2023 (6) TMI 1407 - HC - Income Tax

Validity of order u/s 263 directing the AO to exclude interest u/s 244A granted to it on excess refund claimed through a revised return - as argued Commissioner in Section 244A(2) is the final authority - whether Tribunal was right in cancelling the order made u/s 263 ? - CIT(A) felt that the delay in claiming enhanced refund was attributable to respondent and accordingly interest u/s 244(A) of the Act was not allowable on the refund for 11 months, i.e., from 1st April 2008 to 19th March 2009. HELD THAT - As per Sub Section (2) of Section 244(A) if the proceedings resulting in the refund are delayed for the reasons attributable to the assessee, the period of delay so attributable to the assessee shall be excluded from the period for which interest is payable. There is nothing in the findings of the CIT as to how respondent delayed the proceedings that resulted in the refund or what were the reasons that could be attributable to respondent. It is true that respondent had initially filed return of income on 30th October 2007 declaring total income of Rs.997,10,30,681/- and subsequently on 19th March 2009 revised return declaring income of Rs.615,19,97,000/- was filed. The assessment was completed u/s 143(3) of the Act on 23rd March 2009 assessing the total income at Rs.19,04,69,88,000/-. Against the assessment order respondent preferred an appeal and the CIT(A) vide an order dated 15th June 2011 decided some issues in favour of respondent in giving effect to CIT(A) s order by the AO on 7th March 2012 and it resulted in refund of Rs.377,95,44,631/-. Therefore it cannot be stated that proceedings resulting in the refund were delayed for reasons attributable to respondent wholly or in part. Moreover, the ITAT has also, relying on a judgment of this court in State Bank of India vs. DCIT-2 2012 (3) TMI 413 - ITAT MUMBAI and came to a conclusion that the order passed by the Assessing Officer was neither erroneous nor prejudicial to the interest of revenue and the AO has allowed the amount of interest in question taking one of the possible view. The tribunal has held that where two views are possible and the AO takes one of the possible views, the CIT(A) could not have exercise revisional jurisdiction u/s 263 of the Act. Tribunal having come to the factual conclusion on the basis of materials on record, no question of law arises.

Summary

Issues:
1. Interpretation of Section 244(A) of the Income Tax Act regarding the exclusion of interest on excess refund claimed through a revised return.
2. Validity of the order made under Section 263 directing the Assessing Officer to exclude interest u/s 244A granted to the respondent.
3. Whether the delay in claiming enhanced refund was attributable to the respondent.
4. Applicability of the judgment in State Bank of India vs. DCIT-2 in determining the correctness of the Assessing Officer's order.

Analysis:
1. The main issue in this case was the interpretation of Section 244(A) of the Income Tax Act, which deals with the exclusion of interest on excess refund claimed through a revised return. The question of law proposed was whether the Tribunal was correct in canceling the order made under Section 263, which directed the Assessing Officer to exclude interest u/s 244A. The contention was that the Principal Commissioner in Section 244A(2) is the final authority on this issue in law.

2. The respondent initially filed a return of income, followed by a revised return resulting in a higher refund. The Commissioner of Income Tax (Appeals) noticed discrepancies in the assessment process and concluded that the delay in claiming the enhanced refund was attributable to the respondent. Consequently, the Commissioner issued a notice under Section 263 of the Act. The Income Tax Appellate Tribunal (ITAT) later allowed the appeal, emphasizing that there was no delay attributable to the respondent in the proceedings resulting in the refund.

3. Section 244(A)(2) of the Act stipulates that if the proceedings leading to a refund are delayed due to reasons attributable to the assessee, the period of delay shall be excluded from the interest payment period. However, in this case, there was no evidence presented by the CIT to show how the respondent caused delays in the proceedings. The Tribunal concluded that the delay was not attributable to the respondent, as the revised return was filed promptly after the original assessment.

4. The ITAT relied on the judgment in State Bank of India vs. DCIT-2 to determine the correctness of the Assessing Officer's decision. It was held that if the Assessing Officer takes one of the possible views and the decision is not erroneous or prejudicial to the revenue's interest, the revisional jurisdiction under Section 263 cannot be exercised by the CIT(A). The Tribunal found that the Assessing Officer's decision was reasonable, given the circumstances, and hence, the appeal was dismissed.

In conclusion, the Tribunal decided the case based on factual findings and material on record, emphasizing that no substantial question of law arose. The appeal was ultimately dismissed, upholding the decision of the ITAT.