Indira Chirimar, Vizianagaram v. ITO, Vizianagaram

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV JUDICIAL MEMBER ( SMC) ITA NO.191/VIZAG/2009 ASSESSMENT YEAR : 1985-86 JANATHA TEXTILES VIZIANAGARAM ITO WARD-2 VIZIANAGARAM (APPELLANT) VS. (RESPONDENT) PAN NO.AAEFJ 9791P ITA NO.192/VIZAG/2009 ASSESSMENT YEAR : 1985-86 SMT. PADMADEVI MODI VIZIANAGARAM ITO WARD-2 VIZIANAGARAM (APPELLANT) VS. (RESPONDENT) PAN NO.ABTTM 9740M ITA NO.193/VIZAG/2009 ASSESSMENT YEAR : 1985-86 SRI SUNIL KUMAR MODI VIZIANAGARAM ITO WARD-2 VIZIANAGARAM (APPELLANT) VS. (RESPONDENT) PAN NO.BFSPS 1891H ITA NO.194/VIZAG/2009 ASSESSMENT YEAR : 1985-86 SRI MUKESH MODI REPRESENTING LATE SRI PAWAN KUMAR MODI VIZIANAGARAM ITO WARD-2 VIZIANAGARAM (APPELLANT) VS. (RESPONDENT) PAN NO.AIPPM 0844B ITA NO.195/VIZAG/2009 ASSESSMENT YEAR : 1985-86 SMT. INDIRA CHIRIMAR VIZIANAGARAM ITO WARD-2 VIZIANAGARAM (APPELLANT) VS. (RESPONDENT) PAN NO.AAYPC 4670N APPELLANT BY: SHRI Y.A. RAO CA RESPONDENT BY: SHRI G.S.S. GOPINATH DR 2 ORDER PER SHRI S.K. YADAV JUDICIAL MEMBER:- THESE APPEALS ARE PREFERRED BY DIFFERENT ASSESSEES AGAINST THE RESPECTIVE ORDER OF THE CIT(A) ON COMMON GROUNDS TH AT CIT(A) HAS ERRED IN CONFIRMING THE ORDERS PASSED BY THE A.O. U/S 154 OF THE ACT REJECTING THE CLAIM OF INTEREST ON REFUND AS PER PROVISIONS OF SE CTION 244(1) AND 244A(1) OF THE I.T. ACT. SINCE THESE APPEALS WERE HEARD TOGET HER THESE ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER. 2. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND DOCUMENTS PLACED ON RE CORD. THE FACTS IN ALL THESE APPEALS ARE ALMOST SIMILAR EXCEPT THE QUANTUM S. WE HOWEVER DISCUSSED THE FACTS OF THE APPEAL IN THE CASE OF JA NATHA TEXTILES IN ITA NO.191/V/2009 FOR THE SAKE OF REFERENCE IN WHICH WE FIND THAT AN INTEREST U/S 220(2) WAS CHARGED TO THE EXTENT OF RS.2 55 167/- B Y THE ASSESSING OFFICER FOR THE DELAY IN PAYMENT OF TAX AND PENALTY. THE SAID AMOUNT WAS PAID AND APPROPRIATED FROM THE REFUND DUE TO THE ASSESSEE. THE ASSESSEE FILED A PETITION FOR WAIVER OF INTEREST CHARGED U/S 220(2) BEFORE THE COMMISSIONER OF INCOME TAX WHO LATER ON WAIVED THE INTEREST CHARGED U/S 220(2) OF THE ACT VIDE ITS ORDER DATED 6.3.2008. SUBSEQUENTLY THE A SSESSEE RECEIVED THE REFUND OF INTEREST CHARGED U/S 220(2) OF THE ACT ON 19.5.2008. HOWEVER WHILE ISSUING THE REFUND THE ASSESSING OFFICER ONL Y ISSUED THE REFUND VOUCHER OF INTEREST AND DID NOT ALLOW ANY INTEREST ON SUCH REFUND OF INTEREST CHARGED U/S 220(2) OF THE ACT. 3. THE ASSESSEE FILED A PETITION U/S 154 REQUESTING THE A.O. TO PASS AN ORDER FOR GRANT OF INTEREST U/S 244(1A) OF THE ACT. THE A.O. VIDE ITS ORDER DATED 8.10.2008 REJECTED THE PETITION U/S 154 OF TH E ACT ON THE GROUND THAT REFUND WAS ISSUED BECAUSE OF THE GIVING EFFECT TO T HE ORDER OF THE CIT REGARDING WAIVER OF SUCH INTEREST. THEREFORE THER E WAS NO MISTAKE APPARENT FROM THE RECORD WHICH NEEDED RECTIFICATION. 4. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT( A) WITH THE SUBMISSION THAT AS PER PROVISIONS OF SECTION 244(1A ) OF THE ACT IF THE REFUND 3 AROSE AS PER PROVISIONS OF SECTION 240 OF THE ACT ASSESSEE IS ENTITLED TO INTEREST U/S 244(1A) OF THE ACT. AS SUCH THE A.O. IS NOT CORRECT IN REJECTING THE PETITION FILED U/S 154 OF THE ACT. A RELIANCE WAS PLACED UPON THE INSTRUCTIONS NO.2 OF 2007 DATED 28.3.2007 ISSUED BY THE CBDT. CIT(A) WAS NOT CONVINCED WITH THE EXPLANATIONS OF THE ASSESSEE S AND CONFIRMED THE ORDER OF THE A.O. REJECTING THE RECTIFICATION IN APPLICAT ION AFTER HAVING OBSERVED THAT INTEREST CHARGED U/S 220(2) BEING NEITHER A TAX NOR A PENALTY AS SUCH THE REFUND OF THE SAME WAS NOT ENTITLED TO INTEREST U/S 244(1A) OF THE ACT. 5. NOW THE ASSESSEE PREFERRED AN APPEAL BEFORE THE TRIBUNAL WITH THE SUBMISSION THAT WHERE REFUND IS DUE TO THE ASSESSEE IN PURSUANCE OF AN ORDER REFERRED TO IN SECTION 240 THE CENTRAL GOVERNMENT SHALL PAY TO THE ASSESSEE SIMPLE INTEREST AT THE RATE SPECIFIED IN SUB-SECTIO N 1 OF SECTION 244 ON THE AMOUNTS SO FOUND TO BE IN EXCESS FROM THE DATE OF W HICH SUCH AMOUNT WAS PAID TO THE DATE ON WHICH THE REFUND IS GRANTED. S INCE THE REFUND IS ACCRUED TO THE ASSESSEE ON ACCOUNT OF AN ORDER PASSED UNDER THE OTHER PROCEEDINGS UNDER THE INCOME TAX ACT PROVISIONS OF SECTION 244 (1A) CAN BE INVOKED AND THE CENTRAL GOVERNMENT SHALL PAY SIMPLE INTEREST AT THE RATE SPECIFIED IN SUB- SECTION 1 ON THE AMOUNT SO FOUND TO BE IN EXCESS FR OM THE DATE ON WHICH SUCH AMOUNT WAS PAID TO THE DATE ON WHICH THE REFUN D IS GRANTED. IN SUPPORT OF THIS CONTENTION THE LD. COUNSEL FOR THE ASSESSE E HAS PLACED A RELIANCE UPON THE JUDGEMENT OF GUJARAT HIGH COURT AND DELHI HIGH COURT IN THE CASE OF CIT VS. GUJARAT STATE WARE HOUSING CORPORATION 2 56 ITR 596 AND MODIPON LIMITED VS. CIT 270 ITR 258 RESPECTIVELY IN WHICH T HEIR LORDSHIP HAVE CATEGORICALLY HELD THAT EXCESS AMOUNT OF TAX PAID P URSUANT TO THE ORDER OF ASSESSMENT OR PENALTY THE ASSESSEE IS ENTITLED TO INTEREST U/S 244(1A). THEIR LORDSHIP FURTHER HELD THAT ACCORDINGLY THE ASSESSEE WAS ENTITLED TO INTEREST U/S 244(1A) OF THE I.T. ACT IN RESPECT OF INTEREST PAYMENT U/S 215 217 & 220(2). 6. THE LD. D.R. ON THE OTHER HAND HAS PLACED A HEAV Y RELIANCE UPON THE ORDER OF THE CIT(A). BESIDES HE HAS ALSO PLACED E MPHASIS ON THE JUDGEMENT OF THE APEX COURT IN THE CASE OF CIT VS. CHITTOR EL ECTRIC SUPPLY CORPORATION & ANR 212 ITR 404 (SC) IN SUPPORT OF HIS CONTENTION. 4 7. HAVING HEARD THE RIVAL SUBMISSIONS AND FROM A CA REFUL PERUSAL OF RECORD WE FIND THAT THE REFUND OF INTEREST U/S 220 (2) OF THE ACT WAS GRANTED BY THE CIT BY WAIVING INTEREST U/S 220(2A) OF THE A CT ON A PETITION FILED BY THE ASSESSEE. THE INTEREST CHARGED U/S 220(2) IS N OT AN APPEALABLE ORDER AND ASSESSEE CAN ONLY APPROACH TO THE COMMISSIONER OF I NCOME TAX U/S 220(2A) OF THE ACT AND THE COMMISSIONER MAY REDUCE OR WAIVE THE AMOUNT OF INTEREST PAID OR PAYABLE BY THE ASSESSEE IF HE HAS SATISFIED WITH THE CERTAIN CONDITIONS PRESCRIBED UNDER SUB-SECTION 2A OF SECTION 220 OF T HE ACT. MEANING THEREBY THE REFUND OF INTEREST CHARGED U/S 220(2) OF THE AC T WAS GRANTED IN OTHER PROCEEDINGS UNDER THE ACT. AS SUCH THE REFUND ACCR UED TO THE ASSESSEES CAN BE CALLED TO HAVE BEEN DUE AS PER PROVISIONS OF SEC TION 240 OF THE ACT. AS PER SECTION 244(1A) WHERE THE WHOLE OR ANY PART OF AMOUNT REFERRED TO IN SUB-SECTION 1 IS DUE TO THE ASSESSEE AS A RESULT OF ANY AMOUNT HAVING BEEN PAID BY HIM IN PURSUANCE TO ANY ORDER OF ASSESSMENT OR PENALTY AND SUCH AMOUNT OR ANY PART THEREOF HAVING BEEN FOUND IN APP EAL OR OTHER PROCEEDINGS UNDER THIS ACT TO BE IN EXCESS OF THE AMOUNT WHICH SUCH ASSESSEE IS LIABLE TO PAY AS TAX OR PENALTY AS THE CASE MAY BE UNDER TH IS ACT THE CENTRAL GOVERNMENT SHALL PAY TO SUCH ASSESSEE SIMPLE INTERE ST AT THE RATE SPECIFIED IN SUB-SECTION 1 ON THE AMOUNT SO FOUND TO BE IN EXCES S FROM THE DATE ON WHICH SUCH AMOUNT WAS PAID TO THE DATE ON WHICH THE REFUN D IS GRANTED. 8. TURNING TO THE FACTS OF THE CASE WE FIND THAT RE FUND BECOMES DUE TO THE ASSESSEES BY AN ORDER PASSED BY THE CIT UNDER O THER PROCEEDINGS AND AS SUCH AS PER SUB-SECTION 1A OF SECTION 244 THE ASSE SSEE IS ENTITLED FOR THE SIMPLE INTEREST AT THE RATE SPECIFIED IN SUB-SECTIO N 1 OF SECTION 244 OF THE ACT I.E. 15% PER ANNUM. THIS ISSUE WAS EXAMINED BY THE GUJARAT HIGH COURT IN THE CASE OF CIT VS. GUJARAT STATE WARE HOUSING CORP ORATION (SUPRA) IN WHICH THEIR LORDSHIP HAVE HELD THAT ASSESSEE IS ENTITLED TO INTEREST U/S 244(1A) OF THE I.T. ACT IN RESPECT OF INTEREST PAYMENTS U/S 21 5 217 220(2) IN RESPECT OF ASSESSMENT YEARS. SIMILAR VIEW WAS EXPRESSED BY DE LHI HIGH COURT IN THE CASE OF MODIPON VS. CIT IN WHICH THEIR LORDSHIP HAV E CATEGORICALLY HELD THAT ASSESSEE IS ENTITLED TO INTEREST U/S 244(1A) OF THE I.T. ACT IN RESPECT OF REFUND OF INTEREST PAYMENT U/S 220(2) OF THE ACT. 5 9. WE HAVE ALSO CAREFULLY EXAMINED THE JUDGEMENT RE FERRED TO BY THE REVENUE IN THE CASE OF CIT VS. CHITTOR ELECTRIC SUP PLY CORPORATION AND OTHERS 212 ITR 404 (SC) AND WE FIND THAT JUDGEMENT WAS REN DERED ON DIFFERENT ISSUE. IN THIS CASE THEIR LORDSHIP HAVE HELD THAT INTEREST U/S 244(1) IS NOT PAYABLE FROM THE DATE OF ORDER OF AAC WHERE AAC HAD DIRECTED THE ITO TO MAKE THE ASSESSMENT AFRESH. QUESTION OF INTEREST A ND SECOND INTEREST ARISE ONLY WHEN A FRESH ASSESSMENT IS MADE AND THE AMOUNT PROPERLY CHARGEABLE UNDER THE ACT IS ASCERTAINED. SINCE THIS JUDGEMENT IS RENDERED ON DIFFERENT SET OF FACTS NO ASSISTANCE CAN BE DRAWN FROM THE JU DGEMENT IN FAVOUR OF THE REVENUE. 10. ON A CAREFUL CONSPECTUS OF THE CASE WE ARE OF THE VIEW THAT THE IMPUGNED ISSUE IS SQUARELY COVERED BY JUDGEMENT OF THE GUWAHATI AND DELHI HIGH COURTS IN WHICH IT HAS BEEN HELD THAT ASSESSEE IS ENTITLED FOR AN INTEREST U/S 244(1A) OF THE I.T. ACT IN RESPECT OF REFUND OF INTEREST PAID U/S 215 217 & 220(2) OF THE ACT. WE THEREFORE FOLLOWING THE S AME SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE A.O. TO ALLOW THE INTERES T U/S 244(1A) OF THE ACT ON THE REFUND OF INTEREST CHARGED U/S 220(2) OF THE I. T. ACT. 11. IN THE RESULT THE APPEALS OF THE ASSESSEES ARE ALLOWED. PRONOUNCED IN THE OPEN COURT ON 29.1.2010 SD/- SD/- (SUNIL KUMAR YADAV) JUDICIAL MEMBER VG/SPS VISAKHAPATNAM DATED 29 TH JANUARY 2010 6 COPY TO 1 M/S. ROWE & PAL CHARTERED ACCOUNTANTS 4-3-40 KO THAGRAHARAM VIZIANAGARAM. 2 ITO WARD-2 VIZIANAGARAM 3 THE CIT-1 VISAKHAPATNAM 4 THE CIT(A) VISAKHAPATNAM 5 THE ADDL. CIT RANGE-3 VISAKHAPATNAM 6 THE DR ITAT VISAKHAPATNAM. 7 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM