Kavita Crimping and Processing Vs. Income-tax Officer - Court Judgment

Excerpt:
1. these three second appeals are directed against the common order dated 5-10-1984 passed by the commissioner (appeals), new delhi, in relation to three orders all dated 16-2-1984 passed by the ito under section 154 of the income-tax act, 1961 ('the act') rejected the assessee's request to grant interest under section 243 of the act in respect of belated payment of refund in respect of the assessment years 1978-79, 1979-80 and 1980-81. after the assessments were completed at loss figure for the first year, nil income for the second year (because of carry forward of losses) and again loss for the third year in respect of the business of taxturing/crimping and sale of art silk yarn vide assessment orders dated 5-8-1981, 18-3-1982 and 22-3-1983, respectively, the assessee vide its three applications all dated 28-5-1983 filed under section 154 pointed out that credit for tax deducted at source amounting to rs. 5,423, rs. 34,419 and rs. 37,742 had not been given, which may done and refund issued. getting no respond, on 6-2-1984 the assessee addressed a common application captioned under sections 154 and 243 requesting for refund along with interest.2. the ito passed identical orders on 16-2-1984 in which the assessee's plea of not giving credit for tds was accepted and refunds were ordered to be issued. about interest under section 243, the ito disposed of the contention by simply saying that it was not allowable.3. the commissioner (appeals) dismissed the appeals in limine as not maintainable by observing that against orders refusing to pay interest there could be no appeal. he, however, also held in paragraph 3 that the issue involved was controversial and there was no question of section 154 being applicable in such cases.4. for the appellant shri p.n. monga, advocate appeared and we were assisted by mrs. archana ranjan, senior departmental representative for the revenue.5. before proceedings further we like to bring in focus section 243 as also the provision of section 246(1)(/) of the act, which are relevant for purpose of adjudicating the present appeals : (a) in any case where the total income of the assessee does not consist solely of income from interest on securities or dividends, within three months from the end of the month in which the total income is determined under this act, and (b) in any other case, within three months from the end of the month in which the claim for refund is made under this chapter, the central government shall pay the assessee simple interest at twelve per cent per annum on the amount directed to be refunded from the date immediately following the expiry of the period of three months aforesaid to the date of the order granting the refund. explanation : if the delay in granting the refund within the period of three months aforesaid is attributable to the assessee, whether wholly or , in part, the period of the delay attributable to him shall be excluded from the period for which interest is payable. (2) where any question arises as to the period to be excluded for the purposes of calculation of interest under the provisions of this section, such question shall be determined by the commissioner whose decision shall be final.246(1) subject to the provisions of sub-section (2), any assessee aggrieved by any of the following orders of an income-tax officer may appeal to the appellate assistant commissioner against such order- (f) an order under section 154 or section 155 having the effect of enhancing the assessment or reducing a refund or an order refusing to allow the claim made by the assessee under either of the said sections ; 6. there can be no dispute in the present case that interest was payable under section 243, there being categorical acceptance by the assessing officer that mistake of not giving credit for tax deducted at source was in : the assessments and that original tds certificates were on record. there also cannot be any controversy that an order under section 154 refusing to allow refund claim, or for that reason any claim is appealable, as provided under clause (/) of section 246(1).further, it is an accepted position that the ito passed orders accepting that there were mistakes apparent from record but the assessee's request for interest under section 243 came to be rejected without any reason being given.7. the question, therefore, which arises in the present appeals is as to whether the asssssee rightly acted under section 154 or there could be any controversy in that regard. to us, a plain reading of clause (f) is enough to hold that the assessee could ask for rectification for refund and related interest under section 154 and that is what precisely happened in the present case.8. if we are to accept the commissioner (appeals) approach and the view taken by the ito under section 154, we must also presume that notwithstanding the provision of sections 243 and 246(1)(/) the legislature intended that rectification request would result to the detriment of the taxpayer in the sense that he should be deprived of right of appeal by resorting to rectification proceeding if a particular order is not made in the original assessment, a presumption which we are not prepared to make. in the first place while framing assessments the ito did not give credit for tds and when the mistake was pointed out, he did not even think it fit to analyse as to how the request for interest on refund was untenable and not correct. the learned commissioner (appeals) was not correct in equating a taxpayer's agitation against charging of interest under sections 139(8) and 217 of the act with his right to claim refund, from which right the claim of interest flows under section 243 in view of specific provisions of section 246 and clause (/) noted above.9. therefore, reversing the commissioner (appeals) order and holding that the ito wrongly declined the assessee's claim we direct that necessary interest under section 243 be computed and allowed to the appellant. the statistical working we leave it to the ito.10. since permission to withdraw ground no. 1 in each of the three appeals was granted to the assessee's advocate the said grounds accordingly stand dismissed.

Judgment:
1. These three second appeals are directed against the common order dated 5-10-1984 passed by the Commissioner (Appeals), New Delhi, in relation to three orders all dated 16-2-1984 passed by the ITO under Section 154 of the Income-tax Act, 1961 ('the Act') rejected the assessee's request to grant interest under Section 243 of the Act in respect of belated payment of refund in respect of the assessment years 1978-79, 1979-80 and 1980-81. After the assessments were completed at loss figure for the first year, nil income for the second year (because of carry forward of losses) and again loss for the third year in respect of the business of taxturing/crimping and sale of art silk yarn vide assessment orders dated 5-8-1981, 18-3-1982 and 22-3-1983, respectively, the assessee vide its three applications all dated 28-5-1983 filed under Section 154 pointed out that credit for tax deducted at source amounting to Rs. 5,423, Rs. 34,419 and Rs. 37,742 had not been given, which may done and refund issued. Getting no respond, on 6-2-1984 the assessee addressed a common application captioned under Sections 154 and 243 requesting for refund along with interest.

2. The ITO passed identical orders on 16-2-1984 in which the assessee's plea of not giving credit for TDS was accepted and refunds were ordered to be issued. About interest under Section 243, the ITO disposed of the contention by simply saying that it was not allowable.

3. The Commissioner (Appeals) dismissed the appeals in limine as not maintainable by observing that against orders refusing to pay interest there could be no appeal. He, however, also held in paragraph 3 that the issue involved was controversial and there was no question of Section 154 being applicable in such cases.

4. For the appellant Shri P.N. Monga, advocate appeared and we were assisted by Mrs. Archana Ranjan, senior departmental representative for the revenue.

5. Before proceedings further we like to bring in focus Section 243 as also the provision of Section 246(1)(/) of the Act, which are relevant for purpose of adjudicating the present appeals : (a) in any case where the total income of the assessee does not consist solely of income from interest on securities or dividends, within three months from the end of the month in which the total income is determined under this Act, and (b) in any other case, within three months from the end of the month in which the claim for refund is made under this Chapter, the Central Government shall pay the assessee simple interest at twelve per cent per annum on the amount directed to be refunded from the date immediately following the expiry of the period of three months aforesaid to the date of the order granting the refund.

Explanation : If the delay in granting the refund within the period of three months aforesaid is attributable to the assessee, whether wholly or , in part, the period of the delay attributable to him shall be excluded from the period for which interest is payable.

(2) Where any question arises as to the period to be excluded for the purposes of calculation of interest under the provisions of this section, such question shall be determined by the Commissioner whose decision shall be final.

246(1) Subject to the provisions of Sub-section (2), any assessee aggrieved by any of the following orders of an Income-tax Officer may appeal to the Appellate Assistant Commissioner against such order- (f) an order under Section 154 or Section 155 having the effect of enhancing the assessment or reducing a refund or an order refusing to allow the claim made by the assessee under either of the said sections ; 6. There can be no dispute in the present case that interest was payable under Section 243, there being categorical acceptance by the assessing officer that mistake of not giving credit for tax deducted at source was in : the assessments and that original TDS certificates were on record. There also cannot be any controversy that an order under Section 154 refusing to allow refund claim, or for that reason any claim is appealable, as provided under Clause (/) of Section 246(1).

Further, it is an accepted position that the ITO passed orders accepting that there were mistakes apparent from record but the assessee's request for interest under Section 243 came to be rejected without any reason being given.

7. The question, therefore, which arises in the present appeals is as to whether the asssssee rightly acted under Section 154 or there could be any controversy in that regard. To us, a plain reading of Clause (f) is enough to hold that the assessee could ask for rectification for refund and related interest under Section 154 and that is what precisely happened in the present case.

8. If we are to accept the Commissioner (Appeals) approach and the view taken by the ITO under Section 154, we must also presume that notwithstanding the provision of Sections 243 and 246(1)(/) the Legislature intended that rectification request would result to the detriment of the taxpayer in the sense that he should be deprived of right of appeal by resorting to rectification proceeding if a particular order is not made in the original assessment, a presumption which we are not prepared to make. In the first place while framing assessments the ITO did not give credit for TDS and when the mistake was pointed out, he did not even think it fit to analyse as to how the request for interest on refund was untenable and not correct. The learned Commissioner (Appeals) was not correct in equating a taxpayer's agitation against charging of interest under Sections 139(8) and 217 of the Act with his right to claim refund, from which right the claim of interest flows under Section 243 in view of specific provisions of Section 246 and Clause (/) noted above.

9. Therefore, reversing the Commissioner (Appeals) order and holding that the ITO wrongly declined the assessee's claim we direct that necessary interest under Section 243 be computed and allowed to the appellant. The statistical working we leave it to the ITO.10. Since permission to withdraw ground No. 1 in each of the three appeals was granted to the assessee's advocate the said grounds accordingly stand dismissed.