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2016 (3) TMI 416 - ITAT DELHI

2016 (3) TMI 416 - ITAT DELHI - TMI - Rectification of mistake - order u/s 154 on debatable issues - in order u/s 154 AO allowed refund and interest thereon u/s 244A - Held that:- From the orders passed by AO u/s 154 there is neither any hint nor any reference that any delay was attributable to the assessee. Ld. CIT(Appeals) instead of deciding the grounds raised by the assessee has decided a new issue by holding that AO's order u/s 154 was to be upheld and 244A(2) should be examined. Instead of .....

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in the realm of rectification of mistake. Be that as it may, Sec. 244A(2) postulates that where any dispute arises about the delay for reasons attributable to the assessee the same should be referred to the CCIT/ CIT, whose decision is final on this issue. The reference is not applicable to assessee alone but when the AO raises a dispute, he can also refer the matter to CCIT/ CIT. Surprisingly, in all these proceedings there is no whisper of delay attributable to assessee or any issue raised by .....

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spute in first order giving effect to ITAT order. On the plain reading of the provisions of sec. 244A(3) if the assessee's refund is increased in that case the increased interest u/s 244A is to be given by way of a statutory exercise. The merits about delay and reasons attributable to assessee fall within the realm of arguments and regular proceedings and not rectification of mistakes, more so amount of refund is concurred by Addl. CIT & CIT. Thus the impugned order of AO passed u/s 154 cannot b .....

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mber And Shri L. P. Sahu, Accountant Member For the Appellant : Sh. V.P. Gupta, Advocate & Sh. Anubhav Kumar, Advocate For the Respondent : Sh. Surender Pal, Sr. DR ORDER Per L. P. Sahu, Accountant Member This is assessee's appeal against CIT(A)'s order dated 15-3-2013, relating to A.Y. 1993-94. Following grounds are raised: 1. That the CIT(A) erred in not adjudicating and allowing the grounds raised before him in the appeal filed by the appellant against order dated 24-12-2005 passe .....

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o erred in directing the Assessing Officer to examine applicability of sub-section (2) of section 244A of the Act, whereas, it was neither the subject matter of appeal before him nor he had power under law to set up a new case and set aside the order u/s 251 of the Act. 5. That the order passed by CIT(A) is void, bad unjustified, against the provision of law and without giving an opportunity to the appellant and, therefore, same deserves to be quashed and appeal of the appellant should be allowe .....

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A.Y. 1993-94, a notice u/s 154 dated 4-6-2004 was issued to the assessee, inviting objections on the inclusion of this income in A.Y. 1993-94. Assessee gave its ''no objection and AO vide order dated 9-6- 2004, passed u/s 154, reduced the assessed loss for A.Y. 1993-94 to ₹ 4,02,58,429/-. Besides, AO withdrew the credit for TDS amounting to ₹ 68,98,588/-, which related to the interest income included in A.Y. 1992-93 and consequently to allow the same now in A.Y. 1993-94. To t .....

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3 to 30-7-2004 amounting to ₹ 75,44,408/-. AO while withdrawing credit for TDS in A.Y. 1992-93 also charged interest u/s 220(2). 2.2. On these orders, assessee filed appeals as under: 1992-93: Assessee challenged the chargeability of interest u/s 220(2). 1993-94: Assessee claimed further credit for TDS of ₹ 7,39,856/-. Being the difference of credit earlier given in A.Y. 1992-93 and thereafter in A.Y. 1993- 94 (68,98,588 - 61,58,732). 2.3. Ld. (TIT(Appcals)-XIV, New Delhi \ ide two s .....

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rther notice u/s 154 dated 6-8-2005 of the Act, proposing as under: "Subsequent to the order passed by the CIT(A) vide appeal no. 118/04- 05/CIT-XIV/Del/ dated 3 1 -3-05 A.Y. 1992-93 quashing the charging of interest u/s 220(2} of the Act of ₹ 1,30,10,5827- for A.Y. 1992-93, it is proposed to withdraw interest u/s 244A for A.Y. 1993-94 of ₹ 71,39,7897- out of total interest granted of ₹ 75,44,408/- vide order u/s 154/143(l)_(a) dated 30-7-2004 as interest is to be granted .....

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of any demand/ refund, interest charged/ allowed in A.Y. 1992-93. Thereafter, AO again issued notice u/s 154 dated 5-9-2005 on similar lines to notice dated 5-8-2005, to which assessee replied dated 15-9-2005 reiterating its stand. 2.6. AO, however, passed order u/s 154 of the Act dated 24-10-2005 by which interest u/s 244A granted earlier was withdrawn to the extent of ₹ 72,01,376/- out of interest on refund earlier allowed as under: Order u/s 154/154/143(1) of the Income Tax Act, 1961 O .....

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redit for TDS amounting to ₹ 68,98,588/- relating to interest income of ₹ 2,69,84,301/- was withdrawn. At the time of withdrawal of TDS credit a demand of ₹ 2,04,62,717/- including interest u/s 220(2) amounting to ₹ 1,30,10,582 was raised in the assessment year 1992-93. After withdrawal of TDS credit from the AY 92-93, credit of ₹ 61,58,732/- was allowed to the assessee in AY 93-94. Apart from TDS, an interest u/s 244A amounting to ₹ 75,44,408/- was also allow .....

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there is a demand notice and there should be a default in paying the amount so demanded within the time stipulated in the notice. As the charging of interest u/s 220(2) was quashed by the CIT(A), allowance of Interest u/s 244A in the assessment year 93-94 become Infructuous as the refund in question was originally issued on 29.6.93 for ₹ 10,15,480/- and on 30.3.94 for ₹ 64,36,655/- and the interest u/s 244A is allowable only upto the date of issue of refund i.e. upto 29.6.93 and 30.3 .....

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The reply filed by the assessee was duly considered. In this regard section 244A(l)(a) clearly speaks that where the refund is out of any tax collected by way of IDS or paid by way of advance tax during the financial year immediately preceding the assessment year, such interest shall be calculated at the rate of 1 % per month or part of a month comprised in the period from the 1st day of April of assessment year to the date on which the refund is granted. In the particular case the interest u/s .....

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nt year 1992-93 i.e. upto 29.6.93 and 30.3.94 as per rules." 2.7. Aggrieved, assessee preferred first appeal. Ld. CIT(Appeals), however, dismissed the assessee's appeal by following observations: "7. This being the facts of the case it is seen that the appellant had itself offered the entire income for assessment for the assessment year 1992-93 and the refund was given to the appellant on 30-3-94. However, this case was taken up for scrutiny and on 30-3-94 a demand of ₹ 2,14, .....

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as interest thereon till 31st March, 1992. 8. In consequence to this additional ground taken by the appellant before the Hon'ble ITAT the order passed by the Hon'ble ITAT on 17th Sept. 02 directed that its income should be taxed in the assessment year 1993-94 and not in the assessment year 19923-93. Now the question arises that once the assessee had itself offered the income for taxation in the assessment year 1992-93 and then taken an additional stand before the Hon'ble ITAT that t .....

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Section 244A. If a wrong claim is made by the appellant then sub clause (2) of Section 244A are attracted which reads as under: "If the proceedings resulting in the refund are delayed for reasons 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 and whether any question arises as to the period to be excluded, it shall be decided by the Chief Commissioner of Commissioner who .....

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ected to multiple 154 orders, the chronology is mentioned in AO's impugned order. 3.1. Besides, the remaining credit of ₹ 7,39,856/- was granted in A.Y. 1992- 93. It shall be pertinent to mention that the amounts of refunds, issues about interest on refunds were allowed in favour of the assessee after due approval of order of CIT, Delhi-IV, New Delhi vide order dated 29-7-2004, which is placed on the record, relevant portion is as under: "You were directed to take all remedial act .....

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4 with the directions that orders u/s.184 may be passed after allowing opportunity of being heard. Finally, you resubmitled the proposal vide letter No.308 dated 29.06.04 but again orders u/s.154 were passed for AY.94-95 to 2002-03 without allowing opportunity. However, in accordance with the instructions earlier conveyed, credit for TDS of ₹ 68.98 lacs allowed in A Y.92-93 was withdrawn. However, the relevant year wise chart was again not submitted. As per the proposals resubmitted by you .....

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following refunds is approved.- (i) Refund of ₹ 4,64,09,202/- for A.Y.92-93. This is with reference to order u/s.254 read with sec. 143(3) and the fact may accordingly be duly stated on ITNS-150. Minor calculation corrections may be made at your end. Against this refund, you would adjust the demand of ₹ 2,04,62,717/- raised for AY.92-93 by passing order u/s.184 read with sec. 143(1)(a) withdrawing credit for TDS in respect of the income which is not assessed in this year. Consequentl .....

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isable to take prompt action in such cases. 3.2. It is vehemently argued that the interest on refund which has been calculated with the concurrence of Addl. CIT & CIT, New Delhi cannot be termed to carrying mistake apparent from record. 3.3. Ld. counsel contends that order u/s 154 can be rectified only if there is a glaring mistake apparent from the record. The order passed by AO to give effect to the ITAT order dated 30-7-2004 was a valid order passed as per the directions of a higher appel .....

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d order which is to be rectified u/s 154 contains no apparent mistake. 3.4. In the first para of the 154 order AO has referred only to the history; in second para, AO has relied on the order for A.Y. 1992-93 in which the Id. CIT(Appeals) quashed the interest u/s 220(2) which also has no relevant to A.Y. 1993-94. AO has arbitrarily held that the interest granted to assessee for A.Y. 1993-94 became infructuous, which is a distinct and separate issue. According to Id. counsel, both the years are di .....

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reliance is placed on Hon'ble Supreme Court judgment in the case of Mepco Industries Ltd. Vs. CIT & Anr. (2009) 319 ITR 208 (SC), which in turn has relied on other Supreme Court judgment, for the proposition that rectifiable mistake must be one which is apparent from the record and not dependent on long drawn process of reasoning or having two opinions: "10. Before concluding, we may state that in Deva Metal Powders (P) Ltd. vs. Commr., Trade Tax 2008(2) SCC 439, a Division Bench of .....

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ning or where two opinions are possible. Decision on debatable point of law cannot be treated as "mistake apparent from the record". 3.6. AO has decided the merits about the period of eligibility of interest in the garb of a rectificatory order that now assessee was eligible for refund for the period 1-4-1993 to 29-6-1993 and from 30-9-1993 to 31-3-1994 only. This conclusion depends upon verification of facts and interpretations as the remaining period has not been attributable to any .....

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r section 262 or section 263 or section 264 or an order of the Settlement Commission under sub-section (4) of section 245D, the amount on which interest was payable under subsection (4) has been increased or reduced, as the case may be, the interest shall be increased or reduced accordingly, and in a case where the interest is reduced, the Assessing Officer shall serve on the assessee a notice of demand in the prescribed form specifying the amount of the excess interest paid and requiring him to .....

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equent to ITAT judgment dated 17-9-02 and as per the effect of the order of the ITAT if the refund of the assessee became due, the interest is to be awarded to the assessee thereon. If any further 154 order is proposed to be passed, then it should be in conformity with ratio laid down by the Hon'ble Supreme Court judgments in the cases of Sandvik Asia Ltd. (supra) & Mepco Industries Ltd. (supra). In the impugned order the AO has not whispered about any delay which is attributable to the .....

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e, interpretative and based on change of opinion cannot be called a rectificatory order. In the garb of rectificatory order the AO has attempted to decide the merits and reduce interest without there being any mistake in contradistinction to directions of his own Addl. CIT & CIT. 4. Ld. DR relied on the orders of authorities below and contends that Section 244A(2) provides as under: "244A(2) -If the proceedings resulting in the refund are delayed for reasons attributable to the assessee .....

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as changed, the assessee at the level of ITAT raised the issue about its taxability in A.Y. 1993-94. Therefore, the proceedings resulting in the refund were delayed for reasons attributable to the assessee and the period so attributable shall be excluded while calculating the period of interest payable. The AO failed to apply Sec. 244A(2), while granting interest, this mistake was sought to be rectified by AO. 4.2. In case of dispute about reasons of delay of refund the same was to be referred b .....

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s on record and in the absence of any allegation about assessee's default, the issue of interest on refund cannot be readjudicated in the garb of rectification. Ld. CIT(Appeals) while deciding assessee's appeal should not have issued further directions to AO to consider the issue of 244A(2) afresh. Reference to reconsider 244A by CIT(A) itself makes the order of AO & CIT(A) to decide afresh argumentative issues i.e. to consider the delay attributable to the assessee. For this purpose .....

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orts. 5.3. Hon'ble Supreme Court in the case of Mepco Industries Ltd. and other judgments (supra), has laid down that mistake rectifiable u/s 154 means one which is glaring and which is not dependent on long drawn process of reasoning and having two opinions. 6. We have heard rival contentions and gone through the relevant material available on record. One fact which is to be borne in mind is that the impugned order was passed u/s 154 and assessee's grounds of appeal before Id. CIT(Appea .....

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o examine the interest u/s 244A, which required ascertainment of new facts inasmuch as in none of the earlier orders, there is any whisper to the delay attributable to the assessee. Thus, ld. CIT( Appeals) instead of deciding the merits of the AO's order in terms of rectificatory order has traveled into debatable issue which require mere factual finding, arguments and ascertainment of facts which does not fall in the realm of rectification of mistake. Be that as it may, Sec. 244A(2) postulat .....

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