2021 (8) TMI 112 - AT - Income Tax

Appellate Tribunal corrects CIT(A) decision on tax refund interest denial, emphasizes order validity.

The Seva Vikas Cooperative Bank Bank Ltd. Versus The Dy. Commissioner of Income Tax, Circle – 8, Pune.

The Appellate Tribunal found the CIT(A)'s dismissal of the appellant's appeal against the denial of interest on a tax refund to be erroneous. The Tribunal ... CIT(A) rejecting the appeal in limine by holding that the appeal was filed not against the order passed u/s 154 of the Act but against the order pursuant to the grievance petition - HELD THAT:- Indisputably, the impugned order before ld.CIT(A) results in modification of an earlier order passed by the Assessing Officer. It is not necessary that an order passed by the Assessing Officer should contain a specific reference to the section. Reference can be made to the decision of Narayana Row (SAL) Vs. Model Mills, Nagpur [1966 (10) TMI 2 - SUPREME COURT]. Needless to say that the labelling of an order does not always decide the question of the validity, an order can be upheld or valid if there is a statutory provision to which it can be validly attributed and more importantly, the word “order” in the expression “from the date of order sought to be amended” finding place in the provisions of Sec.154 is not qualified in any other manner and it does not necessarily mean the original order. It can as well be an order which is amended or rectified order as held in the cases of Salem Co-op Spinning Mills Ltd., Vs. CIT [1997 (2) TMI 68 - MADRAS HIGH COURT] and Henri Isidore [1997 (10) TMI 16 - MADRAS HIGH COURT]. Therefore, the reasoning of the ld.CIT(A) that impugned order before him is not an order u/s 154 of the Act and cannot be accepted. As a consequence, dismissal of appeal in limine by the ld.CIT(A) is erroneous and unjustified. Issues: Appeal against order of Commissioner of Income Tax (Appeals) for assessment year 2007-08.Analysis:1. Background: The appellant, a Co-operative Society engaged in banking, filed a return for A.Y. 2007-08 showing a total income of Rs. 5,13,65,025. The Assessing Officer completed the assessment at a total income of Rs. 6,72,33,490 after disallowing certain amounts under the Income Tax Act.2. Initial Appeal: The appellant appealed against the additions made by the Assessing Officer. The CIT(A)-V, Pune, deleted the addition related to loss on investments. However, the Assessing Officer treated the appellant as an Association of Persons (AOP) for tax calculation purposes, leading to a rectification application by the appellant under section 154 of the Act.3. Rectification Order: The Assessing Officer passed a rectification order under section 154, treating the appellant as an AOP and calculating a refund amount of Rs. 39,38,170 inclusive of interest. Subsequently, a Grievance Petition was filed claiming incorrect interest on the refund issued due to a status correction error in the PAN.4. Appeal Dismissal: The appellant filed an appeal before the CIT(A)-6, Pune, against the denial of interest on the refund. However, the appeal was dismissed in limine on the grounds that it was filed against a grievance petition disposal letter and not the order under section 154 of the Act.5. Appellate Tribunal Decision: The Appellate Tribunal considered whether the CIT(A) was justified in rejecting the appeal in limine. The Tribunal held that the labeling of an order does not determine its validity, citing legal precedents. It emphasized that an order under section 154 can include an amended or rectified order. Therefore, the dismissal of the appeal by the CIT(A) was deemed erroneous and unjustified.6. Remittance of Matter: Consequently, the Tribunal remitted the matter back to the CIT(A) for de novo consideration in accordance with the law. The appeal of the assessee was partly allowed for statistical purposes.This detailed analysis of the judgment highlights the issues involved, the sequence of events leading to the appeal, the decisions of the lower authorities, and the Appellate Tribunal's reasoning for remitting the matter back for reconsideration.