2008 (12) TMI 10 - HC - Income Tax

Impugned appeal is against the decision of Tribunal accepting Application for rectification of mistake as filed by revenue - apparent mistake - further directions were required to be given in the matter regarding charging of interest under section 201(1A) in case the assessee has been found to be in default within the meaning of section 201(1) noting wrong in tribunal s order where ROM application of revenue was accepted assessee s appeal is dismissed

Summary

Issues:
Rectification of order under Section 254(2) of the Income Tax Act, 1961 regarding additional payments made by the assessee to IAAI in financial years 1994-1995 to 2000-2001 and 01.04.2001 to 31.12.2001. Interpretation of the order dated 30.11.2005 by the Tribunal and the subsequent order dated 15.06.2007. Whether the impugned order rectifying the earlier order was necessary.

Analysis:
The judgment pertains to a set of eight appeals arising from a common order passed by the Income Tax Appellate Tribunal regarding rectification sought by the revenue under Section 254(2) of the Income Tax Act, 1961. The Tribunal had earlier concluded that no action under Section 201(1) was required as the tax had been collected by the revenue in relation to additional payments made by the assessee to IAAI. The Tribunal directed the Assessing Officer to verify the facts and issue a notice to the assessee if no tax had been paid by IAAI, allowing for a re-examination of the matter.

The revenue sought modification of the order dated 30.11.2005 as it did not include directions under Section 201(1A) of the Act. The Tribunal, in the impugned order dated 15.06.2007, rectified the earlier order by directing the Assessing Officer to charge interest under Section 201(1A) if the facts stated by the assessee were found to be incorrect. The Tribunal found the directions in the previous order incomplete and granted liberty to the Assessing Officer to invoke provisions of Section 201(1A) if necessary.

Upon analysis, the court held that the impugned order merely clarified what was implicit in the order dated 30.11.2005. The directions in the earlier order remained valid, and the subsequent order added clarity regarding the charging of interest under Section 201(1A) if the facts provided by the assessee were inaccurate. The court emphasized that any action under Section 201(1) or 201(1A) would require the Assessing Officer to issue a notice and afford a reasonable opportunity of hearing to the assessee in accordance with the law. Consequently, the court dismissed the appeals, finding no need for interference with the impugned order.

In conclusion, the judgment addressed the rectification sought by the revenue regarding tax implications of additional payments made by the assessee, clarifying the directions given in the previous order and emphasizing the Assessing Officer's obligation to follow due process in case of any further actions under the Income Tax Act.