Income Tax Appellate Tribunal - Amritsar
Ravinder Singhania Prop., Phagwara vs Assessee on 1 August, 2013
ITA No.257(Asr)/2010
IN THE INCOME TAX APPELLATE TRIBUNAL
AMRITSAR BENCH; AMRITSAR.
BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER
AND SH. B.P.JAIN, ACCOUNTANT MEMBER
I.T.A. No.257(Asr)/2010
Assessment year:1997-98
PAN :AGUPR4068H
Sh.Ravinder Singhania, vs. Dy. Commr. of Income Tax,
Prop. M/s. Singhania & Co. Phagwara Circle,
Phagwara. Phagwara.
(Appellant) (Respondent)
Appellant by:Sh.Sandeep Vijh,CA
Respondent by:Sh.Mahavir Singh, DR
Date of hearing:01/08/2013
Date of pronouncement:19/08/2013
ORDER
PER BENCH ;
This appeal of the assessee arises from the order of the CIT(A), Jalandhar dated 22.03.2010 for the assessment year 1997-98. The assessee has raised following grounds of appeal:
"1. That on the facts and in the circumstances of the case the ld.
CIT(A) has erred in accepting the petition of the A.O. and directing the A.O. to charge interest u/s 234A and 234B through order u/s 250(6) by holding that para No.32 of the Appellate order dated 23/2/2001 stood modified which amounts to revision of his earlier order.2 ITA No.257(Asr)/2010
1.(a) The submissions made have not been appreciated and in any case, in levy of interest u/s 234B in view of the facts of this case and the legal position is not justified."
2. The brief facts in the present case are that assessment was framed originally through an order u/s 143(3) dated 14.2.2000. The order was agitated in appeal before the CIT(A) and the issue of levy of interest u/s 234A, 234B and 234C on the returned or the assessed income was also involved. The Ld. CIT(A) through his order dated 23.2.2001 held in para no. 3.1 and 3.2 that the part of the ground relating to levy of interest u/s 234C was infructuous but as far as levy of interest u/s 234A and 234B was concerned, it was held that the interest was to be levied on the returned income in view of the decision of the Supreme Court in the case of CIT vs. Ranchi Club Ltd. reported at 247 ITR 209. Against the order of the CIT(A), the revenue filed an appeal with the ITAT . Before the appeal was heard by the ITAT an order u/s 154 dated 6.12.2011 was passed by the CIT(A) in view of the application filed by the A.O. wherein it was held that in view of the retrospective amendment made by the Finance Act, 2001, w.e.f. 1.4.1989, interest u/s 234A and 234B was to be levied on the assessed income. An appeal against this order was filed before the ITAT by the assessee. The appeal was disposed off together through order of ITAT dated 25.8.2006 wherein the appeal against the ex-parte order u/s 154 was set 3 ITA No.257(Asr)/2010 aside to the file of the CIT(A) and it is this order of CIT(A) which is under appeal.
3. The Ld. counsel for the assessee, Sh. Sandeep Vijh, CA relied upon the decisions of various courts of law on the present controversy involved:
i) Shriram Chits (Bangalore) Ltd. vs. JCTI 325 ITR 219 (Kar.)
ii) CIT vs. Sudhir S.Mehta 265 ITR 548 (Bom.)
iii) ACIT vs. M/s. GTL: M.A. 746/Mum/2009
iv) CIT vs. Gian Talkies : 31 CTR 93 (P&H)
v) Emami Ltd. Vs. CIT 337 ITR 470 (Cal)
vi) DCIT (OSD) Ahmedabad vs. Bosch Rexroth (India ) Ltd. MA No.84/Ahd/2010 dated 09.09.2011.
vii) Star India (P) Ltd. vs. Commissioner of Central Excise 280 ITR 321 (SC)
viii) R.Kuppayee And Another vs. Raja Gounder 265 ITR 551 (SC) 3.1. He further placed on record written submissions containing 11 pages and relied upon the same and the decisions of various courts of law mentioned hereinabove where the issue is squarely covered and stated that any retrospective amendment cannot be a reason for the rectification in the order of the A.O.
4. The Ld. DR, on the other hand, relied upon the orders of both the authorities below.4 ITA No.257(Asr)/2010
5. We have heard the rival contentions and perused the facts of the case.
The present controversy before us is whether rectification can be carried out to an order which was based on the decision of the Hon'ble Supreme Court and the order was passed where the law has been amended subsequent to the date of the order even though the amendment was retrospective. The Ld. counsel for the assessee relied upon the decision of various courts of law in the case of Shriram Chits (Bangalaore) Ltd. vs. JCIT reported in 325 ITR
219. The Hon'ble Supreme Court in the case of Star India (P) Ltd. vs. Commissioner of Central Excise (2006) 280 ITR 321 has held that it is well established that while it is permissible for the Legislature to retrospectively legislate, such retrospectivity is normally not to create an offence retrospectively. The service of "broadcasting" was made a taxable service with effect from July 16, 2001 by the Finance Act,2001 It was only after an amendment and a validating section were introduced by the Finance Act, 2002, that agents who did not broadcast by themselves but merely sold time slots for advertisement and obtained sponsors for serials, programmes or live events, etc; on telecast channels were liable to pay service tax as "broadcasting agency or organization" w.e.f. July 16, 2001. It is clear from the language of the validation section that liability was extended to such agents not by way clarification but by way of amendment to the Finance 5 ITA No.257(Asr)/2010 Act, 2001, with retrospective effect. They are liable to pay interest on service tax if they did not make payment of the tax within 30 days from May 11, 2002, the date of the Presidential assent to the Finance Bill, 2002. This is also clear from the Explanation to the validation section which says that no act or acts on the part of any person shall be punishable as an offence which would not have been so punishable if the section had not come into force. If they did not make payment of the tax within 30 days from May 11, 2002, they would be liable to pay interest at the rate specified only after that date. The liability to pay interest would only arise on default and is really in the nature of a quasi-punishment. Such liability although created retrospectively could not entail the punishment of payment of interest with retrospective effect.
5.1. The said decision of Hon'ble Supreme Court in the case of Star India P. Ltd. Vs. Commissioner of Central Excise (SC) was followed by Hon'ble Calcutta High Court in the case of Emami Ltd. vs. Commissioner of Income Tax (2011) 337 ITR 470 (Cal), where the facts of the case are that for the assessment year 2001-02, the assessee was not liable to tax under section 115JB. By the Finance Act, 2002, section 115JB was amended with retrospective effect from April 1, 2001. In view of the amendment, the assessee was not in a position to deduct the sum of Rs.26.51 crores 6 ITA No.257(Asr)/2010 withdrawn from the revaluation reserves. Thus, the assessee recomputed the book profit u/s 115JB for the A.Y. 2001-02 on the basis that the sum of Rs.26.51 crores credited to the profit and loss account was not deductible. On such basis, the assessee worked out the amount of tax payable at R.1,55,62,511 and paid the tax. The A.O. computed the tax liability under section 115JB with interest u/s 234B and 234C since the assessee did not pay any advance tax with reference to the liability for tax under the amended section 115JB. The Tribunal upheld the order. On appeal:
"Held, that the last date of the relevant financial year was March 31, 2001, and on that day, admittedly, the assessee had no liability to pay any amount of advance tax in accordance with the law then prevailing. The amended provisions of section 115JB having come into force w.e.f. April, 2001, the assessee could not be held a defaulter with respect to the payment of advance tax. On the last date of the financial year preceding the relevant assessment year, as the book profits of the assessee in accordance with the then provision of law were nil, there was no advance tax payable within the last day of the financial year preceding the relevant assessment year as provided in sections 207 and 208 or within the dates indicated in section 211. Interest could not be levied under section 234B and 234C."
5.2 The Hon'ble Bombay High Court in the case of CIT vs. Sudhir S. Mehra, reported in 265 ITR 548, where the facts of the case are that :
"On November 7, 1990, notice u/s 148(1) of the Income tax Act, 1961, as it stood at the material time, was given by the Assessing Officer, calling upon the assessee to file a return of his income within thirty days. Hence, before the Tribunal, an additional ground of appeal was raised by the assessee to the effect that initiation of reassessment proceedings was bad in law and void as the notice dated 7 ITA No.257(Asr)/2010 November 7, 1980, was contrary to section 148(1, as it stood at the relevant time. This argument was accepted by the Tribunal on June 26, 1996. However, the law was amended by the Finance (No.2) Act,1996, retrospectively w.e.f. April 1, 1989 by which the expression "not being less than thirty days" in section 148(1) stood deleted. This amending Act was assented to by the President on September 28, 1996. Pursuant to the said amendment, the Department moved a miscellaneous application before the Tribunal u/s 254(2) of the Income-tax Act for rectification of the order passed by the Tribunal on June 26,1996, on the ground that with the change in law retrospectively from April 1, 1989 the judgment dated June 26, 1996, needed rectification. The applications were dismissed by the Tribunal on the ground that there was no apparent error on record as the amending Act received the assent of the President on September 28, 1996, i.e. after three months from June 26, 1996, when the appeals were disposed of by the Tribunal. On further appeal to the High Court:
Held, dismissing the appeal, that the amending Act operates w.e.f. April 1, 1989. However, the amending Act got the Presidential assent only on September 28, 1996, by which time the entire gamut of reassessment proceedings, in the case, got concluded before the Tribunal when it allowed the appeal of the assessee striking down initiation of reassessment proceedings under then existing law. That decision of the Tribunal was delivered on June 26, 1996, i.e. three months prior to the amending law receiving Presidential asset. There was no mistake apparent from the record in the order of the Tribunal dated June 26, 1996."
5.3. The Hon'ble Supreme Court in the case of Shriram Chits (Bangalore ) Ltd. vs. JCIT reported in (2010) 325 ITR 219 (Karn.), where the facts of the case are that :
"The assessee filed its return for the assessment year 1998-99. The return was processed u/s 143(1) of the Income-tax Act, 1961 and refund of Rs.19,52,528 (including interest of Rs.1,61,168) was ordered and the amount was adjusted towards the arrears of tax payable by the assessee for the earlier assessment years. A notice u/s 8 ITA No.257(Asr)/2010 143(2) was issued. After hearing, an order was passed directing the assessee to pay the balance of Rs.74,56,355. This order was passed on January 29,2001. Subsequently, a notice u/s 154 was issued to the assessee on the ground that interest payable u/s 234B had not been levied while passing the order of assessment. The order of rectification was required to be passed by him in view of the subsequent retrospective amendment or section 234B of the Finance Act, 2001. This order was upheld by the Commissioner (Appeals) and the Tribunal. On appeal to the High Court:
"Held, allowing the appeal, that in view of the judgment of the Supreme Court in CIT v. Max India Ltd. [2007] 295 ITR 282, it was not possible for the A.O. to reopen the case since the A.O. had rightly passed the order relying upon the judgment of CIT vs. Ranchi Club Ltd. {2001} 247 ITR 209 while passing the order of assessment. Just because there was a subsequent amendment, the Assessing Officer could not reopen the file. The order of rectification was not valid."
5.4. In the facts and circumstances of the present case, the issue is identical where the A.O. has made the rectification in view of the retrospective amendment made by the Finance (No.2) Act, 1996, retrospectively w.e.f. April 1, 1989 where the interest under section 234B of the Act was to be levied on the assessed income. Therefore, in view of the decision relied upon hereinabove, there was no mistake apparent from record in the order of the A.O. Therefore, any retrospective legislation in our view will not create any liability respectively since on the last date of the financial year preceding relevant assessment there was no advance tax payable within the last day of the financial year and therefore, under the present facts and circumstances, the order of the ld. CIT(A) is bad in law and no interest u/s 9 ITA No.257(Asr)/2010 234A & 234B of the Act can be levied as per findings hereinabove. Accordingly, grounds of appeal of the assessee are allowed.
6. In the result, the appeal filed by the assessee in ITA No.257(Asr)/2010 is allowed.
Order pronounced in the open court on 19th August, 2013.
Sd/- Sd/-
(H.S. SIDHU) (B.P. JAIN)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 19th August, 2013
/SKR/
Copy of the order forwarded to:
1. The Assessee:Sh. Ravinder Kumar Singhania, , Phagwara.
2. The DCIT, Phagwara Circle, Phagwara.
3. The CIT(A), JLR.
4. The CIT, JLR.
5. The SR DR, ITAT, Amritsar.
True copy By order (Assistant Registrar) Income Tax Appellate Tribunal, Amritsar Bench: Amritsar.