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TMI Blog2016 (3) TMI 416X X X X Extracts X X X X X X X X Extracts X X X X ..... butable 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 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a that it was business income. The dispute went up to the level of the ITAT, which admitting assessee's alternate ground held the income to be taxable in A.Y. 1993-94. Pursuant thereto AO passed order giving effect to the order of ITAT for A.Y. 1992-93 and in order to include this amount in A.Y. 1993-94, a notice u/s 154 dated 4-6-2004 was issued to the assessee, inviting objections on the inclusion of this income in A.Y. 1993-94. Assessee gave its ''no objection and AO vide order dated 9-6- 2004, passed u/s 154, reduced the assessed loss for A.Y. 1993-94 to ₹ 4,02,58,429/-. Besides, AO withdrew the credit for TDS amounting to ₹ 68,98,588/-, which related to the interest income included in A.Y. 1992-93 and consequently to allow the same now in A.Y. 1993-94. To this notice u/s 154 also assessee gave its no objection for proposed rectification with the request to allow the interest on refund as per provisions of the Act. 2.1. Thereafter AO passed an order u/s 154 dated 30-7-2004 in A.Y. 1993- 94 giving credit for TDS amounting to ₹ 61,58,7327- instead of ₹ 68,98,588/-, as originally allowed. In the tax computation made with order u/s 154 AO a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 24-10-2005 by which interest u/s 244A granted earlier was withdrawn to the extent of ₹ 72,01,376/- out of interest on refund earlier allowed as under: Order u/s 154/154/143(1) of the Income Tax Act, 1961 Order u/s 154 of the I.T. Act, 1961 was passed on 30.07.2004 wherein interest u/s 244A of ₹ 75,44,408/- was granted to the assessee from 3.4.1993 to 31.3.2004 i.e. the date of issue of refund. The facts of the case are that the Hon'ble ITAT vide order ITA no. 6639/Del/94 dated 17.09.2002 for assessment year 1992-93 held that interest income of ₹ 2,69,84,301/- does not pertain to A.Y. 92-93 but pertain to A.Y. 93-94. In the order u/s 254/ 143(3) passed for AY 92-93 on 28.6.2004 , credit for TDS amounting to ₹ 68,98,588/- relating to interest income of ₹ 2,69,84,301/- was withdrawn. At the time of withdrawal of TDS credit a demand of ₹ 2,04,62,717/- including interest u/s 220(2) amounting to ₹ 1,30,10,582 was raised in the assessment year 1992-93. After withdrawal of TDS credit from the AY 92-93, credit of ₹ 61,58,732/- was allowed to the assessee in AY 93-94. Apart from TDS, an interest u/s 244A amounting to ₹ 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d forms. Withdraw excess interest allowed u/s 244A of ₹ 72,01,3 76/- and allow interest only upto the issue of refund in the assessment year 1992-93 i.e. upto 29.6.93 and 30.3.94 as per rules. 2.7. Aggrieved, assessee preferred first appeal. Ld. CIT(Appeals), however, dismissed the assessee's appeal by following observations: 7. This being the facts of the case it is seen that the appellant had itself offered the entire income for assessment for the assessment year 1992-93 and the refund was given to the appellant on 30-3-94. However, this case was taken up for scrutiny and on 30-3-94 a demand of ₹ 2,14,58,452/- was raised. The issues were decided against the assessee by the CIT(A) regarding the taxability of income as income from other source. However, in its appeal before the ITAT the appellant took an additional ground which reads as under: That in the alternative and without prejudice to ground no. 3, even if the interest of ₹ 2,69,84,301/- is in the nature of income same is not income of assessment year 1992-93 as no legal right had accrued to receive public issue money as well as interest thereon till 31st March, 1992. 8. In cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as under: You were directed to take all remedial actions and send compliance report by 05.05.04. I also personally explained to you that orders u/s. 154 should only be passed after allowing opportunity of being heard. However, no report was received in the succeeding two months in spite of several telephonic reminders in this regard. Examination of file reveals that you had sent the refund proposal to Addl. CIT, Range-II on 28.05.04 by passing order u/s 154 without allowing opportunity to the assessee. These were sent back by Addl. CIT on 04.06.04 with the directions that orders u/s.184 may be passed after allowing opportunity of being heard. Finally, you resubmitled the proposal vide letter No.308 dated 29.06.04 but again orders u/s.154 were passed for AY.94-95 to 2002-03 without allowing opportunity. However, in accordance with the instructions earlier conveyed, credit for TDS of ₹ 68.98 lacs allowed in A Y.92-93 was withdrawn. However, the relevant year wise chart was again not submitted. As per the proposals resubmitted by you vide letters No.308 309 dated 29.06.04, you have sought approval as under.- (i) For issuing refund of ₹ 4,64, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the impugned order which is to be rectified u/s 154 contains no apparent mistake. 3.4. In the first para of the 154 order AO has referred only to the history; in second para, AO has relied on the order for A.Y. 1992-93 in which the Id. CIT(Appeals) quashed the interest u/s 220(2) which also has no relevant to A.Y. 1993-94. AO has arbitrarily held that the interest granted to assessee for A.Y. 1993-94 became infructuous, which is a distinct and separate issue. According to Id. counsel, both the years are distinct and separate taxable entities, quashing of interest u/s 220 for A.Y. 1992-93 has no relation with grant of interest u/s 244A for A.Y. 1993-94. Therefore, there exists no mistake for A.Y. 1993-94 which is sought to be relied on by AO. 3.5. Ld. counsel then relied on Hon'ble Supreme Court judgment in the case of Sandvik Asia Ltd. Vs. CIT others b(2006) 280 ITR 643 (SC), holding that assessee has a right to be compensated for wrongful detention of monies by the department. Further reliance is placed on Hon'ble Supreme Court judgment in the case of Mepco Industries Ltd. Vs. CIT Anr. (2009) 319 ITR 208 (SC), which in turn has relied on other Supreme Court judg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 and the provisions of this Act shall apply accordingly. 3.7. Thus, if by any order of the Court any amount of refund is increased or reduced, in that case the amount of interest allowable u/s 244A is to be accordingly increased or reduced. In this case the interest in question was awarded to assessee consequent to ITAT directions which is covered u/s 244A(3). The order dated 30-7-04 was passed consequent to ITAT judgment dated 17-9-02 and as per the effect of the order of the ITAT if the refund of the assessee became due, the interest is to be awarded to the assessee thereon. If any further 154 order is proposed to be passed, then it should be in conformity with ratio laid down by the Hon'ble Supreme Court judgments in the cases of Sandvik Asia Ltd. (supra) Mepco Industries Ltd. (supra). In the impugned order the AO has not whispered about any delay which is attributable to the assessee for delayed grant of refund and the order of the AO which was in conformity with sec. 244A(3) has been held to be a mistaken order without pointing any mistake. 3.8. Most importantly the amount of refund and interest thereon u/s 244A was allowed to assessee consequent to verificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing assessee's appeal should not have issued further directions to AO to consider the issue of 244A(2) afresh. Reference to reconsider 244A by CIT(A) itself makes the order of AO CIT(A) to decide afresh argumentative issues i.e. to consider the delay attributable to the assessee. For this purpose new facts are to be ascertained and the responsibility about delay is to be fixed, which cannot be done by way of rectification u/s 154. The Id. CIT(Appeals)'s action is wrong inasmuch as neither the issue arises out of the order of AO nor any enhancement notice was served on the assessee. 5.2. Besides, AO's rectification and CIT(A)'s direction is at variance with the approval of refund and interest accorded by Addl. CIT CIT, New Delhi after due verification of records and reports. 5.3. Hon'ble Supreme Court in the case of Mepco Industries Ltd. and other judgments (supra), has laid down that mistake rectifiable u/s 154 means one which is glaring and which is not dependent on long drawn process of reasoning and having two opinions. 6. We have heard rival contentions and gone through the relevant material available on record. One fact which is to be borne in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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