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2023 (3) TMI 142 - AT - Income TaxRectification of mistake u/s 154 - withdrawing the interest granted to the assessee u/s. 244A - delay in the issuance of the refund u/s 244A(2) - debatable issue - HELD THAT - Whether the issue of responsibility for the delay can be attributed under section 244A(2) of the Act is concerned, restoring the issue to the file of the AO in the present case would be an act of futility. This is because we are faced with an order under section 154 - If at all the direction u/s. 244A(2) was to be granted by the appropriate authority, who admittedly is not the AO, then such direction could have been issued before the issuance of show cause notice u/s. 154 of the Act. Now when the issue is before the Tribunal and much water has flowed under the bridge, by restoring the issue to the file of the AO, no purpose would be served insofar as such a direction cannot be obtained from the appropriate authority for a fresh issuance of a show cause notice u/s. 154 as the same would be substantially time barred - as it is noticed that the AO is not the authority who could attribute the delay in the issuance of the refund u/s 244A(2) as also on the ground that the issue is highly debatable issue, we are of the view that the order passed u/s. 154 is unsustainable and consequently, the order of the Assessing Officer and that of the Ld. CIT(A) stands quashed. Appeal of the assessee stands allowed.
Issues Involved:
1. Withdrawal of interest granted to the assessee under section 244A. 2. Authority of the Assessing Officer to attribute delay under section 244A(2). 3. Applicability and scope of rectification under section 154. Detailed Analysis: 1. Withdrawal of Interest Granted to the Assessee under Section 244A: The primary issue in the appeal was the action of the Assessing Officer (AO) in withdrawing the interest granted to the assessee under section 244A through an order under section 154. The AO contended that the delay in processing the refund was attributable to the assessee, not the department. The assessee argued that this was a debatable issue, referencing the decision of the Co-ordinate Bench of the Mumbai Tribunal in the case of Nathpa Jhakri Joint Venture vs. ACIT, which held that the attribution of delay is a matter that requires examination of facts and records and could involve multiple viewpoints, making it unsuitable for rectification under section 154. 2. Authority of the Assessing Officer to Attribute Delay under Section 244A(2): The assessee further argued that, as per section 244A(2), the responsibility for attributing the delay in granting a refund lies with the Principal Chief Commissioner or Chief Commissioner or the Principal Commissioner or Commissioner, not the AO. This was a crucial point since the AO had acted beyond their jurisdiction by deciding on the attribution of delay. 3. Applicability and Scope of Rectification under Section 154: The revenue supported the AO's action, citing the decision of the Delhi Tribunal in the case of MMTC Ltd., which allowed the AO to re-adjudicate the issue if the provisions of section 244A(2) were not adjudicated by the appropriate authority. The revenue also provided several case laws to support the argument that overlooking statutory provisions constitutes a mistake apparent from the record, justifying rectification under section 154. Notably, cases like CIT vs. Steel Strips Ltd. and L. Hirday Narain vs. ITO emphasized that rectification is permissible when statutory provisions are overlooked. Tribunal's Conclusion: The Tribunal considered the rival submissions and concluded that restoring the issue to the AO would be futile since the matter involved an order under section 154. The Tribunal noted that the appropriate authority for attributing the delay under section 244A(2) is not the AO. Additionally, the Tribunal observed that the issue of attributing delay is highly debatable, making it unsuitable for rectification under section 154. Consequently, the Tribunal held that the order passed under section 154 was unsustainable, and quashed the orders of the AO and the CIT(A). Result: The appeal of the assessee was allowed, and the order was dictated and pronounced in the open court on 20/02/2023.
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