2014 (6) TMI 563 - AT - Income Tax

Interest on refund u/s 244A of the Act Held that - It is a code of its own for claiming interest on refund and it states that when any refund of any amount becomes due to the assessee, he shall be entitled to receive in addition to the amount, simple interest calculated in the manner given under the section - section 244A is subject to the provision of other sub-sections of section 244A - the entertainment of application/appeal for interest on refund by the AO at the first instance u/s 154 of the Act itself was without jurisdiction - The assessee ought to have moved an application before either the Chief Commissioner of Income Tax or Commissioner of Income Tax having jurisdiction to entertain its application for interest on refund u/s 244A of the Act, rather than moving an application u/s 154 before the AO at the first place - there is no inherent right of appeal - Appeal is a creature of statute and when the statute has provided a specific appeal provision for the relief claimed, then only that forum can exercise jurisdiction of appeal and no other. CIT (A) have erred in upholding the order of the AO - the AO withdrew his own order passed u/s 154 of the Act, for the simple reason that the application/appeal for interest on refund cannot be entertained by the AO, an application for refund of interest will lie only before the jurisdictional Chief Commissioner or the CIT - the AO s entertainment of application of the assessee u/s 154 for interest on refund itself was quorum-non-judice and any order passed by a non-jurisdictional authority is a nullity in the eyes of law and all subsequent proceeding, emanating from it is also a nullity - the order of the CIT (A) - the assessee is at liberty to move before proper Forum for relief u/s 244A Decided in favour of Assessee.

Summary

Issues:
- Appeal against order of ld. CIT (A) for Assessment Years 1991-92, 1992-93 & 1993-94
- Claim of deduction u/s 80-I of the Income Tax Act 1961
- Revision application u/s 264 for deduction u/s 80-I
- Appeal/application u/s 154 for interest on refund from 1991-1996
- Order u/s 154 granting interest withdrawn by AO
- Order u/s 263 of the Act by ld. CIT
- Appeal against order of CIT u/s 263 before ITAT
- Tribunal directing CIT (A) to pass orders on merits
- Decision of CIT (A) on interest under section 244A
- Jurisdictional issues related to interest on refund

Analysis:
1. The appellant, engaged in manufacturing and export, set up a new unit but failed to claim deduction u/s 80-I due to a misconception. Subsequently, a revision application u/s 264 was filed for the deduction, which was allowed by CIT-I, New Delhi after a delay attributed to jurisdictional changes.
2. An appeal/application u/s 154 for interest on refund was initially accepted by the AO but later withdrawn. The ld. CIT, through an order u/s 263, found the AO's decision erroneous and canceled the interest on refund.
3. The assessee appealed against the order of CIT u/s 263 and the withdrawal of interest u/s 154. The ld. CIT (A) dismissed the appeal due to the CIT's order u/s 263. The ITAT set aside the CIT's order u/s 263 and directed the CIT (A) to decide on merits.
4. The CIT (A) held that the interest granted u/s 244A was correctly withdrawn by the AO, citing procedural and substantive flaws in the original order u/s 154. The Tribunal concurred that the AO's jurisdiction to entertain the application for interest on refund was flawed.
5. The Tribunal emphasized that the application for interest on refund should have been made before the Chief Commissioner or Commissioner of Income Tax, not the AO. Any subsequent proceedings based on the initial flawed jurisdiction were deemed null and void in the eyes of the law.
6. The Tribunal allowed the appeal, setting aside the CIT (A)'s decision, and advised the assessee to approach the proper forum for relief under section 244A. It reiterated that the jurisdictional authorities should decide on such matters independently, unaffected by previous findings.

This detailed analysis of the judgment highlights the issues involved, the sequence of events, and the legal reasoning behind the decisions made by the authorities and the Tribunal.