NATHPA JHAKRI JOINT VENTURE, MUMBAI v. ACIT 23(1), MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES J MUMBAI BEFORE SHRI R V EASWAR PRESIDENT AND SHRI B RAMAKOTAIAH ACCOUNTANT MEMBER I T A NO: 1190/MUM/2010 (ASSESSMENT YEAR: 2002-03) NATHPA JHAKRI JOINT VENTURE MUMBAI APPELLANT (PAN: AAAAN1127C) VS ASSISTANT COMMISSIONER OF INCOME TAX 23(1) RESPON DENT MUMBAI APPELLANT BY: MR H P MAHAJANI RESPONDENT BY: MS KUSUM INGLE O R D E R R V EASWAR PRESIDENT: THIS IS AN APPEAL BY THE ASSESSEE AND IT RELATES T O THE ASSESSMENT YEAR 2002-03. IT ARISES THIS WAY. THE A SSESSEE FILED ITS RETURN OF INCOME ON 31.10.2002 DECLARING TOTAL INCO ME OF ` 63 89 37 100/-. THE ASSESSMENT WAS COMPLETED ON 31 .01.2005 UNDER SECTION 143(3) OF THE INCOME TAX ACT 1961 O N A TOTAL INCOME OF ` 69 44 75 460/- WHICH WAS RECTIFIED UNDER SECTION 1 54 TO ` 68 94 18 830/-. THERE WAS AN APPEAL TO THE CIT(A) WHO GAVE CERTAIN RELIEFS TO THE ASSESSEE IN HIS ORDER DATED 29.03.2006. THE ASSESSING OFFICER PASSED AN ORDER ON 28.06.2006 TO GIVE EFFECT TO THE ORDER OF THE CIT(A). IN THIS ORDER AFTER GIVI NG EFFECT TO THE RELIEFS ALLOWED BY THE CIT(A) THE TOTAL INCOME WAS DETERMI NED AT A ITA NO: 1190/MUM/2010 2 NEGATIVE FIGURE (LOSS) OF ` 60 59 20 208/-. ON THE SAME DAY I.E. 28.06.2006 THE TAX REFUNDABLE TO THE ASSESSEE WAS CALCULATED IN THE INCOME TAX COMPUTATION FORM IN ITNS-150 A COPY OF WHICH HAS BEEN FILED BEFORE US. THE TOTAL TAX REFUNDABLE TO THE ASSESSEE CAME TO ` 32 06 80 460/-. THE ASSESSING OFFICER ALSO CALCULA TED THE INTEREST PAYABLE TO THE ASSESSEE ON THE REFUND UNDER SECTION 244A OF THE ACT. THE INTEREST CAME TO ` 5 33 46 892/- FOR THE PERIOD FROM 01.04.2002 TO 28.06.2006. ACCORDINGLY THE AMO UNT PAYABLE TO THE ASSESSEE WAS CALCULATED IN THE AFORESAID FORM. 2. IT WOULD APPEAR THAT THE COMMISSIONER OF INCOME TAX HAVING JURISDICTION OVER THE ASSESSEES CASE EXAMINED THE ASSESSMENT RECORD AND BY LETTER DATED 21.08.2006 TOOK THE VIEW THAT THE INTEREST UNDER SECTION 244A COULD NOT BE GRANTED TO THE ASSE SSEE AS THE ASSESSEE HAD FILED A RETURN OF INCOME DECLARING POS ITIVE INCOME AND ALSO PAID TAXES ACCORDINGLY AND THAT THE REFUND HAD ARISEN BECAUSE OF THE ORDER OF THE CIT(A). HE ACCORDINGLY TOOK TH E VIEW IN THE LETTER THAT THE INTEREST CANNOT BE ALLOWED TILL THE DATE O F THE ORDER OF THE CIT(A). APPARENTLY THIS LETTER WAS WRITTEN TO THE ASSESSING OFFICER WHO THEREAFTER PROCEEDED TO PASS AN ORDER UNDER SEC TION 154 READ WITH SECTION 250 OF THE INCOME TAX ACT 1961 ON 22 .09.2006 WITHDRAWING THE INTEREST GRANTED TO THE ASSESSEE. IN THIS ORDER THE ASSESSING OFFICER ALSO OBSERVED THAT THE DELAY IN G RANTING THE REFUND IS ATTRIBUTABLE TO THE ASSESSEE AND THEREFOR E NO INTEREST WAS PAYABLE. 3. THE ASSESSEE FILED AN APPEAL AGAINST THE AFORESA ID ORDER TO THE CIT(A) WHO ENDORSED THE VIEW TAKEN BY THE ASSE SSING OFFICER. ITA NO: 1190/MUM/2010 3 HE ALSO HELD THAT THE ADMINISTRATIVE CIT HAS RIGHTL Y TAKEN THE VIEW THAT SINCE THE REFUND ARISES OUT OF THE ORDER OF TH E CIT(A) NO INTEREST UNDER SECTION 244A WAS PAYABLE TO THE ASSE SSEE ON THE REFUND AND THIS WAS BECAUSE THE DELAY IN GRANTING T HE REFUND WAS ATTRIBUTABLE TO THE ASSESSEE. THE CIT(A) FURTHER N OTED THAT IN THE RETURN OF INCOME THE ASSESSEE DID NOT CLAIM THAT TH E RETENTION MONIES CANNOT BE ASSESSED TO TAX BUT SUCH A CLAIM W AS PUT FORTH ONLY BY LETTER DATED 31.12.2004. ACCORDING TO THE CIT(A) THE ASSESSEES CLAIM WAS AN AFTER-THOUGHT AS SUCH A CL AIM HAD NOT BEEN PUT FORTH IN THE RETURN OF INCOME. IN THIS VI EW OF THE MATTER THE CIT(A) ATTRIBUTED THE DELAY IN GRANTING THE REFUND TO THE ASSESSEE AND UPHELD THE VIEW TAKEN BY THE ASSESSING OFFICER IN THE ORDER PASSED UNDER SECTION 154 READ WITH SECTION 250 OF T HE ACT. 4. THE ASSESSEE IS IN FURTHER APPEAL BEFORE US TO C ONTEND THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS INVALI D AS THERE WAS NO MISTAKE APPARENT FROM THE RECORD IN THE LIGHT OF TH E JUDGMENT OF THE SUPREME COURT IN THE CASE OF T S BALARAM ITO VS. V OLKART BROS & ORS (1971) 82 ITR 50 (SC). ACCORDING TO THE ASSESS EE MAKING A CLAIM IN THE COURSE OF THE ASSESSMENT PROCEEDINGS O R THE APPELLATE PROCEEDINGS CANNOT BE VIEWED AS A STEP TO DELAY THO SE PROCEEDINGS AND CONSEQUENTLY THE REFUND ARISING OUT OF THOSE PR OCEEDINGS AND IN ANY CASE IT REQUIRES A LONG DRAWN PROCESS OF ARGUME NT OR DEBATE TO ESTABLISH THIS VIEW POINT WHICH TAKES THE CASE OUT OF THE PURVIEW OF SECTION 154. IT IS ACCORDINGLY CONTENDED THAT THE RECTIFICATION PROCEEDINGS ARE WHOLLY WITHOUT JURISDICTION. ITA NO: 1190/MUM/2010 4 5. THE REVENUE ON THE OTHER HAND STRONGLY RELIES ON THE ORDERS OF THE INCOME TAX AUTHORITIES. 6. ON A CAREFUL CONSIDERATION OF THE ISSUE WE ARE SATISFIED THAT THE ASSESSEE IS CORRECT. UNDER SUB-SECTION (1) OF SECTION 244A ANY REFUND OF TAX PAID BY THE ASSESSEE DURING THE FINAN CIAL YEAR IMMEDIATELY PRECEDING THE ASSESSMENT YEAR SHALL BEA R INTEREST AT THE RATE OF PER CENT FOR EVERY MONTH OR PART THER EOF COMPRISED IN THE PERIOD FROM THE FIRST DAY OF APRIL OF THE ASSES SMENT YEAR TO THE DATE ON WHICH THE REFUND IS GRANTED. UNDER SUB-SEC TION (2) 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. THE SUB-SECTION PROCEED S TO SAY THAT IF ANY QUESTION ARISES AS TO THE PERIOD TO BE EXCLUDED THE SAME SHALL BE DECIDED BY THE CHIEF COMMISSIONER OR THE COMMISS IONER WHOSE DECISION THEREON SHALL BE FINAL. IN THE CASE BEFOR E US THE FIRST QUESTION TO BE EXAMINED IS WHAT ARE THE PROCEEDINGS WHICH RESULTED IN THE REFUND. ON THIS THERE APPEARS TO BE NOT MUC H DIFFICULTY SINCE THE ASSESSING OFFICER THE CIT(A) AS WELL AS THE AD MINISTRATIVE CIT ARE ALL AGREED THAT THE REFUND HAS ARISEN AS A RESU LT OF THE ORDER OF THE CIT(A). IN OTHER WORDS THE REFUND HAS UNDISPU TEDLY ARISEN AS A RESULT OF THE APPELLATE PROCEEDINGS. THE SECOND QU ESTION WHICH IS TO BE EXAMINED IS WHETHER IT CAN BE SAID THAT THE A SSESSEE DELAYED THE APPELLATE PROCEEDINGS. THERE IS NO EVIDENCE TO SHOW THAT THE APPEAL PROCEEDINGS BEFORE THE CIT(A) WERE DELAYED O N ACCOUNT OF THE ASSESSEE. THE CIT(A) HAS GONE FURTHER TO OBSER VE THAT THE ITA NO: 1190/MUM/2010 5 ASSESSEE PUT FORTH THE CLAIM REGARDING EXCLUSION OF RETENTION MONEY ONLY BY WAY OF LETTER DATED 31.12.2004 FILED DURING THE ASSESSMENT PROCEEDINGS AND THAT THIS CLAIM HAD NOT BEEN MADE I N THE RETURN OF INCOME FILED ON 31.10.2002. WE ARE UNABLE TO APPRO VE OF THIS REASONING OF THE CIT(A) BECAUSE THE REFUND HAS NOT RESULTED ON ACCOUNT OF THE ASSESSMENT PROCEEDINGS BECAUSE THE A SSESSEE WAS ASSESSED TO A TOTAL INCOME OF ` 69 44 75 460/- IN THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) OF THE ACT. THER EFORE THE FACT THAT THE ASSESSEE DELAYED IN MAKING ITS CLAIM BEFOR E THE ASSESSING OFFICER CAN BE NO GROUND TO WITHHOLD THE INTEREST PARTICULARLY WHEN THE ASSESSING OFFICER AND THE CIT HAVE STATED THAT THE REFUND AROSE OUT OF THE APPEAL PROCEEDINGS. IN FACT IN PARAGRA PH 2.5 THE CIT(A) ALSO APPEARS TO AGREE WITH THIS VIEW TAKEN BY THE A SSESSING OFFICER AND THE CIT BUT HE HAS PROCEEDED TO ADD ONE MORE R EASON NAMELY THAT THE ASSESSEE DELAYED EVEN THE ASSESSME NT PROCEEDINGS BY MAKING A CLAIM AT A LATE STAGE. WE HAVE ALREADY SEEN THAT THIS VIEW OF THE CIT(A) CANNOT BE COUNTEN ANCED BECAUSE THE ASSESSMENT PROCEEDINGS DID NOT RESULT IN THE RE FUND. 7. AS ALREADY NOTED THERE IS NO EVIDENCE TO SHOW T HAT THE APPELLATE PROCEEDINGS WERE DELAYED ON ACCOUNT OF RE ASONS ATTRIBUTABLE TO THE ASSESSEE. THE MERE FACT THAT T HE ASSESSEE FILED AN APPEAL AND ASKED FOR CERTAIN RELIEFS IS NO GROUN D TO SAY THAT THE ASSESSEE DELAYED THE APPELLATE PROCEEDINGS BECAUSE AS OBSERVED BY THE MADRAS HIGH COURT IN THE CASE OF POPE THE KI NG MATCH FACTORY VS. CIT (1963) 50 ITR 495 (MAD) FILING AN APPEAL AND QUESTIONING THE ASSESSMENT BY PURSUING THE REMEDIES PROVIDED BY ITA NO: 1190/MUM/2010 6 LAW ARE ONLY CONSTITUTIONAL MEANS OF CHALLENGING TH E LIABILITY OF THE ASSESSEE TO PAY TAX AND THAT THE ASSESSEE IS AT LIB ERTY TO STRAIN EVERY NERVE TO GET THE LIABILITY TO PAY TAX VACATED . IT IS THEREFORE NOT POSSIBLE TO VIEW THE MERE ACT OF FILING AN APPEAL T O THE CIT(A) AS DELAYING THE APPELLATE PROCEEDINGS. IT WAS REQUIRE D OF THE ASSESSING OFFICER TO FURTHER SHOW THAT THE FINAL DE CISION OR THE DISPOSAL OF THE APPEAL BY THE CIT(A) WHICH RESULTE D IN THE REFUND WAS DELAYED ON ACCOUNT OF REASONS ATTRIBUTABLE TO T HE ASSESSEE. IN THE ABSENCE OF ANY SUCH ALLEGATION IN THE ORDER PAS SED BY THE ASSESSING OFFICER UNDER SECTION 154 READ WITH SECTI ON 250 OF THE ACT IT IS NOT POSSIBLE TO UPHOLD THE VIEW TAKEN BY THE INCOME TAX AUTHORITIES. 8. IN ANY CASE THE QUESTION AS TO WHETHER THE PROC EEDINGS RESULTING IN THE REFUND WERE DELAYED FOR REASONS AT TRIBUTABLE TO THE ASSESSEE IS A QUESTION THE ANSWER TO WHICH WILL DEP END ON AN EXAMINATION OF THE RECORD AND THE FACTS THAT ARE RE LEVANT FOR THE DECISION AND EVEN AFTER ALL THE FACTS HAVE BEEN GAT HERED THERE COULD STILL BE POSSIBILITY OF AN ARGUMENT AS TO WHE THER THE DELAY WAS ATTRIBUTABLE TO THE ASSESSEE. FOR EXAMPLE EVEN IF AN ADJOURNMENT WAS SOUGHT FOR BY THE ASSESSEE BEFORE THE CIT(A) A ND AN UNDULY LONG ONE AT THAT STILL IF THE CIT(A) HAD IN FACT A DJOURNED THE MATTER A QUESTION MAY ARISE AS TO WHETHER IT CAN BE SAID THA T THE DELAY IS ATTRIBUTABLE TO THE ASSESSEE IN THE LIGHT OF THE FA CT THAT THE CIT(A) HIMSELF ADJOURNED THE MATTER AND DID NOT CONSIDER T HE REQUEST OF THE ASSESSEE AS UNREASONABLE OR FOR AN UNDULY LONG PERI OD. THESE ARE ALL MATTERS ON WHICH MORE THAN ONE VIEW IS POSSIBLE AND IT IS ONLY ITA NO: 1190/MUM/2010 7 AFTER A LONG DRAWN PROCESS OF ARGUMENT OR DEBATE TH AT THE RIVAL VIEW-POINTS CAN BE ESTABLISHED. SUCH A MATTER CANN OT OBVIOUSLY FALL WITHIN THE PURVIEW OF RECTIFICATION PROCEEDINGS AS A MISTAKE APPARENT FROM THE RECORD IN VIEW OF THE LEGAL POSIT ION ADUMBRATED BY THE SUPREME COURT IN THE JUDGMENT CITED SUPRA. 9. FOR THE AFORESAID REASONS WE SET ASIDE THE ORDER S OF THE INCOME TAX AUTHORITIES AND ALLOW THE APPEAL FILED B Y THE ASSESSEE WITH NO ORDER AS TO COSTS. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH FEBRUARY 2011. SD/- SD/- (B RAMAKOTAIAH) (R V EASWAR) ACCOUNTANT MEMBER PRESIDENT MUMBAI DATED 15 TH FEBRUARY 2011 SALDANHA COPY TO: 1. NATHPA JHAKRI JOINT VENTURE HINCON HOUSE LBS MARG VIKHROLI (WEST) MUMBAI 400 083 2. ACIT 23(2) MUMBAI 3. CIT-23 MUMBAI 4. CIT(A)-33 MUMBAI 5. DR J BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR ITAT MUMBAI