2014 (1) TMI 1277 - AT - Income Tax

Non-grant of quantum of Interest u/s 244A of the Act - Whether the assessee could contest an order of assessment in appeal on the ground of non- grant of or otherwise the quantum of the interest granted u/s 244A of the Act Held that - Relying upon Caltex Oil Refining (India) Ltd. vs. CIT 1992 (12) TMI 23 - BOMBAY High Court - The assessee had preferred a valid appeal, warranting adjudication - The ld. CIT(A) having not adjudicated the matter, holding the same as not appealable, the matter would warrant being restored back to his file for the purpose - it is the assessing authority who has to grant the interest, and whose order contains no reference to any reason for the non-grant of the mandatory interest u/s.244A - the law clearly prescribing the same for being granted along with the refund order set aside and the matter remitted back to the AO for fresh adjudication Decided in favour of Assessee.

Summary

Issues:
1. Non-grant of interest u/s.244A by the Assessing Officer.
2. Appealability of the issue of interest u/s.244A under section 246A.
3. Legal issue of contesting an order of assessment in appeal based on interest granted u/s.244A.

Analysis:
Issue 1: The case involved an appeal by the Assessee against the order of the Commissioner of Income Tax (Appeals) dismissing the appeal regarding the non-grant of interest u/s.244A by the Assessing Officer. The Assessing Officer revised the income as initially assessed but did not allow interest u/s.244A despite a reduction in the assessed income resulting in a refund. The Appellate Tribunal found that the Assessing Officer's order lacked a reason for the non-grant of interest u/s.244A, which is mandatory to be granted along with the refund. Therefore, the Tribunal set aside the order and restored the matter to the Assessing Officer for proper consideration and a speaking order on the grant of interest u/s.244A.

Issue 2: The Appellate Tribunal considered the appealability of the issue of interest u/s.244A under section 246A. The Tribunal referred to the decision of the jurisdictional High Court in Caltex Oil Refining (India) Ltd. vs. CIT, which held that an order by the Assessing Officer giving effect to the order by the first appellate authority is an assessment order covered under section 246A. The Tribunal concluded that the issue of interest u/s.244A is appealable, contrary to the view of the Commissioner of Income Tax (Appeals) who declined to adjudicate the issue on merits.

Issue 3: The Tribunal analyzed the legal issue of whether the Assessee could contest an order of assessment in appeal based on the non-grant or quantum of interest u/s.244A. The Tribunal relied on the decision of the jurisdictional High Court and distinguished it from other decisions cited by the Assessee. It held that the Assessee had a valid appeal regarding the grant of interest u/s.244A and directed the matter to be restored back to the Commissioner of Income Tax (Appeals) for adjudication. The Tribunal emphasized that the Assessing Officer is responsible for granting interest u/s.244A along with the refund and must provide a reason for any non-grant of interest.

In conclusion, the Appellate Tribunal allowed the Assessee's appeal for statistical purposes, highlighting the importance of granting interest u/s.244A and the appealability of such issues under the relevant legal provisions.