19/03/2009. The assessment was completed u/s 143(3) on 23/03/2009, assessing the total income at Rs. 19,04,69,88,000/-. In appeal the Ld. CIT(A) decided some of the issues in favour of the assessee. Accordingly, assessment order giving effect to the CIT(A) order was passed on 07/03/2012, resulting in refund of Rs. 377,95,44,631/-
On verification of records, the Ld. CIT noticed that in the original return the assessee had claimed refund of Rs. 21,19,54,764/- as against the claim of refund of Rs. 337,74,22,347/- in the revised return. As per the Ld. CIT, since the delay in claiming enhanced refund was attributable to the assessee, interest on refund of Rs. 125,54,67,583/- for 11 months (i.e. from 01/04/2008 to 19/03/2009) was required to be excluded u/s 244A of the Act. Failure to exclude the period of delay attributable to the assessee (11 months) resulted in excess allowance of interest. Accordingly, the Ld. CIT issued notice u/s 263 of the Act to the assessee holding that since the Assessing Officer has passed the order in question without conducting proper enquiry and without application of mind, the same is erroneous and prejudicial to the interest of revenue. In response thereof the assessee’s authorized representative appeared before the Ld. CIT and contended that the AO has rightly allowed the interest because delay was not attributable to the assessee. However, the Ld. CIT rejected the contention of the assessee and passed order u/s 263 of the Act vide which he set aside the assessment order and issued direction to the AO to initiate enquiry in the light of the said observations and pass assessment order afresh. The appellant/assessee is in appeal against the impugned order passed by the Ld. CIT raising the following effective grounds:-
“1) The learned CIT erred in facts and circumstances of the case in setting aside the order u/s 147 of Income-tax Act by invoking the provisions of section 263 of the Act. 1.1) The CIT failed to appreciate that the claiming of additional refund in the revised return does not tantamount to proceedings resulting in the refund being delayed by the appellant and hence no withdrawal of interest as per the provisions of section 244(2) is warranted.
1.2) Even otherwise, interest is only a compensation for money lying with the government and since these amounts were already with the government, no withdrawal of interest u/s 244A was warranted.
Before us, the Ld. the Ld. authorized representative of the assessee submitted that in the light of the law laid down by the Hon’ble Bombay High Court in the case of CIT vs. L&T Ltd. (330 ITR 340),Hon’ble Delhi High Court in Director of Income Tax, New Delhi vs. Mitshubishi Corporation [2006] TAXMAN 581(Delhi) and decision of Mumbai Tribunal rendered in State Bank of Indis Vs. DCIT-2, Mumbai for the AY 2001-02 and 2002-03, the impugned order is not sustainable in law and the same is liable to be set aside. The AO has rightly allowed the interest in question by following the ratio laid down in the aforesaid cases.
On the other hand the Ld. departmental representative relying on the findings of the Ld. CIT submitted that the enhanced refund is on account of revision in the income of the assessee and the delay is clearly attributable to the assessee. Accordingly interest u/s 244A is not allowable on the refund of Rs. 125,54,67,583/-.
We have heard the rival submissions and also gone through the material placed on record. Sub section 2 of section 244A of the Act reads as under:-
“ (2) If the proceedings resulting in the refund are delayed for the reason attributable to the assessee, whether wholly or in part, the period of the delay so attributable to him shall be excluded from the period for which interest is payable [under sub-section (1)or(1A) and where any question arises as to the period to be excluded, it shall be decided by the [Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissioner whose decision thereon shall be final ”
In the light of the said provisions, the Hon’ble Delhi High Court has decided the similar issue in favour of the assessee in the case of In Director of Income Tax, New Delih vs. Mitsubishi Corporation (supra), in the said case the assessee initially filed its return of income on 31.10.2002 claiming loss of Rs. 2.13 crores. Revised return was filed subsequently, claiming refund of Rs. 4.73 crores on account of excess taxes withheld at source for itself and its consortium partner as well. On technical objection raised by the revenue, another revised return was filed by the assessee claiming the entire amount of refund in its own name as per the TDS certificates. The question before the Hon’ble Court for consideration was with regard to the period for which interest is payable on tax credit in terms of section 244A of the Act. According to the assessee the interest should be payable from 1.4.2002 until the date of payment on 19.7.2004 whereas according to revenue, the interest was payable for the period from 1.4.2004 till 19.7.2004. The ITAT in the impugned order had accepted the contention of the assessee. The Hon’ble High Court after hearing the parties held that the order passed by the Tribunal does not require any interference and no substantial question of law arises for consideration.
In State Bank of India Vs. DCIT (ITA No 6817&6823/M/2012, AY 2001- 02 and & 6824, AY 2002-2003) the similar issue was before the coordinate Bench of the Tribunal for consideration and the coordinate Bench after considering the rival submissions, in the light of various judgments passed by the Hon’ble Supreme Court and High Courts, decided the similar issue in favour of the assessee.
In view of the aforesaid decisions discussed in the foregoing paras, it can be concluded that the order passed by the AO is neither erroneous nor prejudicial to the interest of revenue. In our considered view, the AO has allowed the amount of interest in question taking one of the possible views, therefore the assessment order cannot be said to be erroneous and prejudicial to the interest of the revenue within the meaning of section 263 of the Act. It is well settled that where two views are possible and the AO takes one of the possible views, exercise of revisional jurisdiction u/s 263 of the Act by the Commissioner is bad in law.
Since, the AO has passed the assessment order in question after taking one of the possible views, we hold that the order passed by the Ld. CIT is not sustainable in law. We, therefore, set aside the impugned order passed by the Ld. CIT(A) and decide the grounds of appeal in favour of the appellant/assessee.
In the result appeal filed by the assessee for A.Y. 2007-08 is allowed.