2005 (7) TMI 56 - HC - Income Tax

Rectification of mistake - Petitioner, a Government of Kerala undertaking, is challenging exhibit P12 demand notice issued under section 156, demanding excess interest paid by the Government to the company as computed by the Chief Commissioner of Income-tax pursuant to exhibit P4 order of the Tribunal - The decisions relied on by the petitioner are rendered prior to the introduction of section 244A(3). As of now, excess interest paid under section 244A(1) can be demanded under section 154 as provided under section 244A(3). Since I find exhibit P12 demand is pursuant to exhibit P13 order which is a rectification order issued under section 154, the challenge against the demand is unsustainable. I find the assessee has no dispute on the merits inasmuch as it has no contest against exhibit P11 by which the Chief Commissioner of Income-tax has refixed the eligible interest to it under section 244A(2). I find no substance in the technical objection raised by the petitioner against the demand notice. O.P. is therefore devoid of any merit and is dismissed

Summary

Issues:
Challenge to demand notice under section 156 of the Income-tax Act for excess interest paid by the Government to the company based on Tribunal's order.

Analysis:
The petitioner, a Government undertaking, challenged a demand notice (exhibit P12) under section 156 of the Income-tax Act for excess interest paid by the Government following the Tribunal's order (exhibit P4). The petitioner paid advance tax for the assessment year 1998-99 but filed an income-tax return without an audit report, leading to the return being treated as invalid. The Assessing Officer initially granted a refund of the entire advance tax with interest under section 244A of the Act. However, it was later found that the delay in proceedings was attributable to the assessee, resulting in a reduced refund and a demand for repayment of excess interest paid. The Tribunal's order (exhibit P4) directed the matter to be decided by the Chief Commissioner or Commissioner under section 244A(2), leading to a fresh order (exhibit P11) by the Chief Commissioner. The petitioner contested the demand notice (exhibit P12) arguing that it was not enforceable under section 244A(3) and relied on precedents. The respondents argued that the Tribunal's order was a remand order, and subsequent decisions by the Chief Commissioner were valid. The Court analyzed the Tribunal's order, finding that the Assessing Officer's jurisdictional error in deciding the interest issue led to corrective actions by the Tribunal and Chief Commissioner. The Court held that the demand notice was sustainable as it was based on rectification proceedings initiated under section 154 of the Act and subsequent adjudication under section 244A(2). The Court dismissed the challenge, noting the absence of merit in the technical objection raised by the petitioner and the lack of contest against the Chief Commissioner's order (exhibit P11).

This detailed analysis of the judgment provides a comprehensive overview of the issues involved, the arguments presented by both parties, and the Court's reasoning leading to the dismissal of the challenge to the demand notice.