2013 (12) TMI 1313 - HC - Income Tax

Validity of recalling its own order by Tribunal - Held that - The AO wrongly allowed the credit of TDS to the assessee which was later on rectified by ITAT as per the provisions of Section 154 of the Income Tax Act, 1961 that mistake was rectifiable after giving an opportunity of hearing - The credit of which could not be given u/s 199 because the Sikkim state did not credit the amount deducted to the account of Government of India - As the credit of T.D.S. was wrongly given to the assessee which was subsequently rectified invoking powers under Section 154 of the Act, hence the assessee is not liable to pay interest for the late payment of Income Tax - Decided partly in favour of Revenue.

Summary

Issues:
1. Correctness of the Income Tax Appellate Tribunal's decision to recall its earlier order.
2. Acceptance of the assessee's plea regarding a mistake in the order of the Income Tax Appellate Tribunal.

Issue 1: Correctness of the Income Tax Appellate Tribunal's decision to recall its earlier order:
The case involved appeals against the Income Tax Appellate Tribunal's orders dated 29.06.2001 and 31.08.2001 regarding Assessment Year 1984-85. The Tribunal initially allowed the revenue's appeal, stating that the tax deductions by the Sikkim State were not eligible for credit under Section 199 of the Income Tax Act. However, upon the assessee's application, the Tribunal recalled its earlier order and decided the appeal afresh on 31.08.2001. The Tribunal upheld the findings of the Commissioner of Income Tax (Appeals) and dismissed the department's appeal. The Tribunal accepted the assessee's argument that the revision in the demand notice was not possible under Section 154 of the Income Tax Act and was not a mistake apparent from records. The revenue department filed appeals under Section 260A of the Income Tax Act, claiming the Tribunal's orders were erroneous and bad in law.

Issue 2: Acceptance of the assessee's plea regarding a mistake in the order of the Income Tax Appellate Tribunal:
The case revolved around the credit for tax deducted at source (T.D.S.) by the Sikkim Government. The Assessing Officer initially allowed this credit but later withdrew it under Section 154 of the Income Tax Act, 1961. The Commissioner of Income Tax (Appeals) and the Tribunal both ruled in favor of the assessee, holding that the credit should be allowed. The Tribunal emphasized that the income earned by the assessee, a resident of India, through winning a lottery prize in Kanpur, was taxable under the Income Tax Act, 1961, despite the Sikkim-specific tax laws. The Tribunal also highlighted that the T.D.S. amount was not remitted to the Government of India, making the credit inapplicable. The Tribunal referenced relevant case laws and provisions to support its decision to uphold the assessee's plea and dismiss the revenue department's appeals.

The judgment concluded by allowing the revenue department's appeals, setting aside the Tribunal's orders, and restoring the Assessing Officer's original assessment order without charging interest from the assessee for late payment of Income Tax. The decision was based on the interpretation of relevant provisions of the Income Tax Act, case laws, and the specific circumstances of the case.