The Commissioner Of Income-Tax, Jalandhar-I, Jalandhar v. M/S Pioneer Sports Works (P) Ltd., Jalandhar

Income-tax Appeal No.88 of 2003 *** IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH Income-tax Appeal No.88 of 2003Date of decision: 21.3.2011. The Commissioner of Income-tax, Jalandhar-I, Jalandhar ...Appellant Versus M/s Pioneer Sports Works (P) Ltd., Jalandhar...Respondent CORAM: HON'BLE MR.JUSTICE ADARSH KUMAR GOEL HON'BLE MR.JUSTICE AJAY KUMAR MITTAL Present: Mr. Vivek Sethi, Senior Standing Counsel for theappellant. Mr. Rohit Sood, Advocate for the respondent. **** ADARSH KUMAR GOEL, J (Oral). 1.This appeal has been preferred by the revenue underSection 260A of the Income Tax Act, 1961 against order dated30.12.2002 passed by the Income Tax Appellate Tribunal, AmritsarBench, Amritsar in ITA No.584(ASR)1996, for the assessment year1981-82, claiming following substantial question of law:- “i).Whether, on the circumstances of the case, the ld. ITAT is right in law in concurring with the orderpassed by the Ld. CIT(A) by placing reliance on thecase of Deep Chand Jain Vs. ITO (1984) 145 ITR676, when the assessment order annulled by theLd. ITAT was revived by the Hon'ble Punjab andHaryana High Court vide their judgment dated *** 1.10.1997 passed in ITR No.121 of 1996 in theassessee's case? ii)Whether, on the circumstances of the case, the ld.ITAT was right in law in allowing interest u/s214/244(1A) of the Income-Tax Act, 1961, when asa result of revival of assessment order annulled bythe ld. ITAT, the assessee was not entitled for anyrefund?” 3.The assessee filed its return declaring loss but theAssessing Officer made additions and made assessment on netincome of the assessee under Section 143/144B. The assessmentwas upheld by the CIT(A) except for setting aside part of theaddition. The Tribunal initially held that the assessment was barredby limitation but this Court on reference, reversed the said view andheld the assessment to be valid. Accordingly, the assessment wasrestored and the amount refunded in pursuance of order of theTribunal was sought to be recovered with interest under Section 214read with section 244(1A) while giving appeal effect to the orderpassed by this Court. In the said proceedings, the Tribunal upheldthe objection of the assessee and held the recovery to the illegal.The finding recorded is as under:- “It is also true that the A.O. in compliance to theorder of the I.T.A.T. dated 28.10.1994 (supra)refunded the tax paid by the assessee but deniedthe interest on the aforesaid refund. The Hon'blejurisdictional High Court in the case of Deep Chand *** Jain Vs. I.T.O.(supra), held that the advance-taxcollected from the petitioner had to be related to afinal assessment order and since no finalassessment order could be passed, the samehaving become barred by limitation, the collectionof the advance-tax itself become illegal and so alsoits detention. It has been further held that the taxdeposited by the petitioner was in the nature ofadvance-tax and, therefore, it would bear simpleinterest under section 214 of the Act which as thenprescribed was 12 percent per annum till the date ofrefund. In our view, the ratio laid down by theHon'ble jurisdictional High Court in the case of DeepChand Jain (supra) is squarely applicable to thefacts of the present case. In that view of the matter,we do not see any infirmity in the order of thelearned CIT(A).” 4.We have heard learned counsel for the parties. 5.Learned counsel for the revenue submits that judgment of this Court in Deep Chand Jain Vs. I.T.O. (1984)145 ITR 676 wasdistinguishable as therein demand was set aside on the ground thatno assessment had been made. In the present case the assessmentwas upheld by this Court. Ignoring order of this Court, it has beenheld that the assessment was barred by limitation. Thus, theTribunal erred in holding the recovery to be illegal. 4.We have heard learned counsel for the parties. 5.Learned counsel for the revenue submits that judgment of this Court in Deep Chand Jain Vs. I.T.O. (1984)145 ITR 676 wasdistinguishable as therein demand was set aside on the ground thatno assessment had been made. In the present case the assessmentwas upheld by this Court. Ignoring order of this Court, it has beenheld that the assessment was barred by limitation. Thus, theTribunal erred in holding the recovery to be illegal. 6.Learned counsel for the assessee has not been able to support the impugned finding and the applicability of the judgment ofthis Court in Deep Chand Jain to the present case.He submits thatrevenue was justified in effecting recovery but was not justified inclaiming interest. 7.We are unable to accept the submission made on behalfof the assessee. Once assessment was validly made and the taxwas due, there is no reason to exclude the applicability of interestliability under Section 214/244(1A). It is, however, clear that interestliability would be only for the period the department was deprived ofthe amount of tax which it was entitled to recover i.e. the periodbetween the refund in pursuance of order of Tribunal and recovery asper order of this Court. Accordingly, the questions raised aredecided against the assessee and in favour of the revenue. 8.The appeal is allowed. (Adarsh Kumar Goel) Judge March 21, 2011Pka (Ajay Kumar Mittal) Judge