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2016 (4) TMI 1080 - ITAT CHENNAI

2016 (4) TMI 1080 - ITAT CHENNAI - TMI - Grant of interest u/s.244A - Held that:- The assessee has legitimate right to claim interest on refund provided the assessee submits correct TDS certificate within the time and eligible for interest on refund. It is the duty of the assessee in case of manual certificate in form 16A to verify and submit to the Income Tax Department and rectify the defects at the earliest. Such delay shall not be a hindrance to the Department for granting refund. The provis .....

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therefore do not interfere with the order of Commissioner of Income Tax and uphold the same. - Decided against assessee - I.T.A. Nos.1320, 1321, 1322, 1323, 1324, 1325 & 1326/Mds/2015 - Dated:- 17-3-2016 - SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER For The Appellant by : Shri. C. Naresh, C.A. For The Respondent : Shri. Shaji P. Jacob, IRS, Addl. CIT ORDER PER G. PAVAN KUMAR, JUDICIAL MEMBER: The assessee filed seven appeals against different orders of Commis .....

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order of AO granting refund and interest on TDS refunded with a direction to verify documents and exclude the period of delay attributable to assessee. 1.2. The learned CIT failed to appreciate that the order of AO was not erroneous and prejudicial to revenue, since the TDS was refunded based on "Indemnity Bond" in respect of "defective TDS" certificates, and in any case the appellant could not be held responsible for defects in TDS Certificates issued by Payee on whom duty .....

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. 3. We consider the facts narrated in ITA No.1320/Mds/2015 for assessment year 2001-02 for adjudication. The assessee bank made a petition u/s.154 of the Act to the Assessing Officer to grant credit of TDS not allowed in the original assessment though TDS certificate are filed alongwith return of income. The assessee bank while claiming TDS credit as per return of income found the TDS certificates as defective due to technical mistakes in the nature of PAN number, TDS challan particulars, date .....

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of TDS alongwith interest u/s.244A of the Act by rectification order u/s.154 Dated 19.04.2013 as under:- TDS credit as claimed by the assessee 36,37,57,680/- Less TDS credit given in the previous orders 22,15,22,032/- Balance TDS credit to be given as claimed in the indemnity bond by the assessee 14,22,35,648 Add Interest u/s.244A from April -01 -March 13 11,24,21,352/- REFUNDABLE 25,46,57,000/- Subsequently, the Commissioner of Income Tax issued show cause notice for initiating proceedings u/s. .....

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led rectification petition, which the Assessing Officer considered and passed order u/s.154 of the Act on 19.04.2013 granted TDS claim based on Indemnity bond filed by the assessee alongwith interest u/s.244A of the Act. The interest u/s.244A of the Act was granted ignoring the fact of delay in filing of TDS certificate attributable to the assessee and there is no proper verification by the Assessing Officer and proceedings are erroneous and prejudicial to the interest of the Revenue. 4. On the .....

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aim is not by itself indicative of the fact that the Assessing- Officer has not applied his mind on the issue. All the circumstances have to be seen. The credit for TDS claimed by the assessee is based on the strength of certificates produced before the AO. If there were any defects, the same is curable and not incurable. Once the defects were cured, the refund is made along with interest. This is an accepted position in law as to grant of credit. Withholding TDS credit on technical grounds caus .....

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he order of the AO in compliance with Law cannot be held to be erroneous and prejudicial to revenue. Further, interest is granted for refund due to the assessee which is locked up with the government and the technical defects, if any, will not disentitle the interest legitimately due . The ld. AR considering the facts, submissions before Assessing Officer and judicial decisions, such delay is not attributable to the assessee and pleaded the order of the Assessing Officer is not erroneous or prej .....

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the assessee. The Commissioner of Income Tax (Appeals) on the order of original assessment has directed the Assessing Officer to carry out verification of TDS claim. Subsequently, the assessee filed a letter dated 15.03.2013 requesting the Assessing Officer to allow TDS claim and submitted indemnity bond. The ld. Assessing Officer on the basis of indemnity bond passed rectification order u/sec. 154 of the Act dated 19.04.2013 allowing TDS credit and granting interest u/s.244A of the Act on the r .....

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rusal of the submissions and explanations of the assessee bank was not satisfied with the issue of granting interest on refund ignoring the delay attributable to the assessee and relied on the Apex Court decision of Malabar Industrial Co. Ltd vs. CIT 243 ITR 83 observed at page 4 of order as under:- There can be no doubt that the provision cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer, it is also when an order is erroneous that the sectio .....

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Act is payable for delay and also if there is dispute on the time period exclusion, the matter has to be referred to the Chief Commissioner of Income Tax who shall adjudicate on granting of refund. In the present case, the Assessing Officer has not referred to the higher authorities and granted refunded. The ld. CIT for non application of mind by Assessing Officer and not excluding any period of delay due to the lapse on the part of the assessee, relied on the findings of the Mumbai Tribunal in .....

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s granted interest on refund based on the indemnity bond for the entire period without excluding the delay attributable to the assessee as per the provisions of law, therefore the order of the Assessing Officer is erroneous and prejudicial to the interest of revenue and the ld. Commissioner of Income Tax has set aside the rectification order dated 19.04.2013 directing the Assessing Officer to examine the issue afresh and verify the documents and also exclude the period of delay attributable to t .....

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ssessing Officer granting refund and interest on TDS to exclude the period of delay attributable to the assessee is without any basis. The TDS was refunded based on the indemnity bond and TDS has been deducted, paid by Government institutions or other public sector undertaking, further the time taken to cure defects cannot be construed as delay attributable to the deductee as TDS was deposited with the Government Treasury which is not disputed but due to mistake in TDS certificates the action of .....

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ax order and substantiated his arguments with the judicial decisions. 7. We heard the rival submissions and perused the material on record, judicial decisions and circulars. The ld. Authorised Representative of the bank submitted that the issue in dispute is on the time lag of submitting rectified defective TDS certificates is not attributable to the assessee as the deductee bank has to rectify with correct PAN number, TDS Challan details and signature and rubber stamp of the concerned authoriti .....

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ec. 244A(2) of the Act before granting the interest as under:- If the proceedings resulting in the refund are delay for reasons attributable to the assessee, whether wholly and in part, the period of the delay so attributable to him shall be excluded from the period for which interest is payable, and where any question arises as to the period to be excluded, it shall be decided by the [Principal Chief Commissioner or] Chief Commissioner of [Principal Commissioner or] Commissioner whose decision .....

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rresponding letters at the earliest. As per the provisions, TDS credit has to be given from the date of submissions of certificates. The Commissioner of Income Tax has dealt in his revision order but Assessing Officer seems to have overlooked the such calculations. We rely on the decision of CIT vs. Varanasi Khanta Rao (2015) 56 Taxmann.com 175 (AP) were the lordship held the Commissioner of Income Tax has got the power to point out errors which effect on Revenue and similar issue of Sec.244A of .....

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