The court ruled that the assessing officer's withdrawal of interest under section 244A due to an inadvertent omission by the assessee was unjustified as the advance tax was properly reflected within official records.

ORDER

PER ASTHA CHANDRA, JM :

The appeal filed by the assessee is directed against the order dated 09.10.2024 of the Ld. Commissioner of Income Tax (Appeals)/NFAC, Delhi [“CIT(A)”/“NFAC”] pertaining to Assessment Year (“AY”) 2014-15.

2. Briefly stated the facts are that the assessee is a company engaged in the business of providing cable television distribution and other related services. For AY 2014-15, the assessee filed its return of income on 01.12.2014 declaring total income of Rs.2,49,28,870/-. The case of the assessee was selected for scrutiny and the assessment u/s 143(3) of the Income Tax Act, 1961 (the “Act”) r.w.s. 92CA(1) of the Act was completed vide order dated 27.11.2017 with demand of Rs. Nil accepting the income of Rs.2,49,28,870/- returned by the assessee. The assessee inadvertently missed to claim credit of advance tax paid amounting to Rs.20,00,000/- in the return of income. No credit of advance tax was therefore granted to the assessee as the same remained to be claimed inadvertently by the assessee in his return of income. The assessee, therefore, filed rectification application u/s 154 of the Act on 27.11.2017 with the Assistant Commissioner of Income Tax, Circle-1, Nashik (“Ld. AO”). The Ld. AO accepted the rectification application filed by the assessee and gave credit of advance tax along with interest u/s 244A of the Act amounting to Rs.4,70,000/-. Accordingly the refund along with interest amounting to Rs.4,70,000/- was issued on 14.05.2018. Thereafter, the Ld. AO issued a show cause letter dated 16.08.2021 to the assessee proposing for withdrawal of interest u/s 244A in light of Circular No. 9 of 2015 u/s 154/155 of the Act and levy of interest u/s 234D of the Act. The assessee requested the Ld. AO vide letter dated 24.08.2021 to provide a copy of the rectification order dated 02.05.2018 however it was not provided. Thereafter, on 27.08.2021, the assessee filed a detailed legal submission on non-applicability of Circular No. 9/2015 (supra) to the assessee’s case along with other contentions raised in support of its claim. The assessee’s main contentions were :- (i) interest under section 244A of the Act has to be allowed even when there is an inadvertent mistake of not claiming advance tax in the return of income; (ii) a decision on debatable point of law cannot be regarded as mistake apparent from record amenable for rectification under section 154 of the Act, and (iii) tax authorities cannot take advantage of any error or mistake committed in return of income out of the assessee’s ignorance in view of the CBDT Circular No. 14(XL35) dated 11.04.1955.

2.1 The Ld. AO rejected the above contentions of the assessee and proceeded to pass the rectification order u/s 154 of the Act on 22.03.2022 withdrawing interest of Rs.4,70,000/- u/s 244A of the Act and also levying interest u/s 234D of the Act amounting to Rs.1,10,450/-, thus, raising of total demand of Rs.5,80,450/- on the ground that the delay in claiming refund of advance tax of Rs.20,00,000/- is attributable to the assessee and hence no interest u/s 244A of the Act is to be granted to the assessee. The relevant observations and findings of the Ld. AO is reproduced below :

“02. As the originally furnished return of Income for the A. Y. 2014-15 on 01/12/2014 wherein claim of Advance Tax amounting to Rs. 20,00,000/- was not made and the time-limit for furnishing revised return as per the provisions of section 139(4) expired on 31/03/2016 but the assessee had failed to make revised return by claiming the aforesaid Advance Tax. Therefore, addition interest u/s 244A might not be issued on the unclaimed refund beyond the expiry of time-period specified U/s 139(4) of the Act for furnishing revised Return of Income. Whereas, in assess