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2011 (7) TMI 61 - HC - Income TaxRefund - Rectification of mistakes - Interest u/s 220(2) - once charging of interest under Section 220(2) of the Act is held to be invalid, the issue relating to withdrawal of credit of TDS allowed in the Assessment Year 1992-93 hangs in the air - It noted that the AO intended to rectify the mistake by issuing notice under Section 154 of the Act on 17.06.2004 to the assessee. The assessee gave no objection to proposed rectification of order under Section 143(1)(a) subject to the condition that interest was properly charged/allowed - The assessee was earlier given the TDS credit in the Assessment Year 1992-93 and refunded that amount along with interest calculated under Section 254A of the Act. When the AO was giving effect to the orders of the Tribunal and passed the orders under Section 254/143(3) of the Act shifting the interest income from the Assessment Year 1992-93 to the Assessment Year 1993-94, it again calculated the interest on the amount which became refundable - It is trite law that nobody can be allowed to enrich itself unjustly and in the matter of calculation once an error is found that can always be directed to be corrected - Decided against the assessee
Issues Involved:
1. Whether the Tribunal was correct in law in issuing directions to the AO to recalculate the amount of refund, which refund had been allowed to the assessee on the basis of an order passed under Section 254/143(3). 2. Whether the directions given in para 20 of the Tribunal's order were necessary and did not amount to setting up a new case. Detailed Analysis: Issue 1: Directions to Recalculate Refund The Tribunal issued directions to the AO to recalculate the amount of refund allowable after tax deductible at source (TDS) under Section 244A of the Income Tax Act. The AO had included substantial income earned by the assessee while computing the taxable income. The Tribunal was dealing with an appeal by the Revenue, which questioned the order of the CIT(A) deleting the interest charged by the AO under Section 220(2) of the Act. The Tribunal affirmed the CIT(A)'s order and dismissed the Revenue's appeal but made additional observations and issued directions to the AO. The assessee argued that the Tribunal exceeded its jurisdiction by issuing directions beyond the scope of the appeal. The Tribunal justified its actions as necessary to give complete effect to its orders in the quantum proceedings. Issue 2: Necessity and Scope of Directions in Para 20 The Tribunal's directions in para 20 were scrutinized to determine if they were necessary and within the scope of the appeal. The Tribunal had directed the AO to rectify the mistake of not shifting the TDS credit from Assessment Year 1992-93 to 1993-94. This rectification was accepted by the assessee, who had no objection to the proposed rectification. However, the AO charged interest under Section 220(2) of the Act, which the CIT(A) deleted, stating that there was no reason or occasion to charge such interest. The Tribunal upheld this deletion but noted that the AO had committed a procedural lapse by preparing two separate ITNS-150 forms instead of one consolidated form. The Tribunal directed the AO to prepare a consolidated ITNS-150 to compute the correct amount of refund and interest under Section 244A, ensuring that the Revenue would not suffer due to the AO's mistake. Conclusion: The Tribunal's directions were aimed at correcting an arithmetical error and ensuring that the assessee did not receive an undue refund. The Tribunal's actions were within its jurisdiction and necessary to give complete effect to its orders in the quantum proceedings. The Tribunal did not set up a new case but merely pointed out what the AO was required to do under the law. The High Court upheld the Tribunal's directions and dismissed the appeal with costs quantified at Rs. 25,000.
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