TaxTMI 
TaxTMI 
2026 (4) TMI 1909
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....wever, the assessee's claim for interest on the amount of tax refund was disallowed. 2. Brief Backdrop: 2.1. Pursuant to the Kar Vivad Samadhan Scheme, 1998 (hereinafter referred as 'KVSS'), the assessee submitted a declaration dated 29.12.1998 under Section 88 of the Finance (No. 2) Act, 1988 qua the Assessment Years 1993-94. In this connection, the CIT, Udaipur issued a certificate dated 02.02.1999 under Section 90(2) read with Section 91 of the Act, ibid. 2.2. In the certificate dated 02.02.1999 issued by the CIT, Udaipur it has been stated inter alia as under: "And whereas the Designated Authority by order dated 6.1.99/28.1.99 determined the amount of Rs. 10,15,02,255/- payable by the declarant in accordance with the provisions of the Scheme and granted certificate setting forth therein the particulars of tax arrears and the sum payable after such determination towards full and final settlement of tax arrears as per details given below: A.Y. 1993-94 Outstanding Demand Payable Demand Interest 234 B Rs. 12,17,15,415 Interest 220(2) Rs. 7,52,89,095 Total demand Rs. 20,30,04,511 . Rs. 10,15,0....
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....esaid direction, the Assessing Officer/Assistant Commissioner of Income Tax, Circle 2, Udaipur passed order dated 02.09.2008 (Annexure-3) holding as under: "I have considered the facts of the case & submissions of the assessee. Respectfully following the directions of Hon'ble ITAT income of the assessee is recalculated as below:- Income determined for the AY 1993-94 as per order u/s 154/143(3)/250 dated 15.10.1998 Rs. 42,57,61,140/- Less: Brought Forward Loss for AY 1992-93 as per order u/s.154 dated Rs. 5,53,13,531/- Net income Rs. 37,04,47,609/- Assessed at Rs. 37,04,47,609 /-. The interest is charged u/s 234B, C and D and withdrawn paid u/s 244A. The calculation of tax is as per ITNS-150 appended as part of this order. The demand notice and Challan is issued herewith." 2.5. While deciding assessee's appeal against above said order of the Assessing Officer, an order dated 18.12.2008 (Annexure-2) was passed by the CIT(A) holding/directing as under: "Thus, on going through the above relevant portion of the ITAT's order, it is amply clear that the amount of tax on the brought forward loss of Rs. 5,53,13,531/- should have been r....
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.... to Rs. 20.30 crores was payable on the assessed income of Rs. 42,57,61,140/-. The same were tax arrears within the meaning of Section 87(m) of KVSS that came to be settled at an amount of Rs. 18.15 crores(sic) which was conclusive in terms of Section 90(1) of that Act. The Appellate Tribunal at Jodhpur being of the opinion that income tax chargeable on the assessed income of Rs. 42,57,61,140/- not being disputed tax for settlement under KVSS found no fetters for allowing refund of income tax amount on the amount of Rs. 5,53,13,531/- which was allowed to be set off as brought forward loss against income of the year under consideration. Accordingly it directed the assessing officer to grant refund of the amount of income tax thereon. It also clarified that interest on tax worked out having been settled under KVSS, the same cannot be refunded but as the details were not available on tribunal's record, it remitted the matter to the assessing authority verify and to carry out the directions as such. The assessing authority in this case is found to have acted on the directions of the Appellate Tribunal and granted refund of income tax on the aforesaid amount of income of Rs. 5,53,13....
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....claration dated 29.12.1998 under Section 88 and certificate dated 02.02.1999 under Section 90(2) read with Section 91 of the 1988 Act issued by the CIT, Udaipur. 5.2. It was urged by learned counsel for the appellant/assessee that in the scheme of things too, assessee's entitlement to interest under Section 244A which accrued upon and flowed from ITAT's order dated 23.01.2008 could not have been the subject matter of or covered by the aforesaid antecedent declaration dated 29.12.1998 and certificate dated 02.02.1999. 5.3. It was contended that the assessee's entitlement/claim for interest under Section 244A of the IT Act on the amount of tax refund qua the brought forward loss of Rs. 5.53 crores of previous year and set off against the income of AY 1993-94 was not covered by and was outside the scope of the assessee's declaration and the CIT's certificate under KVSS. 5.4. Hence, the argument is that the assessee was/is entitled to claim interest under Section 244A of the IT Act on the amount of tax refund qua the brought forward loss of Rs.5.53 crores of previous year and set off against the income of AY 1993-94. 5.5. Learned counsel for the appellant heavily relied upo....
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....nal settlement of the outstanding interest demand. Consequently, the balance liability of Rs. 10,15,02,256/- towards interest stood extinguished. 9. By order dated 23.01.2008 (Annexure-4) (relevant portion reproduced above), the learned ITAT held that the tax arising from the reduction of brought forward loss amounting to Rs. 5.53 crores was refundable to the assessee. However, the assessee would not be entitled to interest on such refund to the extent the amount was covered under the KVSS declaration. 10. In other words, if the assessee's entitlement to interest on the refund, arising from reduction of Rs. 5.53 crores in the previously determined income for A.Y. 1993-94, was less than or did not exceed the interest liability settled under the KVSS declaration, no interest would be payable on the refund. Step by step, the position may be understood as follows: (a). Determine the amount of tax refundable on account of reduction of Rs. 5.53 crores in the previously assessed income for A.Y. 1993-94. (b). Determine the period for which interest under Section 244A of the Income Tax Act would be payable on such refund. (c). Compute the amount of interest ....
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....e of the view that the CIT (A) misconstrued and acted contrary to the order dated 23.01.2008 passed by the learned ITAT. 16. The finding/direction in the ITAT's order dated 23.01.2008 that the assessee would not be entitled to the interest on the amount of tax refund to the extent of the amount having been covered under the KVSS declaration remained unchallenged and had attained finality. 17. Given that the direction concerning assessee's non-entitlement to interest on the amount of tax refund in the previous order dated 23.01.2008 passed by the learned ITAT, arguendo, was given wrongly, as contended by the learned counsel for the petitioner, the fact is that the same was not challenged and had attained finality. There is no gainsaying that it was open to the appellant/assessee to have assailed the said direction given by the ITAT by taking appropriate steps. Having consciously chosen not to do so, the appellant/assessee must now face the consequences of finality of the said direction and fate accomplish. 18. It is also pertinent to note that the direction contained in the order dated 18.12.2008 (Annexure-2) was passed by the CIT(A), i.e., a quasi judicial authority lower ....