The Income Tax Appellate Tribunal (ITAT), Pune Bench, has recently, in an appeal filed before it, held that statutory provisions of S. 244A of the Income Tax Act cannot be altered by CBDT circular.
The aforesaid observation was made by the Pune ITAT when an appeal was preferred before it by the appellant New Era High School Committee, challenging the order of the National Faceless Appeal Centre, Delhi [NFAC], dt. 13/06/2022, passed u/s 250 of the Income Tax Act, 1961, confirming the order of rectification passed u/s 154, which denied to interfere with computation of income carried out u/s 143(3) passed by National e-Asstt. Centre [NeAS], for the assessment year 2018-19.
The sole and substantive ground of the assessee’s appeal being directed against the denial of interest on refund due u/s 244A of the Income Tax Act, from 1st April of the AY, where the return was filed within the extended time period in pursuance of CBDT order, the facts of the case were that the appellant trust had filed its return of income on 11/10/2018 i.e. within the extended due date for impugned AY 2018-19, which initially was processed by CPC, Bengaluru u/s 143(1) of the Income Tax Act, with a refund of ₹29,37,899/- inclusive of interest on refund u/s 244A of ₹2,30,155/-.
Subsequently, the case of the appellant was selected for complete scrutiny u/s 143(2) of the Income Tax Act under e-Asstt. Scheme and accepting the submission of the appellant, the assessment was culminated without variance u/s 143(3) of the Income Tax Act. However, the computation of income annexed thereto quantified the amount of interest u/s 244A payable from the date of ITR, filed as against 1st April of the AY as determined in 143(1).
The matter of substitution of lower interest being first assailed through rectification u/s 154 of the Income Tax Act, on the same being futile, the appellant carried the matter before the NFAC. However, it too being of no success, the appellant has preferred the instant appeal before came before the Tribunal seeking reversal of action of tax authorities below.
Hearing the opposing contentions of either sides as submitted by Shri Rohit Tapadiya, on the assessee’s behalf and Shri Suhas Kulkarni, on behalf of the Revenue, the Pune ITAT commented:
“We have perused the order of CBDT issued u/s 119 of the Act, extending the due of filing for the impugned AY with a rider that, such extension shall not be read into explanation 1 to section 234A of the Act. And in this context, we found that, the Ld. TAB tried to read and enlarged the afore stated rider importing into section 244A of the Act, consequent to which the interest on refund computed from the date of filing i.e., for 11months, instead of from 1st April of the AY i.e., for 17months.”
“The said order also reveals that its coverage is restricted to section 139(1) and section 234A of the Act. The order does not find a reference to section 244A of the Act, and therefore, apparently there is no such direction in the order denying interest from the 1st April of AY wherein the ITR is filed within the extended period of filing granted by the order.”, the ITAT added.
Further observing, the Bench comprising of S. S. Godara, the Judicial Member, and G. D. Padmahshali, the Accountant Member, commented:
“We are heedful to voice that, even if an order u/s 119 issued with such direction, the same shall be repugnant for two reasons, viz firstly being prejudicial to the interest of the assessee and secondly circumvential to statutory provisions, and this view can be witnessed in the judgement of Hon’ble High Court of Karnataka in Dinkar Ullal Vs CIT”
“We our considered view, the statutory provisions of section 244A of the Act cannot be altered by issue of circular by CBDT, as such Circulars, orders and instructions issued by the CBDT u/s 119 of the Act, to the extent they are beneficial to the Assessee are binding on the Department and where they are prejudicial to the tax payer, then they cannot prevail over the statute, for the reason we set aside the orders of both Ld. NFAC and Ld. Ne-AS and restore back the summary assessment insofar as the interest on refund is concerned”, allowing the assessee’s appeal the Pune ITAT held.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
