2016 (3) TMI 416 - AT - Income Tax

Rectification of mistake - order u/s 154 on debatable issues - in order u/s 154 AO allowed refund and interest thereon u/s 244A - Held that - From the orders passed by AO u/s 154 there is neither any hint nor any reference that any delay was attributable to the assessee. Ld. CIT(Appeals) instead of deciding the grounds raised by the assessee has decided a new issue by holding that AO s order u/s 154 was to be upheld and 244A(2) should be examined. Instead of deciding the main issue raised in assessee s appeal, a new direction has been given to examine the interest u/s 244A, which required ascertainment of new facts inasmuch as in none of the earlier orders, there is any whisper to the delay attributable to the assessee. Thus, ld. CIT( Appeals) instead of deciding the merits of the AO s order in terms of rectificatory order has traveled into debatable issue which require mere factual finding, arguments and ascertainment of facts which does not fall in the realm of rectification of mistake. Be that as it may, Sec. 244A(2) postulates that where any dispute arises about the delay for reasons attributable to the assessee the same should be referred to the CCIT/ CIT, whose decision is final on this issue. The reference is not applicable to assessee alone but when the AO raises a dispute, he can also refer the matter to CCIT/ CIT. Surprisingly, in all these proceedings there is no whisper of delay attributable to assessee or any issue raised by AO in first order giving effect to ITAT order. Even in the order of Id. CIT(Appeals) there is no accusation. In the absence of any accusation against assessee in the order sought to be rectified, ld. CIT(Appeals) should not have given a direction to examine afresh the assessee s case u/s 244A(2). We are unable to agree with Id. DR that ITAT has no jurisdiction inasmuch as either there is allegation for attributable to reasons for delay in granting of refund nor AO ever raised this dispute in first order giving effect to ITAT order. On the plain reading of the provisions of sec. 244A(3) if the assessee s refund is increased in that case the increased interest u/s 244A is to be given by way of a statutory exercise. The merits about delay and reasons attributable to assessee fall within the realm of arguments and regular proceedings and not rectification of mistakes, more so amount of refund is concurred by Addl. CIT & CIT. Thus the impugned order of AO passed u/s 154 cannot be upheld. Similarly, ld. CIT(Appeals) also erred in not deciding the dispute as raised in grounds of appeal and instead gave a fresh direction to verify facts and examine the applicability of sec. 244A which would require ascertainment of fresh facts, reasons and accountability. In view of these facts we hold that the impugned order passed by the AO u/s 154 cannot be sustained. - Decided in favour of assessee

Summary

Issues Involved:
1. Non-adjudication and allowance of grounds by CIT(A).
2. Legality and validity of the order dated 24-12-2005 passed by the AO under Section 154 of the Act.
3. Consideration and discussion of submissions by the appellant regarding the validity of the order dated 24-12-2005.
4. Direction by CIT(A) to the AO to examine the applicability of sub-section (2) of section 244A.
5. Validity of the order passed by CIT(A) without giving an opportunity to the appellant.

Issue-wise Detailed Analysis:

Issue 1: Non-adjudication and Allowance of Grounds by CIT(A)
The appellant contended that the CIT(A) failed to adjudicate and allow the grounds raised before him in the appeal against the order dated 24-12-2005 passed under Section 154 of the Act by the Assessing Officer (AO). The Tribunal noted that the CIT(A) did not address the specific grounds raised by the appellant, which included the legality and validity of the AO's order under Section 154.

Issue 2: Legality and Validity of the Order Dated 24-12-2005
The appellant argued that the order dated 24-12-2005 passed by the AO under Section 154 was illegal, unwarranted, void, and beyond the powers of the AO. The Tribunal examined the sequence of events and noted that the AO issued a notice under Section 154 to rectify the assessment for A.Y. 1993-94, which included the withdrawal of TDS credit and adjustment of interest on refunds. The Tribunal found that the AO's rectification order did not point out any apparent mistake from the record, making the rectification order debatable and not within the scope of Section 154.

Issue 3: Consideration and Discussion of Submissions by the Appellant
The appellant claimed that the CIT(A) did not consider or discuss the submissions made regarding the validity of the AO's order dated 24-12-2005. The Tribunal emphasized that the CIT(A) failed to address the appellant's arguments and instead provided a new direction to the AO to examine the applicability of Section 244A(2), which was neither a subject matter of the appeal nor within the CIT(A)'s power to set up a new case.

Issue 4: Direction by CIT(A) to Examine Applicability of Section 244A(2)
The CIT(A) directed the AO to examine the applicability of sub-section (2) of section 244A, which was not the subject matter of the appeal. The Tribunal held that this direction was erroneous and beyond the CIT(A)'s jurisdiction. The Tribunal noted that the AO's rectification order was argumentative and interpretative, requiring a long process of reasoning, which is not permissible under Section 154.

Issue 5: Validity of the Order Passed by CIT(A) Without Giving an Opportunity
The appellant contended that the order passed by CIT(A) was void, unjustified, and against the provision of law as it was passed without giving an opportunity to the appellant. The Tribunal found that the CIT(A) failed to provide the appellant with an opportunity to be heard, which is a fundamental principle of natural justice. The Tribunal also noted that the AO's actions were in contradiction to the approvals and directions given by the Addl. CIT and CIT, New Delhi, regarding the refund and interest calculations.

Conclusion
The Tribunal concluded that the impugned order passed by the AO under Section 154 could not be sustained as it did not point out any apparent mistake from the record. The Tribunal also held that the CIT(A) erred in not deciding the grounds raised by the appellant and instead gave a fresh direction to verify facts and examine the applicability of Section 244A, which required ascertainment of fresh facts and reasons. Consequently, the appellant's appeal was allowed, and the order pronounced in open court on 07.03.2016.