2022 (10) TMI 835 - AT - Income Tax

Interest u/s 244A - claim declined on the ground that the delay in refund is attributed to the assessee - HELD THAT - What is, essential for declining interest to the interest assessee under section 244A(2), is that the delay in refund must be on account of reasons attributable to the assessee, and when there is a dispute about the period for which interest is to be declined, Chief Commissioner or Commissioner must take a call, in favour of the Assessing Officer s stand, on the same. None of these conditions are satisfied on the facts of this case. Just because an assessee has raised a claim by way of an additional ground of appeal before the Tribunal, it does not necessarily mean that the delay is attributable to the assessee-this delayed claim could be on account of subsequent legislative or judicial developments, or on account of other factors beyond the control of the assessee. This exercise of ascertaining the reasons of delay is an inherently subjective exercise, and well beyond the limited scope of mistake apparent on record on which no two views are possible. In any case, there is not adjudication by the Chief Commissioner or the Commissioner on the period to be excluded-something hotly contested by the assessee. Unless that adjudication is done, the denial of interest under section 244A cannot reach finality, and, for this reasons also, the impugned order does not meet our approval. We uphold the plea of the assessee and vacate the impugned rectification order. The assessee gets the relief accordingly.

Summary

Issues Involved:
1. Legality of the rectification order under section 154 of the Income Tax Act, 1961.
2. Withdrawal of interest under section 244A of the Income Tax Act, 1961.
3. Validity of the order passed in the name of a non-existent entity.

Issue-wise Detailed Analysis:

1. Legality of the Rectification Order under Section 154:
The appellant challenged the rectification order dated 17-07-2019, arguing that it was in contravention of section 154 of the Income Tax Act, 1961. The Tribunal noted that the scope of section 154 is inherently limited to correcting "an obvious and patent mistake and not something which can be established by a long-drawn process of reasoning on points on which there may conceivably be two opinions." The Tribunal cited the Supreme Court's decision in ITO vs. Volkart Brothers (1971) to emphasize that a debatable point of law cannot be treated as a mistake apparent on the record. The Tribunal concluded that the Assessing Officer (AO) was in error in passing the rectification order under section 154, and thus, the order was quashed.

2. Withdrawal of Interest under Section 244A:
The appellant contended that the AO erred in withdrawing the interest correctly allowed under section 244A, arguing that the delay in refund was not attributable to the assessee. The Tribunal observed that section 244A(2) requires that any delay in the refund process attributable to the assessee must be decided by the Chief Commissioner or Commissioner. The Tribunal found that no such adjudication had been made in this case. The Tribunal also referenced the decision in DBS Bank Ltd vs. DDIT, which clarified that the delay in making a claim does not necessarily mean the delay is attributable to the assessee. The Tribunal concluded that the AO's decision to withdraw the interest was incorrect and vacated the rectification order.

3. Validity of the Order Passed in the Name of a Non-existent Entity:
The appellant argued that the rectification order was passed in the name of a non-existent entity, Aditya Birla Nuvo Limited, making it void ab initio. The Tribunal noted this argument but found it unnecessary to adjudicate on this ground since the rectification order was already quashed on other grounds. However, the Tribunal acknowledged the appellant's right to raise this issue if needed in future proceedings.

Conclusion:
The Tribunal allowed the appeal, quashing the rectification order under section 154 and restoring the interest under section 244A to the appellant. The Tribunal emphasized that the delay in refund proceedings must be adjudicated by the Chief Commissioner or Commissioner and cannot be assumed to be attributable to the assessee without proper adjudication. The issue of the order being passed in the name of a non-existent entity was noted but not adjudicated upon due to the resolution of the primary issues.