COMMISSIONER OF INCOME TAX Vs. STATE

JUDGEMENT

(1.) This appeal is by the Revenue, challenging the order passed by the Tribunal which found fault with the Commissioner exercising suo motu power under Section 263 of the Income-tax Act, 1961, for short, hereinafter referred to as the 'Act' and set aside the order passed under Section 154 of the Act by the Assessing Authority granting the benefit of refund of tax on tax deducted at source on the ground that it is erroneous as well as prejudicial to the Revenue.

(2.) The assessee filed the return of income for the assessment year 1999-2000 on 29.12.1999 showing the income of Rs. 11,45,67,180-00. The assessee claimed credit for an amount of Rs. 1,36,35,634-00 towards tax deducted at source. The Assessing Officer processed the return of income under Section 143(1)(a) on 14.11.2000 accepting the return and determining a refund of Rs. 1,08,66, 716-00. However, as against the assessee's claim of Rs. 1,36,35,634-00, the Assessing Officer gave credit only to a sum of Rs. 38,14,844-00 towards tax deducted at source. Subsequently, the assessee filed letter dated 19.12.2000 and 12.02.2001 requesting for rectification of the intimation on the ground that credit for entire tax deducted at source was not given. The assessee also pointed out that at the time of filing the return, credit for TDS amounting to Rs. 19,44,692-00 was not claimed since the relevant TDS certificates were not available and since these certificates have been received subsequently, they wanted credit to be given to the extent of Rs. 19,44,692-00. Thereafter, the Assessing Officer passed an order under Section 154 rectifying the intimation. In this order, he gave credit to a sum of Rs. 1,45,98,652-00 towards tax deducted at source which included the amount of Rs. 19,44,672-00 in respect of which no claim was made in the original return of income. Since the assessee did not claim this amount of TDS in the return filed on 29.12.1999 and also no details of the same were indicated in the return and accompanying papers there was no mistake apparent from the records warranting rectification of the intimation to give credit to this amount. Therefore, the Commissioner exercising his power under Section 263 of the Act, found fault with giving credit to the amount of Rs. 19,44,672-00 as tax deducted at source, when that amount was not claimed in the returns filed by the assessee. Therefore, they proceeded to modify the order under Section 154 by withdrawing the credit given to the amount of Rs. 19,44,672-00. Aggrieved by the said order, the assessee preferred an appeal to the Tribunal. The Tribunal held that tax deducted at source partakes the character of advance tax. As per Section 237, the assessee is entitled to refund in respect of such tax deducted at source. The Assessing Officer was satisfied that the credit for such tax was not given earlier. The certificates were found to be correct. The income comprised in such certificate has already suffered taxation. Thus, there is no reason to hold that the assessee is not entitled to credit for such tax. It is settled law that to pass an order under Section 263, the order sought to be revised should not only be erroneous but also prejudicial to the interest of Revenue. There is no prejudice to the Revenue if the credit of such tax deducted is given. After all, the credit is given only in respect of such sum which are already deducted from the income of the assessee and which has been paid to the credit of the Government. Thus, there is neither any error in the order Section 154 nor any prejudice caused to the Government by giving credit for the same. To this extent, there is no error in the order under Section 154 dated 12.06.2001 sought to be revised by the Commissioner. Therefore, they have set aside the order of the Commissioner under Section 263. Aggrieved by the said order, the Revenue is in appeal.

(3.) The learned Counsel for the Revenue assailing the impugned order contends that for exercising the power under Section 154, the mistake should be apparent from the record. It is only then, the Income Tax authorities gets jurisdiction to rectify the mistake. In the instant case, the claim for refund is made after the passing of the order. In the return filed, the claim to the extent of Rs. 19,44,672-00 was not put forth at all. As the law stood then, unless a return accompanied by TDS certificate and the claim is made on that basis, the assessee shall not be entitled to any refund of excess tax paid. Therefore, the order passed by the Assessing Authority on 14.11.2000 did not suffer from any mistake. Therefore, when an application is filed on 19.12.2000 and 12.02.2001 claiming the said amount by enclosing TDS certificate, he could not have exercised his power under Section 154 as there was no error apparent on the face on the record. Even otherwise, the amendment introducing sub-section 14 of Section 155 came on the statute book from 01.06.2002. It has no retrospective operation. Even according to the amended provision, the assessee was not entitled to the said refund. The order passed by the Assessing Authority was erroneous and prejudicial to the interest of the revenue. The Commissioner was justified in exercising his revisional jurisdiction which is vested in him. Therefore the Tribunal committed serious error in interfering with the said order.