Pr. Commissioner Of Income Tax v. M/S Solan District Truck Operators Transport Co-Op.society

IN THE HIGH COURT OF HIMACHAL PRADESH,SHIMLA. ITA No. 3 of 2020Decided on: 27.08.2020 Pr. Commissioner of Income Tax Versus ...Petitioner M/s Solan District Truck Operators Transport Co-op.Society …Respondent __________________________________________________________ Coram: Hon’ble Mr. Justice Tarlok Singh Chauhan, Judge.Hon’ble Ms. Justice Jyotsna Rewal Dua, Judge. Whether approved for reporting? 1 For the Petitioner : Mr. Vinay Kuthiala, Sr. Advocate with Mr. Diwan Negi, Advocate. (Through Video Conferencing) Tarlok Singh Chauhan, Judge (Oral) This appeal is directed by the appellantagainst the order dated 7.08.2019, passed inMiscellenous Application No. 10/CHD/2019 in ITA No.277/CHD/2017, dated 31.10.2017-A.Y. 1996-97 by theIncome Tax Appellate Tribunal Division Bench,Chandigarh, (for short, ‘the ITAT’). 2.The case of the appellant is that the respondentSociety-assessee filed return of income for the assessmentyear 1996-97 on 25.6.1997, which was processed underSection 143 (1) of the Income Tax Act, (for short ‘the Act’).The further case of the appellant is that for the assessmentyears 1996-97 to 1999-2000, certain refunds arising out ofexcess TDS were issued in favour of the assessee.However, interest under Section 244-A of the Act was notpaid in respect of some of the refunds, while in the case ofsome other refunds, interest was paid for a shorter periodthan what was claimed by the assessee. It is averred in theappeal that the interest was refused on the ground that thedelay in issuing refund was attributable to the assessee.Against the order of the Assessing Officer refusing to grantinterest under Section 244-A of the Act, the assessee filedan appeal before the CIT(A) Solan. The CIT (A), Solandismissed the appeal on the ground that the question as towhether any part of the delay was attributable to theassessee is a question to be decided by the ChiefCommissioner or Commissioner of Income Tax underSection 244-A(2) of the Act. Then, the matter was referredto the Commissioner of Income Tax, Railway Board Building,the Mall, Shimla (hereinafter to be referred as ‘the CIT’). The CIT vide its order dated 24.10.2008, dismissed theappeal while exercising its powers under Section 244 of theAct and the Assessing Officer was directed to pay interestto the assessee from July 1997 to February 1999 on refundof RS. 2,85,658/-. Thereafter, the Assessing Officer issuedrefund of Rs. 1,82,165/- on 31.01.2009. It is further averredin the appeal that subsequently, the assessee filed anapplication under Section 154 of the Act on 15.02.2010,requesting therein to allow interest on delayed interest onthe refund. The Assessing Officer vide its order dated30.06.2011 (Annexure P-2) rejected the application of theassessee. 3.Being aggrieved by the aforesaid order of theAssessing Officer, the assessee filed an appeal before theCommissioner of Income Tax (Appeals), (hereinafter to bereferred as ‘the CIT(A)’, Faridabad, and the CIT (A) vide itsorder dated 05.10.2016 (Annexure P-3) dismissed theappeal of the assessee, while relying upon the judgment ofthe Hon’ble Supreme Court in case titled as Commissionerof Income Tax, Gujrat vs. Gujrat Fluoro Chemicals,reported in (2014) 1 SCC 126.It is further averred thatthe aforesaid order of CIT(A) was again challenged by theassessee before the ITAT, by way of ITA No. 277 to 279/CHD/2017. The appeal of the assessee was allowed bythe ITAT vide its order dated 31.10.2017 (Annexure P-4)directing the revenue to pay compensation in the shape ofsimple interest on the amount due at the rate at which theassessee otherwise would have been entitled to, on thedelayed payment of excess tax paid. 279/CHD/2017. The appeal of the assessee was allowed bythe ITAT vide its order dated 31.10.2017 (Annexure P-4)directing the revenue to pay compensation in the shape ofsimple interest on the amount due at the rate at which theassessee otherwise would have been entitled to, on thedelayed payment of excess tax paid. 4.Being aggrieved by the aforesaid order, Revenuechallenged the same by way of Miscellaneous Applicationbefore the ITAT, Chandigarh, which came to be dismissedby the ITAT vide its order dated 7.08.2019 (Annexure P-A)being misconceived and not maintainable and also on theground that there is no error apparent on the record.Hence, by way of this appeal, the appellant/Revenue hasapproached this Court against the aforesaid order dated7.08.2019, as aforesaid. 5.The following substantial questions of law arisefor consideration in this appeal:for consideration in this appeal: i.Whether the Hon’ble ITAT was right inlaw in directing the department to paycompensation in the shape of simpleinterest on the amount due at therate at which the assessee otherwisewould have been entitled to withoutappreciating the fact that assesseewas duly paid interest u/s 244A onlaw in directing the department to paycompensation in the shape of simpleinterest on the amount due at therate at which the assessee otherwisewould have been entitled to withoutappreciating the fact that assesseewas duly paid interest u/s 244A on delayed refund upto the date of issueof refund? ii. Whether the Hon’ble ITAT was right inlaw in ignoring the fact that there is noprovision under the Income Tax Act forpayment of compensation on delayedrefund and interest paid and henceagainst the Statute? Iii. Whether the circumstances of thecase the Hon’ble ITAT on Misc.Application filed by the Departmenterred in holding that the issue cannotbe decided u/s 254(2) of the Act andthe only remedy is to file appealbefore Hon’ble High Court? 6.Learned Senior Counsel for the appellantsubmits that there is no provision under Section 244-A ofthe Act in respect of payment of interest on delayedrefund. To substantiate his submission, he has placedreliance upon the judgment dated 18[th] September, 2013,passed by the Hon’ble Supreme Court in case titled asCommissioner of Income Tax, Gujarat vs. GujaratFluoro Chemicals, reported in (2014) 1 SCC 126,wherein it has been held that in a case of inordinate delayin the payment of compensation by way of interest, it isonly that interest provided for under the Statute which may be claimed by an assessee from the Revenue and noother interest on such statutory interest can be claimed.He further submits that the direction issued by the ITAT inthe impugned order is contrary to the ratio laid down bythe Hon’ble Supreme Court in the aforesaid judgment. Heprays that the impugned order passed by the ITAT may beset aside. 7.We have heard learned Counsel for theappellant and have carefully perused the material placedon record. 8. As far as the submission of the learned Senior Counsel for the appellant to the effect that there is noprovision under Section 244-A of the Act in respect ofpayment of interest on delayed refund is concerned, theHon’ble Supreme Court in judgment cited by the learnedCounsel for the respondent in case titled asCommissioner of income Tax Vs. HEG Ltd, supra, haselaborated the words ‘any amount’. It is apt to reproduceto reproduce the relevant portion of the aforesaid judgmentherein:- “The next question which we are required toanswer is-what is the meaning of the words“refund of any amount becomes due to theassessee” in Section 244A? In the present 7.We have heard learned Counsel for theappellant and have carefully perused the material placedon record. 8. As far as the submission of the learned Senior Counsel for the appellant to the effect that there is noprovision under Section 244-A of the Act in respect ofpayment of interest on delayed refund is concerned, theHon’ble Supreme Court in judgment cited by the learnedCounsel for the respondent in case titled asCommissioner of income Tax Vs. HEG Ltd, supra, haselaborated the words ‘any amount’. It is apt to reproduceto reproduce the relevant portion of the aforesaid judgmentherein:- “The next question which we are required toanswer is-what is the meaning of the words“refund of any amount becomes due to theassessee” in Section 244A? In the present case, as stated above, there are twocomponents of the tax paid by the assesseefor which the assessee was granted refund,namely TDS of Rs. 45,73,528 and tax paidafter original assessment of Rs. 1,71,00,320.The Department contends that the works“any amount” will not include the interestwhich accrued to the respondent for notrefunding Rs. 45,73,528 for 57 months. Wesee no merit in this argument. The interestcomponent will partake the character of the“amount due’ under Section 244A. Itbecomes an integral part of Rs. 45,73,528which is not paid for 57 months after thesaid amount became due and payable. Ascan be seen from the facts narrated above,this is the case of short payment by theDepartment and it is in this way that theassessee claims interest under Section 244Aof the Income-tax Act. Therefore, on boththe aforestated grounds, we are of the viewthat the assessee was entitled to interest for57 months on Rs. 45,73,528. The principalamount of Rs. 45,73,528 has been paid onDecember 31, 1997 but net of interestwhich, as stated above partook thecharacter of “amount due” under Section244 A.” 9. In view of the ratio laid down by the Hon’bleSupreme Court in the judgment supra, the interest on thedelayed refund becomes part of the principle amount andthe delayed interest includes the interest for not refundingthe principle amount. Accordingly, it also includes theinterest on the delayed refund. 10. We find that the Revenue Authorities have beendirected vide Notification dated 08.08.2019 to file appealsin income tax cases before the High Court where themonetary limit is less than Rs. 1.00 crore and where it isabove the said amount, that shall not be a subject matterof appeal before the High Court. But in the Notificationdated 11[th] July, 2018, there is an exception to the effectthat in certain circumstances, an appeal should becontested on merits notwithstanding the fact that the taxeffect entailed is less than Rs. 1.00 crore. It is apt toreproduce para-10 of the said Notification herein, whichreads as follows: “10 Adverse judgments relating to thefollowing issues should be contested onmerits notwithstanding that the tax effectentailed is less than the monetary limitsspecified in para 3 above or there is no taxeffect. following issues should be contested onmerits notwithstanding that the tax effectentailed is less than the monetary limitsspecified in para 3 above or there is no taxeffect. (a) Where the Constitutional validity of theprovisions of an Act or Rule is underchallenge, or provisions of an Act or Rule is underchallenge, or (b) Where Board’s order, Notification, Instruction or Circular has been held tobe illegal or ultra vires orbe illegal or ultra vires or (c) Where Revenue Audit objection in the case has been accepted by theDepartment, or”Department, or” 11. In light of the above, it can be said that though, (a) Where the Constitutional validity of theprovisions of an Act or Rule is underchallenge, or provisions of an Act or Rule is underchallenge, or (b) Where Board’s order, Notification, Instruction or Circular has been held tobe illegal or ultra vires orbe illegal or ultra vires or (c) Where Revenue Audit objection in the case has been accepted by theDepartment, or”Department, or” 11. In light of the above, it can be said that though, the monetary limit to prefer an appeal before High Court isless than Rs.1.00 crore, but if there is a valid question,where an Order, Notification, Instruction or Circular is to bechallenged as illegal or ultra vires, an appeal could be filedbefore the High Court. In the present case, no suchexception is available to the appellant.12.Similar question of law has already beendetermined by this Court while adjudicating ITA No.20/2019, titled as Pr. Commissioner of Income Tax vs. M/sAmbuja Darla Kashlog Mangoo Transport Co-operativeSociety, decided on 25.11.2019 and we have not beenpersuaded to take a different view. 13.In view of the aforesaid observations, we find no merit in the appeal. Hence, the same is dismissed. 14.It is made clear that observations made hereinabove shall not be treated as a precedent. However, libertyis reserved to the appellant to seek appropriate remedy.15.Pending application(s), if any, stands disposedof. (Tarlok Singh Chauhan) Judge August 27, 2020 (pankaj) (Jyotsna Rewal Dua) Judge