2019 (7) TMI 32 - HC - Income Tax

Interest payable u/s 244A - Power of AO in remanded matter - impact of direction of Tribunal - direction to compute interest payable u/s 244A - writ jurisdiction - alternate remedy - HELD THAT - Interest u/s 244A following the principles laid down by the Delhi High Court in case of India Trade Promotion Organisation 2013 (9) TMI 451 - DELHI HIGH COURT . It was not open for the AO thereafter to dissect the ratio of the decision of the Delhi High court in case of India Trade Promotion Organisation and came to the conclusion that further interest u/s 244A is not payable. His role was limited to giving effect to the directions of the Tribunal. The question whether the interest is or is not payable was already decided by the Tribunal. Undoubtedly, if the Department had any legal dispute with the decision of the Tribunal, it was always open to the Department to challenge the same in accordance with law. Department has infact exercised such option by first filing an application for rectification before the Tribunal and when such rectification application came to be dismissed, by filing income tax appeal before the High Court. We are informed such appeal is pending. Limited role of the AO was to implement the directions of the Tribunal. In the process, in our opinion, he exceeded his brief virtually coming to the conclusion that the Tribunal was not justified in issuing such directions and distinguishing the ratio of the decision of the Delhi High Court in case of India Trade Promotion Organisation (supra). We would not relegate the petitioner to alternate remedy. Availability of appeal is not an absolute bar on the High Court exercising its jurisdiction under Article 226 of the Constitution. When we find that the order passed by the Assessing Officer is palpably bad in law and exceeds its jurisdiction, relegating a litigant to appeal remedy will be wholly futile and in facts of the present case also lead to undue hardship.

Summary

Issues:
Challenge to order of Assessing Officer regarding computation of interest under section 244A of the Income Tax Act, 1961 for assessment year 1994-95.

Analysis:
The petitioner, a public limited company, challenged an order by the Assessing Officer dated 15th November, 2018, regarding the computation of interest under section 244A of the Income Tax Act, 1961. The petitioner claimed a refund from the Department, including interest. The Tribunal directed the Assessing Officer to compute and pay interest based on the law established by the Supreme Court and the Delhi High Court. The Assessing Officer's order did not align with the petitioner's computation of interest, stating that it would lead to interest on interest, which is not supported by the law. The Assessing Officer concluded that the petitioner was not entitled to further interest under section 244A. The petitioner argued that the Assessing Officer exceeded his jurisdiction by not following the Tribunal's directions based on the Delhi High Court's decision. The Department contended that the Assessing Officer applied correct legal principles and no further interest was payable.

The High Court found that the Assessing Officer overstepped his authority by not implementing the Tribunal's directions to compute interest as per the Delhi High Court's decision. The Court emphasized that the Assessing Officer's role was limited to following the Tribunal's directives, and any legal disputes should have been addressed through proper channels. The Court noted that the Department had the option to challenge the Tribunal's decision, but the Assessing Officer should have complied with the Tribunal's order. The Court set aside the Assessing Officer's order and directed the computation of interest as per the Delhi High Court's decision within six weeks. The Court clarified that the Department could pursue its appeal against the Tribunal's assessment order, and the interest payment would be subject to the appeal's outcome.

In conclusion, the High Court held that the Assessing Officer's order was legally flawed, and the petitioner was not required to seek an alternative remedy due to the Assessing Officer's jurisdictional error. The Court directed the Assessing Officer to recalculate the interest payable to the petitioner in accordance with the Tribunal's directions and the Delhi High Court's decision.