2008 (12) TMI 432 - AT - Income Tax

Tribunal overturns tax authorities' decision on interest denial under Income-tax Act

The Tribunal set aside the orders of the Assessing Officer and CIT(A) regarding the denial of interest u/s 244A of the Income-tax Act. It directed the ... Refunds Issues Involved:1. Validity of the order u/s 154/143(1) of the Income-tax Act.2. Entitlement to interest u/s 244A of the Income-tax Act, 1961.3. Requirement of approval from CCIT or CIT for determining the period of delay attributable to the assessee u/s 244A(2).Summary:1. Validity of the order u/s 154/143(1) of the Income-tax Act:The assessee challenged the order passed by the CIT(A) u/s 154/143(1) of the Income-tax Act, claiming it was bad both in law and on facts. The Tribunal did not specifically address this issue in the judgment.2. Entitlement to interest u/s 244A of the Income-tax Act, 1961:The assessee, a Public Sector Undertaking, filed appeals against the CIT(A)'s order for the assessment years 2001-02 and 2002-03. The primary contention was the denial of interest u/s 244A on the refund amount. The assessee argued that the interest should be allowed from 1st April of the relevant assessment year till the date of granting the refund. The CIT(A) held that the Assessing Officer was justified in not allowing the interest for the period attributable to the assessee's delay in filing the revised return. However, the Tribunal found that the Assessing Officer and CIT(A) were not authorized to exclude any period for the purpose of granting interest u/s 244A(1) without referring the matter to the Chief Commissioner or Commissioner as mandated by section 244A(2).3. Requirement of approval from CCIT or CIT for determining the period of delay attributable to the assessee u/s 244A(2):The Tribunal emphasized that u/s 244A(2), if there is any question regarding the period to be excluded for the purpose of interest, it must be decided by the Chief Commissioner or Commissioner. The Assessing Officer had excluded the period from 1st April of the relevant assessment year till the date of filing the revised return without such a referral, which was beyond his jurisdiction. The Tribunal directed the Assessing Officer to refer the matter to the Chief Commissioner or Commissioner to determine the period of exclusion as per section 244A(2).Conclusion:The Tribunal set aside the orders of the Assessing Officer and CIT(A) and restored the matter to the file of the Assessing Officer with the direction to refer the issue regarding the exclusion period to the Chief Commissioner or Commissioner for determination. The appeals filed by the assessee were allowed for statistical purposes.