Assessee’s Appeal against Income Tax Order: Understanding the Intricacies of Section 244A

• The recent appeal filed by the assessee against the order of the Learned Commissioner of Income Tax, National Faceless Appeal Centre (NFAC), Delhi [referred to as “Ld. CIT(A)”], dated 26/06/2023 for Assessment Year 2013-14 has drawn attention due to significant grounds put forth. Let’s delve into the essence of the case and the pivotal arguments presented.

Background of the Case

• The crux of the matter revolves around the reduction of interest granted under section 244A from Rs. 1,00,195.00 to Rs. 47,595.00 by the AO CPC through a rectification order under section 154, without providing an opportunity for hearing. The appeal challenges this reduction and questions the applicability of Section 244A(2) regarding the delay in issuing the refund and its attribution to the assessee.

The Arguments

• The appellant contends that the AO CPC erred in reducing the interest without affording an opportunity for a hearing, as mandated by Section 154(3) of the IT Act. Moreover, the appellant argues that Section 244A(2) is not applicable for the assessment year in question, as it was amended effective from 01/04/2017, and therefore, the reduction of interest based on this section is unwarranted.
• In contrast, the Department argues that the delay in refund issuance was due to reasons attributable to the assessee, justifying the application of Section 244A(2) and consequently denying interest for 19 months.

Court’s Observations and Decision

• The Court, after considering the submissions of both parties, analyzed the applicability of Section 244A(2) for the assessment year 2013-14. The Court highlighted the amendment made to this section, introducing the phrase “or the deductor, as the case may be” effective from 01/04/2017 via the Finance Act, 2017.
• It was concluded that this amendment isn’t applicable to the assessment year under consideration, 2013-14. Therefore, the Ld. CIT(A) erred in considering Section 244A(2) as a basis for reducing the interest payable to the assessee.

Verdict and Future Course of Action

• In light of the above analysis, the Court partly allowed the appeal for statistical purposes. The decision deemed it appropriate to remand the issue back to the AO for recomputation and granting of interest in accordance with the law, acknowledging the non-applicability of the amended Section 244A(2) for the concerned assessment year.

Conclusion

• This appeal highlights the nuanced interpretation of tax laws and the significance of understanding the applicability of specific sections in different assessment years. The decision not only emphasizes adherence to procedural fairness but also underscores the necessity for precise application of statutory provisions in tax assessments.

Topic-Extrieve Technologies Pvt. Ltd. Versus Ao Cpc Bangalore

Court-ITAT-Delhi

Date-14/12/2023

Team Taxonation