GUJARAT STATE FERTILIZERS & CHEMICALS LTD.,,VADODARA vs. THE DY.CIT, CIRCLE-1(1),, BARODA

The sum and substance of the grievance of the assessee is that the CIT(A) erred in confirming the action of the Assessing Officer charging interest of Rs.50.01 lakhs under section 220(2) of the Income Tax Act, 1961 (‘the Act’ hereinafter).

Briefly stated, the facts of the case are that notice of demand under section 156 of the Act was issued raising a demand of Rs.26.61 crores. It was brought to the notice of the Assessing Officer that the assessee had preferred rectification application for earlier assessment years as per which substantial refund would become due to the assessee. The assessee requested the Assessing Officer to adjudicate the pending rectification application and determine the refund due to the company and adjust the same against outstanding demand for the year under consideration. 4. The Assessing Officer did not consider the request made by the assessee and levied interest under section 220(2) of the Act at Rs.50,01,200/-.

We have given a thoughtful consideration to the orders of the authorities below. We find that the assessment order is framed under section 143(3) of the Act vide order dated 30.12.2011. The notice of demand was served upon the assessee on 04.01.2012 which means that due date for payment of demand expired after 30 days from the date of receipt of the order. We further find that while giving effect to the order of CIT(A) for assessment year 2007-08, the Assessing Officer has also given effect to the rectification application preferred under section 154 of the Act for assessment year 2006-07. We find that the order was passed by the Assessing Officer on 23.02.2012. The application for rectification was made on 31.05.2011 and the Assessing Officer should have passed the rectification order within six months. But the same was passed after eight months. In our considered opinion, the delay of two months in passing the rectification order cannot be attributed to the assessee. It is a fact that the assessee was allowed refund of Rs.46.54 cores. Had the rectification was done on time, the refund of Rs.46.54 crores could have been adjusted against the demand which become due on 02.02.2012.

Considering the facts in totality, we do not find any reason why the assessee should be charged interest for the delay of two months which is not attributable to the assessee at all. We accordingly direct the Assessing Officer to delete the levy of interest for two months. Appeal filed by the assessee is accordingly allowed.

In the result, appeal is allowed. (Order pronounced in the open Court on this 13th day of December, 2017)