1.   CIT Vs. Indian Farmer Fertilizer Co-operative, I.T.A. No. 542/2012, Date of decision:  03.03.2015, High Court of Delhi

Whether interest on delayed payment of interest u/s 244A on principal refund amount be allowed to the assessee?

Held: No

Brief facts:
The return of the assessee for the year 1997-98 and 1998-99 were processed under Section 143(1). The assessments were thereafter framed under Section 143(1) and refund was determined of Rs.10,38,32,977/-. However, the AO adjusted the refund against demand of A.Y. 1996-97 on 19.03.1999.  The assessee claimed grant of interest u/s. 244A for the period 1.4.1997 to 31.3.1999,i.e.  upto the month in which the refund was adjusted. However, the AO denied paying interest for the said period.  The assessee filed an application u/s 154 dated 18.7.2001 but application u/s. 154 has been rejected, on account of being barred by limitation i.e. expire of 4 years. The assessee filed appeal before CIT(A) and CIT (A) granted the refund upto the date of adjustment. Further the assessee also claimed interest on delayed interest apart from the interest on principal refund but CIT(A) declined the same. However, the ITAT relied upon the decision of the Supreme Court in Sandvik Asia Ltd. V. CIT & Ors. (2006) 280 ITR 643 and held that the assessee was entitled to interest on delayed payment of interest.

Held:
The Hon’ble High Court relied the decision of the Hon’ble Supreme Court in the case of CIT Vs. Gujarat Fluoro Chemicals 358 ITR 291 wherein it was held that the only amount which an assessee aggrieved by delayed payment can legitimately claim under the statute is interest and that “no other interest on such statutory interest” is payable. The Hon’ble High Court according held that the impugned order of ITAT to the extent it directs payment of any sum over and above interest payable under Section 244A(1) to the assessee, cannot be upheld.  Accordingly the question of law framed is answered in favour of the revenue and against the assessee in the above terms. The appeal is partly allowed.

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2.  Heranba Industries Ltd. Vs. DCIT, I.T.A. No. 2292 of 2013, Date of Pronouncement: 08.04.2015, ITAT- Mumbai

Where assessee surrendered unexplained income voluntarily even after receiving notice u/s 143(2) and the AO had not brought any evidence on record to prove that there was concealment of income, whether levy of penalty u/s 271(1)(c) is justified?

Held_No

Brief facts:
Assessee is engaged in manufacturing of pesticides, herbicides and formulations. Assessee filed his return for the year. During scrutiny assessment AO found receipt of share application money of Rs.89.50 lakhs during the year. The assessee was asked to furnish the details with supporting evidences. Assessee was not able to produce any evidence, hence surrendered the entire amount as additional income. The AO passed order u/s.143(3) adding surrendered amount u/s 69A and levied penalty u/s 271(1)(c) on the plea that assessee has surrendered amount only after issue of notice. CIT(A) upheld the order of AO. Aggrieved, assessee filed appeal before Tribunal.

Held:
From the record we found that at the very first instance share application money was surrendered by assessee with a request not to initiate any penalty proceedings. In the instant case, there was no malafide intention on the part of the assessee and the AO had not brought any evidence on record to prove that there was concealment of income. It is quite clear from the record that this entire transaction was not detection of the AO that the share capital was not genuine and that the assessee had offered the amount without any specific query. It was categorically observed that penalty should be imposed only when there is some element of deliberate default and not a mere mistake. This being the position, the furnishing of inaccurate particulars was simply a mistake and not a deliberate attempt to evade tax. The Hon’ble Supreme Court in the case of CIT vs. Suresh Chandra Mittal 251 ITR 9 (SC), has held that if the assessee has offered the additional income to buy peace of mind and to avoid litigation, penalty u/s. 271(1)(c) of the Act cannot be levied.  In view of the above, we do not find any merit for levy of penalty u/s.271(1)(c) of the Act. In the result, appeal of the assessee is allowed.

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