2021 (10) TMI 1048 - AT - Income Tax

Rectification of mistake - disallowance of interest expenses for want of non-deduction of tax at source while making payment of interest - HELD THAT - As gone through the order dated 10.12.2020 order passed by the AO while giving effect to the order of Tribunal vide his order dated 12.04.2021 and the subsequent order passed u/s 154 of the Act, withdrawing the relief is granted to the assessee in terms of order of tribunal. AO initially while following the direction of Tribunal, verified the fact and granted relief to the assessee. However, the relief granted to the assessee was withdrawn by AO on the same day in order passed u/s 154. We find that the AO passed the subsequent order without giving opportunity of hearing - we find that the ld.AR of the assessee failed to point out any mistake apparent in the order dated 10.12.2020. Therefore, the application filed by the assessee under section 254(2) of the act is dismissed - Miscellaneous Application filed by the assessee is dismissed.

Summary

Issues:
Rectification of order related to disallowance of interest expenses for want of non-deduction of tax at source.

Analysis:
The Miscellaneous Application was filed by the assessee seeking rectification in the order dated 10.12.2020. The sole ground of appeal raised by the assessee was regarding the disallowance of interest expenses due to non-deduction of tax at source while making interest payments to a non-banking finance company (NBFC). The assessee argued that the recipient of the interest had included the income in their total income and paid tax on it. The Tribunal allowed the appeal subject to verification of this fact by the Assessing Officer (AO) to determine if the recipient had paid tax on the interest income. The AO initially verified the fact and granted relief to the assessee. However, the relief was later withdrawn by the AO in an order passed under section 154 of the Income Tax Act without providing an opportunity of hearing to the assessee.

The Senior Departmental Representative for the Revenue contended that there was no mistake apparent in the order that could be rectified under section 254(2) of the Act. The assessee was advised to seek appropriate recourse as per the provisions of the Income Tax Act if they had grievances. The assessee's representative acknowledged that there was no mistake in the order but requested the Bench to direct the AO to consider the matter in line with the Tribunal's direction in its previous order.

After considering the submissions of both parties and reviewing the relevant orders, the Tribunal found that the AO had withdrawn the relief granted to the assessee without providing a hearing. The Tribunal concluded that the assessee had not identified any mistake apparent in the order dated 10.12.2020. Consequently, the application filed by the assessee under section 254(2) of the Act was dismissed. However, the assessee was granted liberty to pursue appropriate application, appeal, or representation to the relevant authority as per the provisions of the Income Tax Act.

In conclusion, the Miscellaneous Application filed by the assessee seeking rectification in the order related to the disallowance of interest expenses was dismissed by the Tribunal on 04 October 2021 during a virtual court hearing.