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TMI Blog2010 (3) TMI 884X X X X Extracts X X X X X X X X Extracts X X X X ..... ok benefit receivable cannot be taxed. The Assessing Officer passed an order dated 26-2-2001 giving effect to the order of the learned CIT(A) dated 24-11-2007; wherein the Assessing Officer excluded the pass book benefit receivable-amounting to Rs. 6,75,24,157 from the total income. In the said order giving effect to the order passed by the learned CIT(A), an amount of Rs. 2,55,01,434 inclusive of interest under section 244A of Rs. 82,85,812 was determined as refundable to the assessee as shown below :- Particulars Rs. Rs. Total income as per order giving effect to the order of the learned CIT(A) 19,22,59,200 Tax on aforesaid income including surcharge 8,26,71,456 Less : Prepaid taxes (a) Tax deducted at source 57,96,691 (b) Advance Tax 9,50,00,000 10,07,96,691 Net tax refundable 1,81,25,235 Less : Interest under section 234C (25,550) 1,80,99,685 Add : Interest under section 244A 82,85,812 Particulars Rs. Rs. Balance 2,63,85,497 Less : Amount already refunded on 18-1-1999 8,84,063 Balance amount refundable 2,55,01,434 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of section 154(7), no order under section 154 can be passed after the expiry of four years from the end of the financial year in which the order sought to be amended was passed. It was submitted that the said period of four years expired on 31-3-2005. Accordingly, the aforesaid order giving effect to the order passed by learned CIT(A) cannot be amended beyond 31-3-2005. Hence the aforesaid notice giving an opportunity to the assessee under section 154 was time-barred and ought to be treated as null and void. It was submitted that the proceedings initiated under section 154 are barred by limitation and thus bad in law. It was further submitted that the appellate order passed by the ITAT, cannot save the limitation under section 154(7). If the notice given to the assessee on the basis of the directions of the ITAT was issued within the prescribed time then the said notice would have been a valid notice. However, since the said notice has been issued beyond the stipulated period of four years, the said notice ought to be treated as null and void. Consequently, the order giving effect to the order of the ITAT also ought to be treated as void and bad in law. In this connecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs resulting in refund have been delayed for reason attributable to the assessee. 7. Without prejudice to the above submission, it was submitted that the only consequence of making the said claim in the return of income would have been a higher refund in the limitation granted on 18-1-1999. No part of proceedings resulting in the refund have been delayed for reasons attributable to the assessee and if the claim was made in the return of income itself, then possibly the assessee would have been granted the refund in the intimation passed under section 143(1)(a) on 28-9-1998. Accordingly, the assessee would still have been entitled to interest under section 244A even in respect of the said claim from 1-4-1997 upto 18-1-1999 being the date of granting the refund determined in the intimation and there is no question of withdrawing interest for the said period. 8. Further in the intimation dated 25-9-1998 passed under section 143(1)(a) for assessment year 1997-98 an amount of Rs. 8,84,063 was determined as refundable to our clients. The said refund was adjusted as follows :- A.Y. Nature of demand Amount of demand outstanding (Rs.) Amount adjusted (Rs.) 1996-97 143(1)(a) 8,44,59 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der would be the Hon'ble ITAT, Mumbai. Consequently this appeal is dismissed". 11. We have heard the rival submissions. The learned counsel for the assessee reiterated the stand as was taken by the assessee before the Revenue authorities. The learned D.R. relied on the order of CIT(A) and further submitted that the decision of the Hon'ble Orissa High Court in the case of Gangaram Chapolia & Co. ( supra) is not good law and relied on the following decisions of the Hon'ble Supreme Court and Hon'ble Bombay High Court wherein it has been held that failure to follow the principles of natural justice will render the order irregular and not void in Deepak Agro Foods v. State of Rajasthan [Civil Appeal Nos. 4327 to 4329 of 2008, dated 11-7-2008],Superintendent (Tech.-1), Central Excise v. Pratap Rai [1978] 114 ITR 231 (SC), CIT v. Bharat Kumar Modi [2000] 246 ITR 6931 (Bom.). 12. We have considered the rival submissions. The Hon'ble Orissa High Court in the case of Gangaram Chapolia & Co. (supra) the facts were an order dated 20-10-1975 was passed to rectify the assessment order dated 16-7-1971 and 26-10-1971 for assessment years 1968-69 and 1969-70 without giving any opportunity of bein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uant to the order of the ITAT is beyond time cannot be accepted. 13. We are however of the view that the order of the Assessing Officer cannot be sustained for other reasons. When a dispute arises as to whether any period has to be excluded while allowing interest under section 244A, then the Assessing Officer in terms of section 244A(2) has to make a reference to the Chief Commissioner or Commissioner. In the present case, the Assessing Officer in the order dated 26-2-2001 passed while giving effect to the order of CIT(A) dated 24-11-2000 allowed interest to the assessee for the whole period for which interest was to be allowed in terms of section 244A(1). The cause of action for the proceedings under section154 was the letter dated 10-5-2001 received by the Assessing Officer from the CIT, City VI Mumbai asking him to withdraw interest for a certain period. A look at the provisions of the Act regarding allowing interest on refunds is necessary to appreciate the stand of the parties before us. "244A. Interest on refunds.-(1) Where refund of any amount becomes due to the assessee under this Act, he shall, subject to the provisions of this section, be entitled to receive, in additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estion as to the period to be excluded to the Chief Commissioner or Commissioner whose decision thereon shall be final. It goes without saying that the CIT or Chief Commissioner before deciding the issue has to afford opportunity of being heard to the assessee. Such orders of the CIT or Chief Commissioner are final. They are not orders against which an appeal will lie to CIT(A) under section 246-A. Thus the jurisdiction of the appellate forums under the Act has been excluded on such decision. In other words such orders are administrative orders and cannot be challenged before other judicial forums. In the present case what has happened is that it was the CIT, City VI Mumbai, vide his letter dated 10-5-2001 directed the Assessing Officer to withdraw interest already allowed for a particular period. That has been done by the CIT behind the back of the assessee. In any event the letter of CIT dated 10-5-2001 maybe a ground for Assessing Officer to issue notice under section 154 but when the assessee disputes facts regarding the question as to whether the proceedings resulting in the refund are delayed for reasons attributable to the assessee, the Assessing Officer has no other option ..... X X X X Extracts X X X X X X X X Extracts X X X X
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