TMI Blog2011 (9) TMI 206X X X X Extracts X X X X X X X X Extracts X X X X ..... - an application is filed under Section 154 of the Act enclosing the TDS certificate numbering 72, claiming credit for a sum of Rs. 19,44,672-00 and seek refund of the said amount. The Assessing Authority in purported exercise of his power under Section 154 of the Act, accepted the said claim, amended the order of assessment dated 14.11.2000 and directed refund of the said amount by his order dated 12.06.2001. Held that:- The order of AO was not erroneous - The said amount was not a lawful amount to the Government. It was an amount which should have been refunded to the assessee. - revision by the CIT is without jurisdiction. - IT APPEAL NO. 30 OF 2006 - - - Dated:- 19-9-2011 - N. KUMAR AND RAVI MALIMATH, JJ. G. Kamaladhar for the Appellant. K.P. Kumar and Smt. Vani H. for the Respondent. JUDGMENT N. Kumar, J. This appeal is by the Revenue, challenging the order passed by the Tribunal which found fault with the Commissioner exercising suo motu power under Section 263 of the Income-tax Act, 1961, for short, hereinafter referred to as the 'Act' and set aside the order passed under Section 154 of the Act by the Assessing Authority granting the benefit of ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urce. The Assessing Officer was satisfied that the credit for such tax was not given earlier. The certificates were found to be correct. The income comprised in such certificate has already suffered taxation. Thus, there is no reason to hold that the assessee is not entitled to credit for such tax. It is settled law that to pass an order under Section 263, the order sought to be revised should not only be erroneous but also prejudicial to the interest of Revenue. There is no prejudice to the Revenue if the credit of such tax deducted is given. After all, the credit is given only in respect of such sum which are already deducted from the income of the assessee and which has been paid to the credit of the Government. Thus, there is neither any error in the order Section 154 nor any prejudice caused to the Government by giving credit for the same. To this extent, there is no error in the order under Section 154 dated 12.06.2001 sought to be revised by the Commissioner. Therefore, they have set aside the order of the Commissioner under Section 263. Aggrieved by the said order, the Revenue is in appeal. 3. The learned Counsel for the Revenue assailing the impugned order contends that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person from whose income the deduction was made, or the owner of the security, or of the depositor or of the owner of property or of the unit-holder, or of the shareholder, as a case may be." Similarly, sub-section (2) makes it clear that: "(2) Any sum referred to in sub-section (1A) of Section 192 and paid to the Central Government shall be treated as the tax paid on behalf of the person in respect of whose income such payment of tax has been made." 7. Corresponding duty is caste on a person deducting those tax in accordance with foregoing provisions to pay within the prescribed time, the sum so deducted to the credit of Central Government or as the Board directs as stipulated in Section 200 of the Act. 8. Section 139 of the Act deals with Return of Income. Sub-section (9) of Section 139 sets out under what circumstances the return so filed is defective. Explanation to the said provision makes it clear that the tax, if any claimed to have been deducted or collected at source and the advance tax and tax on self assessment, if any, claimed to have been paid has to accompany the return filed under Section 139. If it does not accompany the return under Section 139, the return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e an application seeking for refund of amount which he has not claimed in the original return. However, the Parliament taking note of the hardship that is being faced by the assessee in cases of deduction made in accordance with the provisions of Sections 192 to 194 and other provisions of the Act, where certificates under Section 203 are not furnished to them. In the result, credit is not given for the tax so deducted, introduced new sub-section 14 of Section 155 to provide relief to such persons. The Memorandum explaining provisions in the Finance Bill 2002 dealing with credit for deduction at source reads as under: "Under the existing provisions of Section 199 of the Income Tax Act any deduction made in accordance with the provisions of Sections 192 to 194, 194A, 194B, 194C, 194D, 194E, 194EE, 194F, 194G, 194H, 194-I, 194J, 194K, 194L, 195, 196A, 196B, 196C and 196D and paid to the account of Central Government it is treated as a payment of tax on behalf of the person from whose income the deduction was made or the owner of the security or depositor or owner of property or of unit holder or of the shareholder, as the case may be and credit is given to such person for the amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te is produced before the Assessing Officer within two years from the end of the assessment year in which such income is assessable, the Assessing Officer shall amend the order of assessment or any intimation or deemed intimation under sub-section (1) of Section 143, as the case may be, and the provisions of Section 154 shall, so far as may be, apply thereto: Provided that nothing contained in this sub-section shall apply unless the income from which the tax has been deducted [or income on which the tax has been collected] has been disclosed in the return of income filed by the assessee for the relevant assessment year." 10. This provision was inserted by Finance Act, 2002 which came into effect from 01.06.2002. Therefore, with the introduction of the aforesaid provision, for claiming such refund, the assessee could invoke the provisions of Section 154. Therefore, if an assessee in the return filed has claimed credit for tax deducted or collected in accordance with the provisions of Section 199 and has not furnished the certificate under Section 203 along with the return but subsequently produce the such certificate before the Assessing Officer within two years from the end of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied about the genuineness of the certificate, as the said amount has been paid to the Government, as the assessee was not liable to pay any tax, he has ordered refund. Is that order erroneous or it that order prejudicial to the interest of the Revenue, is the question which requires to be considered. 13. Section 263 of the Act, which confers on Commissioner the revisional power to interfere with the orders prejudicial to the Revenue reads as under: "263. Revision of orders prejudicial to revenue. (1) The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer is erroneous insofar as it is prejudicial to the interest of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. Explanation.- For the removal of doubts, it is hereby declared that, for the purposes of this sub-section. (a) An order pas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer is erroneous in so far as it is prejudicial to the interests of the Revenue. The Commissioner has to be satisfied of twin conditions, namely, (i) the order of the Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the Revenue. If one of them is absent - if the order of the Income Tax Officer is erroneous but is not prejudicial to the Revenue or if it is not erroneous but is prejudicial to the Revenue recourse cannot be had to section 263(1) of the Act. The phrase "prejudicial to the interests of the Revenue" is not an expression of art and is not defined in the act. Understood in its ordinary meaning it is of wide import and is not confined to loss of tax .." " ..The scheme of the Act is to levy and collect tax in accordance with the provisions of the Act and this task is entrusted to the Revenue. If due to an erroneous order of the Income-tax Officer, the Revenue is losing tax lawfully' payable by a person, it will certainly be prejudicial to the interests of the Revenue. The phrase "prejudicial to the interest of the Revenue" has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every los ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . If one of them is absent, i.e., if the order of the Income tax officer is erroneous but is not prejudicial to the Revenue, recourse cannot be had to Section 263(1) of the Act. The satisfaction of both the conditions stipulated in the Section is sine qua non for the Commissioner to exercise his jurisdiction under Section 263. 17. In this background, if we look into the facts of the case, as the provisions of Section 155(14) was not in the statute book on the day the Assessing Officer passed the order, coupled with the scope of his power under Section 154, the order passed on 12.06.2001 cannot be strictly in accordance with law. It is erroneous. The amendment came into effect only from 01.06.2002. But on the delay the Commissioner was exercising his power and passing the order on 31.07.2002, the said amendment was very much in the statute book. Therefore, on 31.07.2002, when revisional jurisdiction was exercised, the Commissioner could not have held that the order passed by the Assessing Authority is erroneous, as on that day the amended law provided for such reference. 18. Even if it is erroneous, unless the said erroneous order is prejudicial to the interest of the Revenue, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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