Case Law Details
New Era High School Committee Vs ACIT (ITAT Pune)
ITAT Pune held that the statutory provisions of interest on refund (section 244A of the Act) cannot be altered by issue of circular by CBDT to the extent they are beneficial to the taxpayer.
Facts-
The sole and substantive ground of appeal is directed against denial of interest on refund due u/s 244A of the Act from 1st April of AY where return was filed within extended time period in pursuance of CBDT order.
The limited issue under adjudication seeks to address the period from which interest u/s 244A is payable where ITR is filed within the extended time limit of filing in terms of order of CBDT issued u/s 119 of the Act.
Conclusion-
We our considered view, the statutory provisions of section 244A of the Act cannot be altered by issue of circular by CBDT, as such Circulars, orders and instructions issued by the CBDT u/s 119 of the Act, to the extent they are beneficial to the Assessee are binding on the Department and where they are prejudicial to the tax payer, then they cannot prevail over the statute.
FULL TEXT OF THE ORDER OF ITAT PUNE
By the present appeal, the assessee challenges the order of National Faceless Appeal Centre, Delhi [for short “NFAC”] dt. 13/06/2022 passed u/s 250 of the Income Tax Act, 1961 [for short “the Act”] confirmingorder of rectification passed u/s 154 which denied to interfere with computation of income carried out u/s 143(3) passed by National e-Asstt. Centre [for short “NeAS”] for assessment year [for short “AY”] 2018-19.
2. Without duplicating grounds from appeal memo, it shall be purposive to articulate that, the sole and substantive ground of appeal is directed against denial of interest on refund due u/s 244A of the Act from 1 st April of AY where return was filed within extended time period in pursuance of CBDT order.
3. We have heard rival contentions of both the parties; and subject to the provisions of rule 18 of Income Tax Appellate Tribunal Rules, 1963 [for short “ITAT, Rules”] perused the material placed on records till the date of conclusive hearing and duly considered the facts of the case in the light of settled legal position forewarned to parties present.
4. In the instant case, we find that,
4.1 The appellant trust filed its return of income [for short “ITR”] on 11/10/2018 i.e. within the extended due date for impugned AY 201 8-1 9, which initially was processed by Ld. CPC, Bengaluru u/s 143(1) of the Act with a refund of
4.2 The case of the appellant was then selected for complete scrutiny u/s 143(2) of the Act under e-Asstt. Scheme and accepting the submission of the appellant, the assessment was culminated without variance u/s 143(3) of the Act, however computation of income annexed thereto quantified the amount of interest u/s 244A payable from the date of ITR filed as against 1st April of the AY as determined in 143(1).
4.3 The matter of substitution of lower interest was first assailed through rectification u/s 1 54 of the Act,on being futile, the appellant carried the matter before the Ld. NFAC, however of no success, the appellant came before the Tribunal seeking reversal of action of tax authorities below [for short “TAB”]
5. The limited issue under adjudication seeks to address the period from which interest u/s 244A is payable where ITR is filed within the extended time limit of filing in terms of order of CBDT issued u/s 119 of the Act. Without reproducing the text of section 244A of the Act, it shall be apropos to state that, by virtue of sub-section 1 of section 244A, where the refund of tax is due to the assessee out of any TCS u/s 206C or paid by way of advance tax or treated as paid under section 199 (credit of TDS), during the financial year immediately preceding the assessment year and the ITR is filed within the due date prescribed u/s 139(1) of the Act, the interest on such refund shall be computed for the period from 1st day of April of the assessment year upto the date of refund isgranted.
6. Ostensibly, having considered the date of filing, the Ld. CPC computed the interest on refund for the period of 17 months commencing from 1st April of the AY, which was varied by the Ld. Ne-AS considering the interest liability u/s 244A for the period of 11 month commencing from date of ITR filed as against 1st April of the AY. The Ld. DR contended that, the action of Ld. TAB is supported by the order of Central Board of Direct Taxes [for short “CBDT”] issued u/s 119 of theAct, extending the due date of filing to 31/10/2018 for the impugned AY, which invariably expunged the application of extension for 234A interest application.
7. We have perused the order of CBDT issued u/s 119 of the Act, extending the due of filing for the impugned AY with a rider that, such extension shall not be read into explanation 1 to section 234A of the Act. In this context, we found that, the Ld. TAB tried to read and enlarged the aforestated rider importing into section 244A of the Act, consequent to which the interest on refund computed from the date of filing i.e. for 11 months instead of from 1st April of the AY i.e. for 17months. The said order also reveals that, it coverage is restricted to section 139(1) and section 234A of the Act, the order does not find a reference to section 244A of the Act, therefore apparently there is no such direction in the order denying interest from the 1st April of AY wherein the ITR is filed within the extended period of filing granted by the order. We are heedful to voice that, even if an order u/s 119 issued with such direction, the same shall be repugnant for two reasons, viz firstly being prejudicial to the interest of the assessee and secondly circumvential to statutory provisions, and this view can be witnessed in the judgement of Hon’ble High Court of Karnataka in “Dinkar Ullal Vs CIT” reported in 323 ITR 452 wherein their lordship have categorically held as;
“a condition in derogation of the statue is not for the proper administration of the Act and further held that a circular cannot impose any burden on the tax payer can deviate from the provisions of the Act if it is beneficial to the assessee and mitigates or relaxes the rigour of law.”
“The interest U/s 244A would be admissible on refund claims and that the instructions cannot run counter to the legislative provisions and create rights and obligation which are contrary to statute. Instructions should supplant the law and not supplement the law. “
8. We our considered view, the statutory provisions of section 244A of the Act cannot be altered by issue of circular by CBDT, as such Circulars, orders and instructions issued by the CBDT u/s 119 of the Act, to the extent they are beneficial to the Assessee are binding on the Department and where they are prejudicial to the tax payer, then they cannot prevail over the statute, for the reason we set aside the orders of both Ld. NFAC and Ld. Ne-AS and restore back the summary assessment insofar as the interest on refund is concerned.
9. Resultantly, the appeal of the appellant is ALLOWED in above terms.
In terms of rule 34 of ITAT Rules, the order pronounced in the open court on this Friday 30th day of December, 2022.
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