Kerala State Financial Enterprises, Trichur v. ACIT, Trichur

CO 28/COCH/2009 | 1996-1997
Pronouncement Date: 26-09-2011

Appeal Details

RSA Number 2821923 RSA 2009
Assessee PAN AABCT3817A
Bench Cochin
Appeal Number CO 28/COCH/2009
Duration Of Justice 2 year(s) 1 month(s) 28 day(s)
Appellant Kerala State Financial Enterprises, Trichur
Respondent ACIT, Trichur
Appeal Type Cross Objection
Pronouncement Date 26-09-2011
Appeal Filed By Assessee
Bench Allotted DB
Tribunal Order Date 26-09-2011
Date Of Final Hearing 12-09-2011
Next Hearing Date 12-09-2011
Assessment Year 1996-1997
Appeal Filed On 28-07-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH COCHIN BEFORE S/SHRI N.R.S.GANESAN JM AND SANJAY AROR A AM INT. TA NO. 4/COCH/2009 & C.O. NO. 28/COCH/2009 (BY THE ASSESSEE) ASSESSMENT YEAR: 1996-97 THE ASSISTANT COMMISSIONER OF INCOME-TAX CIRCLE-1(1) TRICHUR. VS. THE KERALA STATE FINANCIAL ENTERPRISES BHADRATHA MUSEUM ROAD CHEMBAKAVU TRICHUR-680 020. [PAN: AABCT 3817A] (REVENUE-APPELLANT) (REVENUE- RESPONDENT) REVENUE BY MS. S. VIJAYAPRABHA JR. DR ASSESSEE BY SHRI JOSE POTTOKKARAN FCA-AR DATE OF HEARING 12/09/2011 DATE OF PRONOUNCEMENT 26/09/2011 O R D E R PER SANJAY ARORA AM: THIS IS AN APPEAL BY THE REVENUE UNDER THE INTERES T TAX ACT 1974 (`THE ACT HEREINAFTER) IN THE CASE OF THE ASSESSEE A COMPANY INCORPORATED UNDER THE COMPANIES ACT 1956 ARISING OUT OF THE ORDER BY THE COMMISSI ONER OF INCOME-TAX (APPEALS)-V KOCHI (CIT(A) FOR SHORT) DATED 12.1.2009 FOR THE ASSESSMENT YEAR (A.Y.) 1996-97 ALLOWING THE ASSESSEES APPEAL CONTESTING ITS ORDER U/S. 17 OF THE ACT DATED 31.7.2007. 2. THE ASSESSEE HAS FILED A CROSS OBJECTION (C.O.) WHICH HOWEVER IS DELAYED BY A PERIOD OF 30 DAYS. THE CONDONATION PETITION ENCLOS ED ALONG WITH STATES THAT THE APPELLANT- COMPANY A PUBLIC SECTOR UNDERTAKING OF THE GOVERNM ENT OF KERALA WAS UNDER THE BONA FIDE BELIEF THAT THE CROSS OBJECTION COULD BE FILED AS IN THE CASE OF AN APPEAL BEFORE THE TRIBUNAL WITHIN A TIME PERIOD OF 60 DAYS (OF BEING COMMUNICATED THE RELEVANT NOTICE). INT.TA NO.4 /COCH/2009 & C.O. NO. 28/COCH/2009 (ASST. YEAR: 1996-97) 2 THAT IS IT WAS UNAWARE OF THE TIME LIMIT OF 30 DAY S - FROM THE DATE OF THE RECEIPT OF THE NOTICE BY THE TRIBUNAL (IN RESPECT OF THE DEPARTMEN TS APPEAL) AS SPECIFIED UNDER THE ACT. HENCE THE DELAY WHICH HAS NOT ARISEN OUT OF ANY W ILFUL NEGLIGENCE BUT ONLY ON ACCOUNT OF AN ACCIDENTAL ERROR SO THAT THE SAME MAY BE CON DONED. AFTER HEARING THE LD. DR IN THE MATTER THE BENCH WAS SATISFIED AS TO THE BONA FIDES OF THE ASSESSEES CASE AS REGARDS THE DELAY IN FILING OF ITS C.O. AND ACCORDINGLY THE H EARING WAS PROCEEDED WITH FOR BOTH THE APPEAL AND THE C.O. 3. THE ONLY ISSUE ARISING IN THE INSTANT CASE ; THE ASSESSEES C.O. BEING ONLY SUPPORTIVE IN NATURE IS THE MAINTAINABILITY IN LAW OF THE WIT HHOLDING OF THE REFUND ARISING TO THE ASSESSEE IN PURSUANCE OF THE ORDER GIVING APPEAL-EF FECT DATED 31.7.2007 PASSED BY THE ASSESSING OFFICER (AO). THE ASSESSEE STOOD DENIED T HE REFUND BY THE AO IN VIEW OF THE DECISION BY THE APEX COURT IN THE CASE OF CIT VS. SHELLY PRODUCTS (2003) 261 ITR 367 (SC) BY PLACING RELIANCE ON THE DECISION BY THE CO CHIN BENCH OF THE TRIBUNAL IN THE CASE OF KALLADA WINES (IN I.T.(SS)A. NO. 1/COCH/2002). THE LD. CIT(A) H OWEVER WAS OF THE VIEW THAT THE SAID DECISION BY THE APEX COURT IS NO T APPLICABLE IN THE FACTS OF THE CASE AS THE REFUND TO THE ASSESSEE ARISES ONLY IN CONSEQUEN CE TO THE APPELLATE PROCEEDINGS WHICH RESULTED IN A REDUCTION IN THE ASSESSABLE INTEREST. THAT THE SAME FALLS BELOW THAT RETURNED BY THE ASSESSEE ITSELF RESULTING IN A REFUND IN PA RT OF THE TAX PAID BY THE ASSESSEE PER ITS RETURN I.E. VOLUNTARILY WOULD BE OF NO MOMENT. F URTHER THE AO HAD NEITHER MENTIONED THE SECTION UNDER WHICH HE WITHHELD THE REFUND NOR WOULD THE PROVISION OF SEC. 17 OF THE ACT WHEREBY THE ASSESSING AUTHORITY COULD RECTIFY A MISTAKE APPARENT FROM THE RECORD AND WHERE-UNDER THE ORDER STANDS PASSED BY THE AO WOULD HOLD IN THE FACTS OF THE CASE; THERE BEING ADMITTEDLY NO MISTAKE APPARENT FROM THE RECORD AS THE REFUND AROSE ONLY IN CONSEQUENCE TO THE ORDER GIVING APPEAL-EFFECT TO TH E ORDER BY THE FIRST APPELLATE AUTHORITY. 4. BEFORE US THE LD. DR WAS VEHEMENT IN HER OPPOSI TION TO THE IMPUGNED ORDER. THE APPELLATE ORDER IS NOTHING BUT A MODIFICATION OF TH E ASSESSMENT ORDER AND THEREFORE IF THE ASSESSING AUTHORITY IS CONSTRAINED NOT TO ASSESS TH E INTEREST BELOW THAT RETURNED BY THE ASSESSEE ITSELF THE APPELLATE ORDER WHICH ONLY SE EKS TO MODIFY THE ASSESSMENT COULD NOT INT.TA NO.4 /COCH/2009 & C.O. NO. 28/COCH/2009 (ASST. YEAR: 1996-97) 3 POSSIBLY TRAVEL OUTSIDE THE AMBIT OF OR THE CONSTR AINTS PLACED ON THE ASSESSING AUTHORITY IN FRAMING THE SAME. THE LD. AR ON THE OTHER HAND WOULD SUBMIT THAT THE ASSESSEES CASE IS SQUARELY COVERED BY THE DECISION BY THE TRIBUNAL IN ITS CASE FOR THE PRECEDING THREE YEARS I.E. AYS 1993-94 TO 1995-96 (UNDER INTEREST TAX APPEAL NOS. 01 TO 03/COCH/2009 DATED 26.8.2009) (PB PG. 53 TO 58 ). 5. WE HAVE HEARD THE PARTIES AND PERUSED THE MATER IAL ON RECORD INCLUDING THE CASE LAW RELIED UPON BY BOTH THE PARTIES WHICH WE OBSER VE HAVE PLACED RELIANCE ON A DECISION EACH BY THE COCHIN BENCH OF THE TRIBUNAL. 5.1 SECTION 21 OF THE ACT CLEARLY MANDATES THAT SS. 237 TO 245 OF THE INCOME TAX ACT 1961 WOULD APPLY IN THE CASE OF PROCEEDINGS UNDER T HE ACT. SECTION 240 OF THE I.T. ACT READS AS UNDER:- REFUND ON APPEAL ETC. 240. WHERE AS A RESULT OF ANY ORDER PASSED IN APPEAL O R OTHER PROCEEDING UNDER THIS ACT REFUND OF ANY AMOUNT BECOMES DUE TO THE ASSESSEE THE ASSESSING OFFICER SHALL EXCEPT AS OTHERWISE PROVIDED IN THIS ACT R EFUND THE AMOUNT TO THE ASSESSEE WITHOUT HIS HAVING TO MAKE ANY CLAIM IN THAT BEHAL F: PROVIDED THAT WHERE BY THE ORDER AFORESAID - (A) AN ASSESSMENT IS SET ASIDE OR CANCELLED AND AN ORDER OF FRESH ASSESSMENT IS DIRECTED TO BE MADE THE REFUND IF ANY SHALL BEC OME DUE ONLY ON THE MAKING OF SUCH FRESH ASSESSMENT; (B) THE ASSESSMENT IS ANNULLED THE REFU ND SHALL BECOME DUE ONLY OF THE AMOUNT IF ANY OF THE TAX PAID IN EXCESS OF THE TA X CHARGEABLE ON THE TOTAL INCOME RETURNED BY THE ASSESSEE. 5.2 IN THE INSTANT CASE THE ASSESSMENT HAS NEITHER BEEN SET ASIDE NOR CANCELLED NOR ANNULLED BUT ONLY MODIFIED. AS SUCH IT IS DIFFICU LT TO SEE AS TO HOW A REFUND TO THE ASSESSEE AS A RESULT OF AN ORDER PASSED IN APPEAL C OULD POSSIBLY BE WITHHELD. ALL THAT THE APEX COURT HAS CLARIFIED IN THE CASE OF SHELLY PRODUCTS (SUPRA) IS THAT WHERE AN ASSESSMENT IS CANCELLED OR STANDS ANNULLED ETC. THE ASSESSEE COULD NOT TAKE ADVANTAGE OF THE SAME INT.TA NO.4 /COCH/2009 & C.O. NO. 28/COCH/2009 (ASST. YEAR: 1996-97) 4 AND CLAIM REFUND OF THE ADMITTED TAX I.E. IN THE CIRCUMSTANCES WHERE NO FRESH ASSESSMENT COULD BE POSSIBLY MADE. THE SAME IT WOULD BE SEEN IS CONSISTENT WITH SEC. 240 OF THE IT ACT WHICH IS ALSO APPLICABLE TO THE PROCEEDINGS UN DER THE ACT. IT IS TRITE LAW THAT IT IS THE CORRECT LEGAL POSITION (I.E. THE LAW - AS INTERPRE TED AND EXPLAINED BY THE HIGHER COURTS OF LAW) WHICH WOULD PREVAIL AND BE DECISIVE AND THUS IS RELEVANT AND NOT THE VIEW THAT THE PARTIES MAY TAKE OF THEIR RIGHTS IN THE MATTER [ CIT V. C. PARAKH & CO. (INDIA) LTD . (1956) 29 ITR 661 (SC)]. THE REVENUE THUS CANNOT PUT THE A SSESSEE TO A DISADVANTAGE IN VIEW OF ITS HAVING RETURNED A HIGHER TAXABLE INTEREST. ITS STAND IS CONTRADICTORY INASMUCH AS IT ADMITS THAT THE ASSESSEE IS NOT LIABLE TO TAX ON A PART OF ITS RETURNED INTEREST WHICH STANDS FINALLY ASSESSED AT A LOWER SUM YET WOULD NOT BE ENTITLED TO A REFUND OF THE TAX PAID IN EXCESS OF THAT CHARGEABLE ON THE BASIS OF THE ASSES SMENT. TAX CAN BE CHARGED AND/OR LEVIED ONLY BY THE AUTHORITY OF THE LAW (ARTICLE 26 5 OF THE CONSTITUTION OF INDIA) AND WHERE NOT SO AND COLLECTED OR RETAINED IN EXCESS WOULD BE CONFISCATORY IN NATURE. THIS IS PRECISELY WHAT THE LD. CIT(A) MEANT WHEN HE QUESTIO NED THE PROVISION OF LAW UNDER WHICH THE REFUND WAS BEING WITHHELD BY THE REVENUE. APART FROM THE DECISION BY THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE IMMEDIA TELY PRECEDING THREE YEARS (SUPRA) ITS CASE IS ALSO FORTIFIED BY THE DECISION BY THE THIRD MEMBER IN THE CASE OF CIT (ASSTT.) V. RUBFILA INTERNATIONAL LTD . (IN ITA NO. 985/COCH/2008 DATED 27/4/2011) (COPY ON RECORD). THE DECISION IN THE CASE OF SUSHIL KUMAR DAS V. ITO 11 ITR (TRIB) 18 (KOLKATA) IS ALSO ON THE POINT. 6. IN VIEW OF THE FOREGOING WE HAVE NO HESITAT ION IN UPHOLDING THE IMPUGNED ORDER. THE ASSESSEES C.O. AS AFORE-STATED IS ONLY SUPPO RTIVE IN NATURE. 7. IN THE RESULT THE REVENUES APPEAL IS DISMISSED AND THE ASSESSEES C.O. IS ALLOWED. SD/- SD/- (N.R.S.GANESAN) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: ERNAKULAM DATED: 26TH SEPTEMBER 2011 INT.TA NO.4 /COCH/2009 & C.O. NO. 28/COCH/2009 (ASST. YEAR: 1996-97) 5 GJ COPY TO: 1. THE KERALA STATE FINANCIAL ENTERPRISES BHADRAT HA MUSEUM ROAD CHEMBAKAVU TRICHUR - 680 020. 2. THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE -1(1) TRICHUR. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-V KOCH I. 4. THE COMMISSIONER OF INCOME-TAX TRICHUR. 5. D.R. I.T.A.T. COCHIN BENCH COCHIN. 6. GUARD FILE .