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Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI
Before: SHRI CHANDRA POOJARI & SHRI G. PAVAN KUMAR
आदेश / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER:
The appeal filed by the assessee is directed against order of the Commissioner of Income-tax (Appeals)-VIII, Chennai in ITA No.09/09-10(A)- VIII, dt. 26.11.2012 for the assessment year 1999-
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2000 passed u/s.154 and 250 of the Income Tax Act, 1961 (herein
after referred to as ‘the Act’).
The assessee has raised the following grounds:- 2. 1. The order of the Commissioner of Income Tax (Appeals) is opposed to law and contrary to the facts of the case. 2. The Commissioner of Income Tax (Appeals) grossly erred in remanding the matter back to the Assessing Officer in the guise of giving one more opportunity, which is in violation to the provisions of Section 251(1) (a).
Limitation:- 3.1 The Commissioner of Income Tax (Appeals) ought to have appreciated that the order u/s. 154 passed by the Assistant Commissioner of Income Tax is barred by limitation since four years have expired from the end of the financial year in which the order sought to be amended was passed as per section 154(7). 4. Jurisdiction:- 4.1. The Commissioner of Income Tax (Appeals) ought to have appreciated that the Assessing Officer has no jurisidiciton for rectification of mistake of previous orders, while passing an order of revision for giving effect to the order of the Income Tax Appellate Tribunal 4.2.. The Commissioner of Income Tax (Appeals) ought to have appreciated that while giving effect to the Tribunal's order, the Assessing Officer cannot rectify an alleged mistake committed by him and also admitted by him that neither in the original order nor in the giving effect to CIT(A)'s order, he charged interest u/ s. 234B for the period beyond 28 months i.e. till the date of intimation u/s.143(1). 5. Merits:- 5.1 The Commissioner of Income Tax (Appeals) ought to have appreciated that when the Assessee was in appeal before Tribunal, it cannot be worse off by being in appeal before the Tribunal, since the Assessing Officer is taking advantage of rectifying a mistake prejudicial to the interest of the assessee who was in appeal before Tribunal in the guise of
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giving effect to order of the Income Tax Appellate Tribunal.
5.2. The Commissioner of Income Tax (Appeals) ought to have appreciated that the Tribunal has no power of enhancement and therefore the direction of the Tribunal, if any, cannot be interpreted to levy interest for a period of 70 months against the originally charged 28 months. 5.3. The Commissioner of Income Tax (Appeals) ought to have held that the original order passed by the Assessing Officer levying interest u/ s. 2348 for a period of 28 months was correctly charged and there was no mistake warranting rectification of the same. 6. The Appellant contests all the findings of fact and law made by the Commissioner of Income Tax (Appeals) against the Appellant. 7. The Appellant craves leave to file additional grounds of appeal at or before the time of hearing’’.
The Brief facts of the case that the assessee is a partnership 3.
firm engaged in the business of manufacture and export of readymade
garments and filed Return of income admitting Nil income on
10.12.1999. Subsequently, the return was processed u/s.143(1)(a) of
the Act on 22.10.2002 and refund was determined �10,91,584/-
including interest u/s.244A of the Act �2,64,612/-. The Assessing has
reason to believe on escapement of income and issued notice u/s.148
of the Act on 12.11.2003 and assessment was finalized and completed
on 28.02.2005. In the re-assessment order, the Assessing Officer
determined tax demand of �30,94,798/- including interest u/s.234A
and 234B of the Act. The Assessing Officer calculated interest
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u/s.234B from 22.10.2002 to 28.02.2005 i.e. (interest calculated from
date of processing of return u/s.143(1)(a) of the Act to date of
assessment order u/s.143(3) r.w.s 147 of the Act for 28 months).
Aggrieved by the re-assessment order, the assessee filed an appeal
before the Commissioner of Income Tax (Appeals) and was partly
allowed. The ld. Assessing Officer passed consequential order giving
effect to the Commissioner of Income Tax (Appeals) order on
30.11.2005 and determined tax payable �30,89,057/- including
interest u/s.234A and 234B of the Act and calculated interest u/s.234B
of the Act for a period of 28 months as in earlier order. Aggrieved by
the order of Commissioner of Income Tax (Appeals) the assessee and
Department has filed cross-appeal with the Tribunal and order was
passed on 10.08.2007 and further the Assessing Officer passed
consequential order dated 20.08.2008 giving effect to the Tribunal
order dated 10.08.2007 and determined tax payable on the assessed
income �35,93,705/- including interest u/s.234A and 234B of the Act.
The main dispute arises on charging interest for 70 months u/s.234B
by Assessing Officer from 1.4.1999 to 28.02.2005 as against period of
28 months calculated earlier in re-assessment order u/s.143(3) r.w.s
147 of the Act dt.28.02.2005 and consequential order dated
30.11.2005 from 22.10.2002 to 28.2.2005. The Assessing Officer in the
re-assessment order and consequential order of Commissioner of
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Income Tax (Appeals) charged interest u/s.234B for a period of 28
months. But while giving effect to the ITAT order charged interest for
71 months. The assessee filed petition u/sec. 154 of the Act and was
rejected on 17.06.2009 by mentioning that mistake was committed
earlier in charging interest u/s.234B of the Act and subsequently,
rectified in revision order dated 20.08.2008. Aggrieved by the order of
rejection u/s.154 of the Act dated 17.06.2009, the assessee filed an
appeal before the Commissioner of Income Tax (Appeals).
In the appellate proceedings, the ld. Authorised 4.
Representative of the assessee appeared and reiterated the
submissions made in the assessment proceedings earlier appellate
and ITAT proceedings and also explained the circumstances of
charging of interest u/s.234B of the Act. The Commissioner of Income
Tax (Appeals) considered the submissions directed Assessing Officer
through letter dated 16.12.2009 to provide an opportunity to the
appellant on principles of natural justice and comply with the report
before 29.01.2010. The ld. Assessing Officer filed reply dated
29.12.2009 communicating that the revision order was made
consequent to the order of ITAT and the question of issue of notice for
providing an opportunity of hearing to the assessee does not arise.
Subsequently, the ld. Commissioner of Income Tax (Appeals)
considered the findings of the re-assessment order, revision order,
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grounds of appeal and written submissions and directed the Assessing
Officer to provide one more opportunity before calculating the interest
u/s.234B of the Act to the assessee and allowed the appeal for
statistical purpose. Aggrieved by the order of the Commissioner of
Income Tax (Appeals), the assessee assailed an appeal before
Tribunal.
Before us, the ld. Authorised Representative reiterated the
submissions made in the re-assessment proceedings and appellate
proceedings. The ld. Authorised Representative challenged the
validality and limitation of passing order u/sec. 154 of the Act by the
Assessing Officer and the assessee cannot be put in a worst position
than before, as in the present case on the guise of revision order
giving effect to ITAT order, the ld. Assessing Officer has enhanced the
liability by calculating interest u/s.234B of the Act for a period of 70
months as against originally 28 months. The ld. Commissioner of
Income Tax (Appeals) ought to have held that original order u/sec.
143(3) r.w.s 147 passed by the Assessing Officer is correct and there
is no mistake for rectification and supported his arguments with the
Synopsis list of dates, chart and paper book evidencing the assessment
order passed u/s.143(3) r.w.s. 147 of the Act dt. 28.02.2005 and
revision order dated 30.11.2005 were the Assessing Officer calculated
the interest u/s.234B of the Act for a period of 28 months. The ld.
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Authorised Representative drew our attention to the order dated
20.08.2008 passed by the Assessing Officer giving effect to the ITAT
order charged interest u/s.234B for 70 months �17,01,779/- referred
at page 11 of paper book. Further on comparison with the revision
order, dated 20.08.2008 were interest charged u/s.234B is
�17,01,779/- as against earlier Revision order dated 30.11.2005
�8,97,165/-. The ld. Authorised Representative relied on the decision
of Vijaya Kumar Saboo (HUF) and another vs. ACIT 340 ITR 382 (Kar)
were held that ‘’After determination of tax under Sec. 143(1)(a) of the
Act in regular assessment, and income declared by the assessee was
accepted by the Department, thereafter, proceedings were initiated
under sec. 147 of the Act and revised return was filed declaring
enhanced income and interest u/s.234B of the Act shall be calculated
from the said date of tax determined u/s.143(1)(a) of the Act and not
from the date of first day of April next following such financial year’’
and prayed for allowing the ground.
Contra, the ld. Departmental Representative relied on the
orders of the Assessing Officer.
We heard the rival submissions, perused the material on 7.
record and judicial decisions cited. The ld. Authorised Representative
only dispute with respect to charging of interest u/s.234B of the Act.
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In re-assessment proceedings, interest was charged for 28 months and
also in revision order giving effect to order of the Commissioner of
Income Tax (Appeals) interest was charged for 28 months by the
Assessing Officer which is not disputed. But the Assessing Officer has
charged interest u/s.234B from 01.04.1999 to 28.02.2005 for a period
of 70 months while giving effect to ITAT order and mention that
earlier orders were passed with the mistake of the Income Tax
department. On the limitation issue, the order u/sec. 154 of the Act
cannot be the finality as there is no increase, enhancement or
reduction of total income. On perusal of provisions of Sec.234B(3) of
the Act before Amendment ‘’where, as a result of an order of
reassessment or recomputation under section 147 or section 153A, the
amount on which interest was payable under sub-section (1) is
increased, the assessee shall be liable to pay simple interest at the
rate of one per cent for every month or part of a month comprised in
the period commencing on the day following the date of
determination of total income under sub-section (1) of Sec. 143 and
where a regular assessment is made as is referred to in sub-section
(1) following the date of such regular assessment and ending on the
date of the reassessment or recomputation under section 147 or
section 153A, on the amount by which the tax on the total income
determined on the basis of the reassessment or recomputation
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exceeds the tax on the total income determined under sub-section (1)
of Section 143 or on the basis of the regular assessment aforesaid’’
and substituted Amended provision effective from 01.06.2015
‘’Where, as a result of an order of reassessment or recomputation under section 147 or section 153A, the amount on which interest was payable in respect of shortfall in payment of advance tax for any financial year under sub-section(1) is increased, the assessee shall be liable to pay simple interest at the rate of 70[one] per cent for every month or part of a month comprised in the period commencing on the 1st day of April next following such financial year and ending on the date of the reassessment or recomputation under Sec 147 to section 153A, on the amount by which the tax on the total income determined on the basis of the reassessment or recomputation exceeds the tax on the total income determined under sub-section (1) of Section 143 or on the basis of the regular assessment as referred to in sub-section (1), as the case may be’’.
Prime facie the amendment is prospective on combined reading of
both the provisions there is change in the interest calculation
u/s.234B of the Act. In the case of re-assessment and re-
computation interest u/s.234B has to be charged commencing on the
day following the date of determination of total income u/s.143(1) of
the Act. On comparison with the post amendment proviso interest to be charged commencing on 1st day of April next following such
financial year and ending on the date of re-assessment or re-
computation u/sec.147 or Sec. 153A of the Act. Considering the
apparent facts, provisions of law and amendments and judicial
decision Vijay Kumar Saboo & Anr. (supra), we are of the opinion that
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the assessment year of the assessee is prior to the Amendment and the rectification of mistake by the Department on the guise of giving effect to the ITAT order is not in order. Therefore, we remit the entire file to the Commissioner of Income Tax (Appeals) to consider the post and pre amendment provisions and shall provide adequate opportunity of hearing to the assessee before passing the order.
In the result, the appeal of the assessee is partly allowed for 8. statistical purpose.
Order pronounced on Thursday, the 31st day of March, 2016, at Chennai.
Sd/- Sd/- (चं� पूजार�) (जी. पवन कुमार) (CHANDRA POOJARI) (G. PAVAN KUMAR) �या�यक सद�य/JUDICIAL MEMBER लेखा सद�य /ACCOUNTANT MEMBER चे�नई/Chennai �दनांक/Dated:31.03.2016 KV
आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 3. आयकर आयु�त (अपील)/CIT(A) 5. �वभागीय ��त�न�ध/DR 2. ��यथ�/Respondent 4. आयकर आयु�त/CIT 6. गाड� फाईल/GF