2023 (2) TMI 86 - AT - Income Tax

Tribunal Rules No Rectification for Debatable Interpretation of 'Regular Assessment' in Interest Withdrawal Case.

The ITAT Pune ruled in favor of the assessee, dismissing the A.O's order under section 154. The Tribunal found that the rectification to withdraw excess ... Rectification of mistake u/s 154 to withdraw the excess interest granted u/s 244A to the assessee - HELD THAT:- There are more than one opinion on the meaning of “regular assessment” which is critical issue for deciding whether or not the assessee was eligible for interest u/s 244A of the Act. In such scenario the scope of rectification proceedings u/s 154 of the Act spells out that only mistake apparent from record can be rectified. The Hon‟ble Apex Court in the case of T.S. Balram, ITO v Volkart Bros [1971 (8) TMI 3 - SUPREME COURT] held that mistake apparent on record must be obvious and patent mistake and not something which has to be established by a long drawn process of reasoning on the points on which there may be conceivably two opinions. A.O was wrong in resorting to section 154 of the Act to withdraw the excess interest granted u/s 244A of the Act to the assessee as it was not something mistake apparent from record. Hence, the ld. CIT(A) dismissed the order of the A.O passed u/s 154 of the Act. We do not find any infirmity with the findings of the ld. CIT(A) and the relief provided to the assessee is sustained. The grounds of appeal of the Revenue are dismissed. Issues Involved:1. Rectification of order u/s 154 to withdraw excess interest u/s 244A on refund.2. Interpretation of 'regular assessment' for eligibility of interest u/s 244A.3. Application of CBDT Circulars on monetary limits for exceptions.Issue 1: Rectification of order u/s 154 to withdraw excess interest u/s 244A on refund:The appeal by the Revenue stemmed from the order of the ld. CIT(A)-12, Pune, for the assessment year 2010-11. The Assessing Officer (A.O) had passed an order u/s 143(3) r.w.s. 147 of the Income-tax Act, assessing the total income of the assessee. The assessee received a refund with interest u/s 244A, but as the refund amount was less than 10% of the assessed tax, the A.O issued a notice u/s 154 to rectify the order and withdrew the excess interest granted u/s 244A. The ld. CIT(A) upheld the A.O's decision, stating that the rectification was not a mistake apparent from the record, as there were differing opinions on the meaning of 'regular assessment,' a critical factor for interest u/s 244A eligibility. The CIT(A) referred to the Supreme Court's stance that rectification can only be done for obvious and patent mistakes, not debatable legal points. Consequently, the CIT(A) allowed the appeal of the assessee, dismissing the A.O's order u/s 154.Issue 2: Interpretation of 'regular assessment' for eligibility of interest u/s 244A:The dispute revolved around the interpretation of 'regular assessment' concerning the eligibility of interest u/s 244A. The assessee contended that the proviso to section 244A(1)(b) excludes interest in cases where tax was determined under sub-section (1) of section 143 or on regular assessment. Citing a Bombay High Court case, the assessee argued for the applicability of this exclusion. However, the A.O disagreed, stating that the case law was not relevant to the present scenario. The ld. CIT(A) noted the conflicting opinions on the meaning of 'regular assessment,' emphasizing that rectification under section 154 can only address mistakes apparent from the record, as per Supreme Court precedent. As such, the A.O's decision to withdraw the excess interest was deemed not a mistake apparent from the record, leading to the dismissal of the A.O's order by the CIT(A.Issue 3: Application of CBDT Circulars on monetary limits for exceptions:The appellant raised the issue of the applicability of CBDT Circulars regarding monetary limits for exceptions. The appellant argued that the monetary limit specified in the circular would not apply due to the case originating from a Revenue Audit Objection accepted by the Department, falling under an exception as laid down by the Board in Circular No. 3/2018. However, the judgment did not delve deeper into this issue as the focus was primarily on the rectification of the order u/s 154 and the interpretation of 'regular assessment' for interest u/s 244A eligibility.In conclusion, the judgment by the Appellate Tribunal ITAT Pune delves into the nuances of rectification under section 154, the interpretation of 'regular assessment' for interest u/s 244A eligibility, and the application of legal principles regarding mistakes apparent from the record. The decision provides a detailed analysis of the issues at hand, emphasizing the need for clarity in legal interpretations and the application of precedents in tax matters.