Commissioner of Income Tax (Central), Kanpur vs Sahara India Savings and Investment Corpn. Ltd.

Satish Chandra, J.—Present appeal has been filed by the department u/s 260A of the income tax Act, 1961, against the judgment and Order dated 15.04.2004 passed by the Income Tax Appellate Tribunal, Lucknow in I.T.A. No. 1293/Alld/95, for the assessment year 1992-93. On 28.09.2004, a Coordinate Bench of this Court has admitted the appeal on the following substantial questions of law:--

Whether the Income Tax Appellate Tribunal was legally justified in law and on facts of the case in adjudicating the issue relating to determination of period of delay attributable for claiming interest u/s 244A ignoring the provisions of section 244A(2) according to which the Chief Commissioner or the Commissioner of income tax are only empowered to decide the period so attributable and whose decision shall be final and binding.

The brief facts of the case are that the return was filed by the assessee showing the income of Rs. 30,49,770/- in the status of the Company. It is alleged that the assessee has not filed tax deducted at source (in short TDS) certificates along with the return of the income. Therefore, credit was not allowed in respect of the TDS certificates as the same was not filed along with the return of income. Subsequently, TDS certificates were filed along with the application u/s 154 of the Act. On 25.10.1994, the A.O. passed an order u/s 154, where the interest was not allowed u/s 244A in view of the delay on the part of the assessee. The A.O. observed that the delay is on the part of the assessee, so no interest shall be allowed. In first appeal, CIT(A) has confirmed the order passed by the A.O. by observing that the TDS certificates were not filed along with the return of the income. Therefore, credit was not given. It is only at the very late stage that TDS certificates were filed and refunds were issued. The delay is apparently attributable to the assessee-Company. Interest has been rightly denied. However, the Tribunal vide its impugned order has directed the A.O. to allow interest u/s 244A of the Act on the amount of refund for the period 01.04.1992 to 31.12.1992. Being aggrieved, the Department has filed the instant appeal.

With this back dropped, Sri D.D. Chopra, learned counsel for the Department has justified the order passed by the A.O. At the strength of the written submissions, he submits that the assessee did not file all TDS certificates along with return of income. Subsequently, two bunches of TDS certificates were filed.

Learned Counsel read out Section 244A(2) of the Act, which reads as under--

If the proceedings resulting in the refund are delayed for reasons attributable to the assessee, whether wholly or in part, the period of delay so attributable to him shall be excluded from the period for which interest is payable, and where any question arises as to the period to be excluded, it shall be decided by the Chief Commissioner or Commissioner whose decision thereon shall be final.

Learned counsel further submits that neither the CIT(A) nor ITAT should have adjudicated the issue relating to the allowability of interest on refund u/s 244A which is to be decided exclusively by the Chief Commissioner of income tax, whose decision shall be final and no appeal would lie. Finally, he submits that the Tribunal has passed the order without having the jurisdiction. Lastly, he made a request that the impugned order may kindly beset aside.

On the other hand, Sri Waseequddin Ahmad, learned counsel for the assessee has justified the impugned order passed by the Tribunal. He submits that the assessee has filed TDS certificates along with the application u/s 154. Thus, once the TDS certificates have been filed on that date and the A.O. has passed the order, then no delay is attributed.

After hearing both the parties and on perusal of the record, it appears that refund of the interest u/s 244A is a substantial question of law against which the appeal lies in the High Court. Hence, the order passed by the A.O. is appealable to the High Court. So, in this regard, the submission of the learned counsel for the Department is not sustainable.

It may be mentioned that Section 244A is constitutionally valid in providing for payment of interest on excess tax deducted at source. Right to interest on refund is a matter of substantive right. Section 244A not being procedural as observed in the case of Deputy Commissioner of Income Tax and Others Vs. Central Concrete and Allied Products Limited and Another, .

Further, it may be mentioned that no application is necessary for interest on refund u/s 244A. Interest on refund goes along with refund. No application is required for this purpose in view of the mandatory provision u/s 244A(1)(b) of the Act as observed in the case of National Horticulture Board Vs. Union of India and Others, . The argument that the assessee should have made an application for refund was found to be without any merit. Denial of interest on delay attributable to the assessee as provided u/s 244A(2) would have no application, merely because of delay in application for refund. At any rate, where the refund is pending before the authorities, failure to apply for the refund cannot be treated as delay attributable to the assessee.

It may also be mentioned that the Hon''ble Apex Court in the case of Commissioner of Income Tax, Bhopal Vs. H.E.G. Ltd., observed that:--

Interest which accrued to the assessee for non-refund of TDS partook of the character of the "amount due" u/s 244A and became an integral part of the principal amount which was not refunded after it became due and payable and therefore assessee was entitled to interest on delayed refund of TDS.

It is pertinent to mention that the Bombay High Court in the case of The Commissioner of Income Tax Vs. Larsen and Toubra Ltd., , observed that:--

Section 244A(2) provides that in the event the proceeding resulting in refund has been delayed for reasons attributable to the assessee, the period of delay so attributable shall be excluded from the period for which the interest is payable. In the present case Section 244A(2) is clearly not attracted. The proceeding resulting in the refund was not delayed for reasons attributable to the assessee. Though the TDS certificates were not submitted with the return and were filed during the course of the assessment proceedings, the Tribunal has noted that the tax was in fact deducted at source at the right time. In the circumstances, the Tribunal is correct in holding that since the benefit of TDS has been allowed to the assessee, interest u/s 244A could not be denied only on the ground that the TDS certificates were not furnished with the return of income. Tax was deducted and deposited in the exchequer in time. Section 244A(2) is not attracted. The appeal, therefore, does not raise any substantial question of law and is dismissed.

In the light of the above discussions and by considering the totality of the facts and circumstances of the case, we find no reason to interfere with the impugned order passed by the Tribunal and the same is hereby sustained along with the reasons mentioned therein.

The answer to the substantial question of law is in favour of the assessee and against the Department. In the result, appeal filed by the department is dismissed.