2003 (4) TMI 238 - AT - Income Tax

Summary

Issues:
Withdrawal of interest under section 154 of the IT Act.

Analysis:
The appeal concerns the withdrawal of interest amounting to Rs. 44,645 under section 154 of the IT Act. The assessee had initially claimed a refund of Rs. 13,28,889, but the AO allowed a refund of Rs. 8,78,440 and credited TDS of Rs. 8,05,910. Subsequently, the AO noticed incomplete TDS certificates and proposed to withdraw the interest granted under section 244(1A). The CIT(A) upheld the AO's decision, stating that the delay in filing proper TDS certificates was attributable to the assessee, thus justifying the withdrawal of interest.

The assessee argued that interest should be paid from the assessment year's start till the refund, and the delay in TDS certificates issuance should not penalize the assessee. The Departmental Representative supported the authorities' decisions, emphasizing that the delay was due to incomplete TDS certificates by the assessee. The Tribunal noted that the AO withdrew interest without referring the matter to the CIT/Chief CIT, as required by law. Additionally, as tax was deducted and deposited, the assessee should be entitled to interest from the assessment year's beginning till the refund.

The Tribunal held that the AO lacked jurisdiction to exclude the delay period without CIT/Chief CIT's decision. As the tax was deducted and paid, interest should be granted from the assessment year's start till the refund. The Tribunal concluded that the AO's withdrawal of interest was not in line with the law, setting aside the CIT(A)'s order and reinstating the interest. The appeal of the assessee was allowed, overturning the withdrawal of interest under section 154 of the IT Act.