Income Tax Appellate Tribunal - Chandigarh
Punjab State Co-Op. Milk Producers ... vs Jt. Cit on 10 April, 2003
Equivalent citations: (2004)90TTJ(CHD)657
ORDER
Joginder Pall, A.M.:
By this order we shall dispose of this appeal of the assessee filed against the order of the Commissioner (Appeals), Chandigarh, for the assessment year 1992-93.
2. The only effective issue raised in this appeal is that Commissioner (Appeals) was not justified in withdrawing interest amounting to Rs. 44,645 under section 154 of the Income Tax Act. The facts of the case are that in the return of income filed, the assessee had claimed refund of Rs. 13,28,889. The assessing officer processed the return under section 143(l)(a) and allowed refund of Rs. 8,78,440. Credit for TDS of Rs. 8,05,910 was allowed. Thereafter, the assessee moved an application under section 154 stating therein that assessee had claimed a refund of Rs, 13,28,889, but the assessing officer had allowed refund of Rs. 8,05,910. Thus, the assessee claimed refund of the remaining amount along with interest under section 244(lA). The assessing officer allowed the refund of Rs. 6,64,750 including interest of Rs. 2,40,694 under section 244(1A) vide his order dated 30-8-1994. Subsequently, the assessing officer noticed that credit for TDS Certificates of Rs. 3,09,377 and Rs. 31,728 aggregating to Rs. 3,41,105 had been allowed on incomplete TDS certificates. This defect was pointed out to the assessee who corrected the certificates on 1-10-1993. Similarly, two other TDS Certificates aggregating to Rs. 26,393 were also found to be defective and such defect was rectified on 2-7-1993. Therefore, the assessing officer observed that interest under section 244(1A) had been wrongly allowed for the period when the delay in filing the correct TDS certificates was attributable to the assessee. The assessing officer, therefore, issued a show-cause notice under section 154 proposing to withdraw the interest aggregating to Rs. 44,645 allowed under section 244(lA). In reply, the assessee submitted that the proposed rectification was not called for. However, the assessing officer passed order under section 154 and withdrew interest of Rs. 44,645.
3. Aggrieved, the assessee impugned the action of the assessing officer in appeal before the Commissioner (Appeals). Learned Commissioner (Appeals) observed that delay in furnishing the proper TDS certificates was attributable to the assessee, Therefore, till the date proper TDS certificates were filed, the assessee was not entitled to grant of interest. Accordingly, learned Commissioner (Appeals) upheld the order of the assessing officer by recording the following finding in para 4 of her appellate order :
"4. The submissions made by the appellant have been considered and the same are found to be without merit. Admittedly, the two TDS certificates of Rs. 3,09,377 and Rs. 31,728 aggregating to Rs. 3,41,105 were incomplete, but inadvertently credit of same was allowed vide order under section 154 of the Act dated 30-8-1994, and interest under section 244(lA) was also allowed. The appellant filed the corrected certificates on l-10-1993. Similarly, vide order under section 154, dated 28-8-1995, by mistake, credit of two improper certificates amounting to Rs. 26,393 was allowed and the corrected certificates were filed on 2-7-1995. Therefore, the appellant was squarely responsible for filing incomplete and defective TDS certificates due to which refunds could not be issued in time. It is, therefore, held that delay in issue of refunds of Rs. 3,41,105 and Rs. 26,393 was attributable to the appellant and accordingly the action of the assessing officer in allowing interest under sections 244(1A) and 244A amounting to Rs. 37,520 and Rs. 7,125 for the period prior to 1-10-1993 and 2-7-1995, respectively, vide orders under section 154, dated 30-8-1994 and 28-8-1995, respectively, were apparently wrong. In this regard, attention is drawn to the provisions of sub-section (2) of section 244A of the Income Tax Act which States that if the proceedings resulting in the refund are delayed for reasons attributable to the assessee, whether wholly or in part, the period of the delay so attributable to him shall be excluded from the period for which interest is payable. The second objection of the appellant that the order passed on 15-3-1999, was barred by time, is also not tenable. In this regard, attention is drawn to sub-section (7) of section 154 of the Income Tax Act which states as under :
"Save as otherwise provided in section 155 or sub-section (4) of section 186, no amendment under this section shall be made after the expiry of four years from the end of the financial year in which the order sought to be amended was passed."
Since the orders under section 154 passed on 30-8-1994 and 28-8-1995 vide which credit of improper TDS certificates had been allowed, were amended vide the impugned order under section 154, dated 15th March,. 1999, it is held that the action of the assessing officer is with ' time as the same has been passed within four years from the end of the respective financial years in which the orders sought to be amended were passed. Thus, the action of the assessing officer in withdrawing the excess interest granted under sections 244(1A) and 244A vide the impugned order under section 154, dated 15-3-1999, is held to be justified and the same is confirmed. Accordingly, the appeal is dismissed."
Assessee is aggrieved by the order of the Commissioner (Appeals) and hence this appeal before us.
4. The learned counsel for the assessee, Shri M.L. Sharma, submitted that tax was deducted at source and paid to the government account in the financial year relevant to assessment year under reference. The assessee was entitled to interest under section 244A from 1-4-1992, till the grant of refund. The mere fact that the party responsible for deduction of tax at source had issued defective certificates does not mean that the assessee could be penalised for this lapse. He also drew our attention to provisions of section 244A(2), which provides that the assessing officer can exclude the period of delay attributable to the assessee for the purpose of granting refund. But he has to refer the case to the Commissioner/Chief Commissioner whose decision in this regard is final. He further submitted that the issue, whether interest should be paid from the Ist April of the assessment year till date of refund or interest should be allowed from the period when proper certificates were filed was debatable and, therefore, the same fell outside the scope of provisions of section 154 of the Income Tax Act. He relied on the judgment of Allahabad High Court in the case of CIT v. Modi Lndustries (1999) 157 CTR (All) 427: (1999) 235 ITR 464 (All),
5. The learned Departmental Representative, Shri Rajiv Harit, on the other hand, heavily relied on the orders of authorities below. He submitted that as per provisions of section 244A(2) of the Income Tax Act, the assessee is not entitled to interest for the period of delay attributable to the assessee. He submitted that it is not disputed that assessee had filed four TDS certificates aggregating to Rs. 3,41,105 and Rs. 26,393 in the proper format. These defects were rectified only on 1-10-1993 and 2-7-1995. Therefore, interest relatable to such period was not admissible to the assessee because the delay in filing the certificate in proper format was attributable to the assessee. He further submitted that the judgment of Allahabad High Court in the case of CIT v. Modi Industries (supra), relied upon by the assessee, was distinguishable as the same related to grant of interest under section 214 and not under section 244A of the Income Tax Act.
6. We have heard both the parties and carefully considered the rival submissions. From the facts discussed above, it is obvious that interest under section 244A was allowed by the assessing officer on assessee's application filed under section 164. Subsequently, interest was withdrawn for the reason that four of the TDS certificates filed by the assessee were defective and the delay in filing the correct certificates was attributable to the assessee. No doubt, sub-section (2) of section 244A empowers the assessing officer to deny interest where the delay is attributable to the assessee. However, in a case where dispute arises for the period to be excluded, it shall be decided by the Commissioner/Chief Commissioner whose decision thereon shall be final. Now, in response to notice under section 154, the assessee had contended that interest was correctly allowed to the assessee for the reason that tax had been deducted and paid to the government account in the financial year relevant to assessment year under reference. In case the assessing officer intended to attribute the delay to the assessee, he should have referred the matter to Commissioner/Chief Commissioner without which he could not have withdrawn the interest. Therefore, it was mandatory on his part to refer the matter to the Commissioner/Chief Commissioner. Reliance in this regard is placed on the decision dated 16-9-2002, of Tribunal, Chandigarh Bench, in the case of Asstt CIT v Alfa Drugs (India) Ltd. in ITA Nos. 2539 & 2540 of 1996 for the assessment years 1990-91 and 1993-94, where the Tribunal has held as under :
"9 Even otherwise, the provisions of section 244A(2) reveal that in case the assessing officer disputes the limitation for the claim of refund and is of the opinion that the delayed period was attributable to the assessee and is liable to be excluded from the period for which interest is to be granted, it is incumbent upon the assessing officer to refer the matter for the decision by the Chief Commissioner or the Commissioner, as the case may be, and the assessing officer himself has no jurisdiction to exclude the alleged delayed period.
10. So far as the case of the assessee before us is concerned, it is revealed from the orders of the assessing officer that he had not referred the issue to the Chief Commissioner or the Commissioner. Rather, he has decided himself which, in our opinion, was without jurisdiction and his orders cannot be upheld.
11. In view of above discussion and the totality of the facts and circumstances of the case, we do not find any reason to interfere with the orders of the Commissioner (Appeals) which are confirmed."
Thus, it has been held that assessing officer had no jurisdiction to exclude the alleged period of delay attributable to the assessee without referring the matter to Commissioner/Chief Commissioner. In the present case, the assessing officer has not made any reference to the Commissioner/Chief Commisioner. Therefore, respectfully following the aforesaid order of the Tribunal, the order of the Commissioner (Appeals) requires to be set aside on this ground itself.
6.1 Even otherwise, it is not in dispute that tax in fact was deducted at source and paid the same to"the Government account during the financial year itself. As per the provisions of the Act, interest is payable from the 1st day of April of the assessment year till the date of order granting refund. The mere fact that the authority responsible for deducting the tax at source made mistake in issuing the TDS certificate does not mean that TDS has not been collected and deposited in the government account. The interest is compensatory in nature. Reliance in this regard is placed on the judgment of Hon'ble Supreme Court in the case of Central Provinces Manganese Ore Co. Ltd. v. CIT (1986) 58 CTR (SC) 112 : (1986) 160 ITR 961 (SC). Since the tax has been deducted and paid to the Government account, one possible view is that assessee shall be entitled to grant of interest from the 1st day of the assessment year under reference till the refund was granted to the assessee. In any case, whether interest should be paid from the 1st day of assessment year till the date of order for granting the refund or the same should be paid by excluding the period of delay attributable to the assesspe is a debatable issue, where two views are possible. Therefore, it does not constitute a mistake of law or fact apparent from record. Reliance in this regard is placed on the judgment of Hon'ble Supreme Court in the case of T.S. Balram, Income Tax Officer v. Volkart Bros. (1971) 82 ITR 50 (SC), where the Hon'ble Supreme Court has held that a mistake apparent on record must be 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. A decision on a debatable point of law is not a mistake apparent from the record, Thus, the action of the assessing officer in withdrawing the interest is not in conformity with the provisions of the Act. Having regard to these facts and circumstances of the case and the legal position discussed above, we are of the considered opinion that the Commissioner (Appeals) was not justified in sustaining the action of the assessing officer in withdrawing the interest.
We set aside the order of the Commissioner (Appeals) and quash the order of the assessing officer in withdrawing the interest. Accordingly, all the grounds of appeal are allowed.
7. In the result, appeal of the assessee is allowed.