Tribunal Directs AO to Reinstate Interest on Refund; Rectification Order Deemed Unjustified Due to Inapplicable Amendments.

The Tribunal allowed the appeal of the assessee, directing the AO to reinstate the interest on the refund under section 244A of the Act that was previously withdrawn through a rectification order under section 154. The Tribunal concluded that the rectification was unjustified, as the amendments to section 244A were not applicable to the assessee's case, and the Revenue had already benefited from prior tax deductions.

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Issues:
1. Whether interest on refund u/s 244A of the Act should be granted to the assessee for the period in question.

Analysis:
The appeal was filed against the order of the ld. CIT(A) confirming the withdrawal of interest on refund u/s 244A of the Act. The AO withdrew the interest for the period from April 2006 to January 2008, citing Section 244A(2) of the Act, which states that interest is not payable if there is a delay attributable to the assessee. The assessee contended that the impugned amendment was applicable from June 2016, whereas the return was filed in January 2008. The assessee relied on various cases to support the argument that interest granted earlier cannot be withdrawn under section 154 of the Act. The Revenue argued that since the return was belated, the AO rightly withdrew the interest for the said period.

The Tribunal noted that the assessee filed the return in January 2008, with the due date being September 2006. The Tribunal had earlier deleted additions made by the AO, and interest u/s 244A was granted to the assessee. The AO, under section 154, believed that excess interest was granted for the period in question. The Finance Bill 2016 proposed amendments to section 244A, but these were to be effective from June 2016, not applicable to the assessee's case. The Tribunal found that the Revenue had already benefited from tax deductions made by Standard Chartered Bank, even before the return was filed, and the refund was claimed later. The Tribunal held that the mistake could not be rectified under section 154, as established by precedent.

In conclusion, the Tribunal directed the AO to allow the interest that was withdrawn through the rectification order under section 154 of the Act. The appeal of the assessee was allowed, emphasizing that the rectification was not justified in this case.

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