S. Narayanan, A.M:— The only objection taken by the Revenue in this appeal is as under:
“On the facts and in the circumstances of the case, the ld. CIT(A) has erred in holding that the ITO could not withdraw interest already allowed under s. 244(1 A).”
2. The assessee is an HUF. The assessment was completed on a total income of Rs. 1,60,064 on 28-11-1983. It was reduced to Rs. 1,58,206 after giving effect to the order of the Commissioner(A). This order also was contested by the assessee before the Tribunal. The Tribunal, however, set aside the issues relating to the determination of the ALV of the house, B-12, Greater Kailash New Delhi, as also deductibility of the interest paid to Sharma Estate Agency and Sharma Property Dealers. There was only one “other objection” before the Tribunal. That was with regard to the disallowance of interest paid to Bank of Baroda. On this point, the assessee's claim was rejected and the orders of the authorities below confirmed. In other words, only part of the assessment as it stood after the first Appellate Authority's order was confirmed. The other part, i.e relating to the determination of the annual value and allowability of interest payments to Sharma Estate Agency and Sharma Property Dealers came to be set aside for being redone by the ITO. This order of the Tribunal was passed on 22-3-1982.
3. Shri M.L Gupta, ld. counsel for the assessee placed before us a statement of facts relating to the demands raised originally and modified subsequently following the Tribunal's order, for this assessment year. We reproduce below this statement:
ORIGINAL ASSESSMENT
1. Income-tax payable as per order under s. 143 dt. 27-3-1979.
Rs. Income assessed 1,60,064 Tax payable: Income tax 1,06,086 Interest under s. 215 15,960 Interest unders. 139 456 1,22,502 Less T.D.S 60,458 62,044
2. Income-tax as per order under s. 254 dt. 24-9-1982 (set aside)
Rs. Income assessed 87,850 Tax payable: Income-tax 50,485 Less: (i) TDS 69,220 (ii) Regular Payment: on 25-9-1979 456 on 19-10-1979 31,763 on 21-7-1980 227 on 19-2-1981 18,990 51,456 1,20,676 Refund: 70,191 Interest under s. 244(1 A) on Regular payment 14,542 Refund issued: 84,733
4. In fact a copy of the aforesaid consequential order of the ITO, based on 24-9-1982 is also available on p. 6 of the assessee's paper book. This is to the following effect:
“ORDER UNDER S. 254 OF THE IT ACT, 1961
This is an order to give effect to the orders of the ITAT Bench ‘C’ New Delhi, dt. 22-3-1982 arising out of appeal No. I.T.A 927.Del./81:
Net income as per order under s. 250 dt. 22-1-1981 Rs. 1,58,206 Less: The ITAT set aside the following additions (i) higher rental value of free furnished acco-mmodation 57,000
(ii) interest to Sharma Estate and Property Dealer 13,360 70,360 87,846 or say 87,850
Issue necessary forms. Allow credit for taxes paid and interest under s. 244(1A) as per law.”
5. The assesses accordingly, received refund of Rs. 14,542 as interest under s. 244(1A) which reads as under:
“(1A) Where the whole or any part of the refund referred to in sub-section (1) is due to the assessee, as a result of any amount having been paid by him after the 21st day of March 1975, in pursuance of any order of assessment of penalty and such amount or any part thereof having been found in appeal or other proceeding under this Act to be in excess of the amount which such assessee is liable to pay as tax or penalty, as the case may be, under this Act, the Central Govt. shall pay to such assessee simple interest at the rate specified in sub-section. (1) on the amount so found to be in excess from the date on which such amount was paid to the date on which the refund is granted.”
6. That part of the assessment which was set aside by the Tribunal was then taken up by the ITO. He completed the proceedings by an order dt. 28-11-1983. This order is styled as one under s. 143(3)/254. This computed the total income at Rs. 1,46,700. This assessment was contested in appeal. The Commissioner (A) disposed of the appeal by his order dt. 10-8-1984. He allowed reliefs to the assessee and thereby the total income came to be reduced to Rs. 1,08,850. We may mention here that on the completion of the revised assessment on 28-11-1983 supra, the tax liability of the assessee was worked out as under:
“1. Income-tax payable as per order dt. 28-11-1983.
Rs. Income assessed 1,46,700 Tax payable: Income-tax 95,799 Interest under s. 139 530 Interest under s. 215 9,275 Interest under s. 220 1,815 1,07,419 Add: Interest withdrawn allowed earlier under s. 2440A) 14,542 1,21,961 Less: Recovered as per original assessment 50,485 Payable: 71,476
7. One of the contentions taken before the Commissioner (A) in its appeal from the aforesaid order of 28-11-1983, was that the ITO wrongly withdrew interest refund of Rs. 14,542 originally allowed to the assessee under s. 244 (1A). The Commissioner (A) noted that the ITO had not given any reason or justification for with drawing the said interest allowed originally. He further held that even otherwise, the withdrawal was unjustified as the ITO had no power to withdraw interest already allowed under s. 244(1 A) of the Act. He, therefore, directed that the assessee should be allowed the said interest refund of Rs. 14,452. Hence this appeal by the Revenue.
8. We may note here one more factual position. This is available at p. 1 of the assessee's paper book. This works out the income-tax which actually became payable by the assessee for this year ultimately after the aforesaid appellate order of 10-8-1984. It may be noted here that this order of 10-8-1984 has been accepted by the department except for its objection to the direction that the assessee should be allowed interest of Rs. 14,542 under s. 2440A):
“Income-tax payable as per order under s. 250 dt. 2-7-1985
Rs. Income assessed 1,08,850 Tax payable: Income-tax 66,655 Less TDS 50,485 16,170 Less: Payment made on 6-2-1984 37,668 Refundable: 21,498 Interest under s. 2440A) allowed on the payment made on 6-2-1984 3,852 Refund issued: 25,350
9. We have heard both Shri K.K Sharma, departmental representative as well as Shri M.L Gupta, ld. counsel for the assessee. We were also taken through the relevant provisions in the Act. The departmental Representative's contention was that there could be no consequential order for giving effect to an appellate order which only partly determined the various issues that were in dispute for assessment. In the instant case, two issues were not decided by the Tribunal by its order of 22-3-1982. These issues related to the determination of the annual value of the Greater Kailash house and also the allowability of certain interest payments. Until these issues were finally settled by the ITO by way of a fresh order, which itself would be the subject of appeal proceedings, no consequential order could be passed by the ITO and even if he did, there was no question of his allowing any interest under s. 244(1A) in any case on the basis of such an interim order. Interest under s. 244(1 A) could be determined only on the completion of the assessment following the appellate order because the interest element related to the difference between the tax already paid by the assessee and the tax that came to be determined as payable for the assessment year as a whole following the relevant appellate order. In other words, according to Shri Sharma, grant of interest under s. 244(1A) having been illegal and not authorised in law in the first place, i.e under the order of 24-9-1982, necessary adjustment made therefor by the ITO in his order dt. 28-11-1983 was in order and should have been confirmed by the Commissioner(A). For the assessee, strong reliance was placed on the order of the Commissioner (A). It was also contended that there was nothing wrong in the ITO's order dt. 24-9-1982 (supra), wherein refund of interest was allowed in terms of s. 2440A). It was further submitted that there was nothing in the language of s. 244(1 A) which obliged the ITO to grant interest only on the completion of the entire assessment following an appellate order. It was also pointed out that the ITO gave no reasons, whatsoever, for this impugned action and that, therefore, the Commissioner (A)'s order was correct in law.
10. We have considered the position. We have already extracted s. 244(1A) insofar as it is relevant. The object behind this section seems to be to compensate the assessee for payment of tax over and above what is due from him for any assessment year. The expression used in the section is “such amount or any part thereof having been found in appeal or other proceedings under this Act to be in excess of the amount which such assessee is liable to pay as tax under this Act”. Now there are two components here to be considered. The first is the amount that an assessee is liable to pay as tax for the assessment year in question in pursuance of an order of assessment. This is not in dispute before us. This has come to be Rs. 66,655 (See paragraph 4 above). The second component is the amount actually paid by the assessee in pursuance of the order of assessment as finally modified in appeal. Under the order of Commissioner(A) dt. 10-9-1984, which became final, the total payable, as already noted, amounted to Rs. 66,655. Here we find that the ITO has allowed a credit of only Rs. 50,485 as tax already recovered.” This figure does not appear to be correct in the light of the factual statement placed before us for the assessee. (See paragraph 3 supra where T.D.S alone is shown at Rs. 69,220). Unfortunately, the Commissioner(A)'s order in appeal before us is in the most cryptic terms possible. He has not gone into the factual position at all. Nor has he considered the specific language and requirements of s. 244(1A). In the absence of such an enquiry and a speaking order from the Commissioner(A) we are unable to dispose of this appeal. We would, therefore, restore the matter to his file for a fresh consideration, without expressing any final opinion either on the legal or the factual position relating to the issue in dispute. The Comm-missioner(A) will no doubt hear the assessee as well as the ITO and then dispose of the issue in accordance wtth law passing a speaking order in the matter. For this purpose, the order of the Commissioner(A) is set aside.
11. The appeal is deemed to be allowed for statistical purposes.
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