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2016 (4) TMI 1080 - AT - Income TaxGrant of interest u/s.244A - Held that - The assessee has legitimate right to claim interest on refund provided the assessee submits correct TDS certificate within the time and eligible for interest on refund. It is the duty of the assessee in case of manual certificate in form 16A to verify and submit to the Income Tax Department and rectify the defects at the earliest. Such delay shall not be a hindrance to the Department for granting refund. The provisions of section 244A(2) of the Act should be considered at the time of granting interest. The ld. Commissioner of Income Tax has examined the issue and called for the explanations and verified the provisions with the judicial decisions viz-a-viz explanations of the assessee and we are not inclined to interfere with the order of Commissioner of Income Tax in setting aside the rectification order of Assessing Officer for verification and examine on provisions applicable for granting interest. We, therefore do not interfere with the order of Commissioner of Income Tax and uphold the same. - Decided against assessee
Issues Involved:
1. Invocation of revisionary proceedings under section 263 by the Commissioner of Income Tax. 2. Erroneous and prejudicial nature of the Assessing Officer's order. 3. Delay attributable to the assessee in submitting rectified TDS certificates. 4. Granting of interest on TDS refund under section 244A. Issue-wise Detailed Analysis: 1. Invocation of Revisionary Proceedings under Section 263: The Commissioner of Income Tax (CIT) invoked section 263 to revise the Assessing Officer's (AO) order, which granted a refund and interest on TDS based on defective certificates. The CIT directed the AO to verify documents and exclude the period of delay attributable to the assessee. The CIT argued that the AO's order was erroneous and prejudicial to the revenue since the TDS was refunded based on an "Indemnity Bond" for defective TDS certificates, and the delay caused by the defects could not be attributed to the assessee. 2. Erroneous and Prejudicial Nature of the AO's Order: The AO had granted TDS credit and interest under section 244A based on the genuineness of transactions and an indemnity bond submitted by the assessee. However, the CIT found that the AO did not properly verify whether the delay in proceedings was attributable to the assessee or if any period should be excluded under section 244A(2). The CIT cited the Supreme Court decision in Malabar Industrial Co. Ltd vs. CIT, emphasizing that an order passed without proper verification or application of mind is erroneous and prejudicial to the revenue. 3. Delay Attributable to the Assessee: The CIT noted that the assessee bank filed a rectification petition, and the AO granted TDS credit and interest without considering the delay attributable to the assessee. The CIT highlighted that the defective TDS certificates were handed over to the assessee for rectification, but there was no evidence that the defects were corrected and resubmitted. The CIT emphasized that the AO should have excluded the delay period attributable to the assessee as per section 244A(2) before granting interest. 4. Granting of Interest on TDS Refund under Section 244A: The CIT argued that the AO erroneously granted interest on the refund without excluding the delay attributable to the assessee. The CIT relied on judicial decisions, including the Mumbai Tribunal's case of Kotak Mahindra Finance Ltd vs. DCIT, where it was held that interest under section 244A should not be granted for delays attributable to the assessee. The CIT set aside the AO's rectification order and directed the AO to re-examine the issue, verify documents, and exclude the delay period attributable to the assessee for granting interest under section 244A. Conclusion: The Tribunal upheld the CIT's order, agreeing that the AO's order was erroneous and prejudicial to the revenue. The Tribunal emphasized that the AO should have considered the provisions of section 244A(2) and excluded the delay period attributable to the assessee before granting interest on the TDS refund. The appeals filed by the assessee were dismissed.
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