ORDER
D.R. Singh, J.M.
The assessee has filed this appeal against the order of CIT(A) passed in Appeal No. 135/05-06/GGN dt. 2nd May, 2006 on 4 grounds of appeal mainly raising the issue whether the assessee is entitled to the refund of Rs. 4 lakhs together with interest paid in pursuant to the directions of Tribunal issued during the stay proceedings and due to the final order of Tribunal in which the assessment framed by the AO in the treatment of Rohtas (HUF) has been held to be null and void.
1. Briefly stated the facts relating to the issue are that the an assessment Under Section 147 was framed by the AO vide order dt. 14th March, 2002 at an income of Rs. 70,47,356, against which an appeal was preferred by the assessee before Tribunal and the Tribunal vide order dt. 29th Sept., 2004 annulled the assessment framed against the assessee, Shri Rohtas, in the status of Rohtas (HUF). Thereafter, the assessee moved an application Under Section 154 before the AO alleging therein that the effect of the said order passed by the Tribunal was that a sum of Rs. 4 lakhs paid by the assessee as HUF, in pursuance to the directions of the Tribunal in the stay petition, was refundable with interest to the assessee HUF, which has not been so refunded to the assessee in full and a sum of Rs. 2,13,482 has been deducted out of that amount, which in any case was not due from the assessee. In its application the assessee prayed before the AO that the amount deducted by the AO may be refunded to the assessee HUF.
2. The AO, however, rejected the application of the assessee on the reasoning that the assessee as individual has submitted his return on 26th July, 2001 in response to notice Under Section 148 of IT Act showing an income of Rs. 8,50,981. That the assessment was completed in the status of Rohtas (HUF) at Rs. 70,47,356 by the AO. The assessee filed an appeal but the same was dismissed by the CIT(A). Later, in second appeal the Tribunal gave a decision in favour of the assessee that the assessment framed by the AO was not proper and treated the same as null and void. Appeal effect was given to the order of Tribunal on 25th Aug., 2005 and interest under Sections 234A, B and C was charged up to the date of filing of the return on the returned income only.
Further according to the AO the interest under Sections 234A, B and C has been rightly charged on the declared income of the assessee at Rs. 8,50,951 showing tax of Rs. 1,71,471 upto the date of filing of the return and hence there was no mistake apparent from record.
3. Aggrieved, the assessee filed an appeal and reiterated the submissions before the CIT(A) as alleged in the application moved before the AO, and further contended that as per Section 240(b) and CBDT Circular No. 551 dt. 23rd Jan., 1990 [(1990) 82 CTR (St) 325] which deals with amendment in Section 240 w.e.f. 1st April, 1989, that only tax is chargeable on the total income returned by the assessee and it nowhere states that interest under Sections 234A, B and C should be recovered from the assessee. Further, that payment was made against the demand created in status of HUF and no income is taxable in the hands of HUF and as such no tax was payable by the assessee in the status of HUF. Since no tax is payable by assessee in the status of HUF, the question of recovering interest under Sections 234A, B and C do not arise at all. It is further submitted, that the amount was deposited in accordance with directions of Tribunal, which were issued on the request of assessee for early hearing. Had the assessee, not made an application for early hearing, then there was no need for this deposit. Now since in the facts and circumstances of the case, AO cannot demand interest under Sections 234A, B and C, it is not open for him to deduct interest under Sections 234A, B and C on returned income, while giving the appeal effect because it has been held by the Tribunal, Delhi Bench, in the present case of the assessee that individual and HUF are two separate taxable entities.
4. On considering the submissions the CIT(A) rejected all the submissions of the assessee and upheld the order of AO on the reasoning that the return was filed by the assessee Shri Rohtas voluntarily in the capacity of an individual hence, after the order of Tribunal, wherein the assessment framed in the status of HUF was declared null and void, so the return filed by the assessee voluntarily in individual capacity stands and interest under Sections 234A, B and C has been rightly charged upto the date of filing of the return while passing the appeal effect order by the AO.
5. We have considered the rival submissions of both the parties, perused the record and carefully gone through the orders of tax authorities below.
6. This is an admitted fact that the assessee (HUF) has gone in appeal against the assessment framed on the assessee (HUF). This Tribunal vide order dt. 29th Sept. 2004, passed in ITA No. 200/Del/2004, annulled the assessment by observing as under:
Having considered the rival submissions and from a careful perusal of the record and judgments referred to by the parties, we find that admittedly the notice Under Section 148 and other notices under Sections 143(2) and 142(1) of the IT Act, 1961 were issued upon the assessee in the status of an individual. During the course of hearing, the learned Counsel for the assessee has also invited our attention to the reasons recorded and from its perusal it appears that the reasons were also recorded in the case of assessee individual. In response to notice Under Section 148 return was also filed in the status of an individual. We have also carefully examined the impugned letter dt. 14th March, 2002 on which the Revenue has placed heavy reliance and we find through this letter the assessee has categorically stated that the land was acquired through a Court decree, therefore, the status is shown as individual. Since, the assessee has not stated anything about the status of HUF in this letter, we fail to understand how the CIT(A) has observed in his order that through this letter the assessee has agreed for the status of HUF. We have also carefully examined the aforesaid judgments through which the legal position has been clarified that an assessment can only be framed in the hands of the same person in whose name notices Under Section 148 and other notices were issued. Moreover, the notice Under Section 148 is a statutory notice and without serving a notice Under Section 148 the jurisdiction to frame an assessment over the assessee cannot be assumed. It is also a settled position of law that the individual and the HUF are two different entities and the notice issued upon one assessee cannot lead to framing of assessment upon another assessee. If the AO wished to frame an assessment upon the HUF, he should have issued the notice Under Section 148, other notices upon the HUF assessee for framing the assessment. But in the instant case, notice Under Section 148 and other sections were issued upon the individual, but the AO framed the assessment in the hands of the HUF, which is not legally permissible or tenable, in the light of the aforesaid judgments referred to by the assessee. During the course of hearing, our attention was also invited to the order of the Tribunal in the case of Dharam Singh (HUF) v. ITO (supra) in which identical issue was examined by the Tribunal and the Tribunal, after relying upon the various judgments, knocked down the entire assessment, being not framed in proper hands. Keeping in view the facts and circumstances of the case and in the light of legal propositions, we have no hesitation to hold that the assessment was not properly framed and we, therefore, annul the same, being null and void.
7. This is also an admitted fact that the assessee (HUF) had deposited a sum of Rs. 4 lakhs in compliance with the interim order of this Tribunal dt. 7th April, 2004. When the assessment framed on the HUF was annulled and held null and void, the tax deposited by the assessee (HUF) became refundable to the assessee (HUF) along with interest in accordance with law. The AO in our opinion has exceeded his jurisdiction giving the appeal effect of the order of the Tribunal dt. 29th Sept., 2004 treating the assessee in the status of individual. Individual and HUF both are different assessees in law. The Tribunal has annulled the assessment in the case of the assessee (HUF) vide order dt. 29th Sept., 2004 in ITA No. 200/Del/2004. Therefore, the order giving the appeal effect to the order of the Tribunal was to be passed in the status of assessee (HUF) not individual. Thus, in our opinion, there is a mistake apparent on record committed by the AO while giving the appeal effect to the order of this Tribunal. The assessee (HUF) has not filed an IT return. Therefore, no question of payment of any self assessment tax as well as interest under Sections 234A, 234B and 234C arises. We, therefore, set aside the order of the CIT(A) and direct the AO to refund a sum of Rs. 4 lakhs paid by the assessee (HUF) along with the interest on the refund due to the assessee in accordance with the law.
In the result, the appeal filed by the assessee is allowed.