Sec 234D of Income Tax Act for charging interest on excess refund is applicable only from AY 2004-05

Court :
Income Tax Appellate Tribunal

Brief :
In brief, the factual background giving rise to the impugned dispute can be summarized as follows. By a letter dated 18.12.2006, it was pointed out by the assessee that a refund of Rs 6,78,32,796/- was received by it on 1.4.2006 in consequence of the order of the Tribunal, Pune Bench, in ITA No 205/PN/99 dated 20.4.2005. The assessee noticed a mistake in the above refund insofar as the refund was granted by the Assessing Officer as if the relief was given by the Tribunal in respect of the additions made under section 143(3) of the Act while in fact the decision of the Tribunal was to the effect of reduction/withdrawal of additional tax levied under section 143(1A) of the Act. According to the assessee, as the issue before the Tribunal was regarding the scope of section 143(1A), the order giving effect to the order of the Tribunal passed by the Assessing Officer was incorrect. The Assessing Officer discussed the entire history of the case in the order under section 154 of the Act and came to a conclusion that there was a mistake apparent from record insofar as the refund of Rs 6,78,32,796/- was incorrectly given. The assessing Officer, therefore, proceeded to rectify the mistake, but at the same time, charged the assessee with interest of Rs 27,56,821/- under section 234D of the Act from 1.4.2006 to 18.12.2006, i.e. till the date of passing the order under section 154 of the Act. Subsequently, the assessee moved an application dated 5.1.2006 against the order under section 154 passed by the Assessing Officer stating that interest under section 234D levied by the Assessing Officer was not tenable. The Assessing Officer, however, rejected the said application. Against the same, assessee went in appeal before the Commissioner of Income-tax (Appeals), who directed deletion of the interest under section 234D of the Act levied by the Assessing Officer. Against the order of the Commissioner of Income-tax (Appeals), Revenue is in appeal before us.

Citation :
Dy. Commissioner of Income-tax, .. Appellant VS The United Western Bank Ltd., .. Respondent