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Income Tax Appellate Tribunal, “RANCHI BENCH, RANCHI
Before: Shri Sanjay Garg & Shri Rajesh Kumar
order
: April 28, 2023 ORDER
Per Sanjay Garg, Judicial Member:
The present appeal has been preferred by the assessee against the order dated 26.08.2021 of the National Faceless Appeal Centre [hereinafter referred to as ‘CIT(A)’] passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’).
The brief facts of the case are that the Assessing Officer noticed that the assessee had filed service tax return and declared turnover of Rs.26,44,516/- in his service tax return. Apart from that, the assessee has also entered into a transaction of sale of immovable property of Rs.11,79,011/-, but the assessee did not file its return of income for the assessment year under consideration. The Assessing Officer thereafter reopened the assessment u/s 148 r.w.s. 147 of the Act and called for the assessee to file its return of income. The assessee filed 1
Assessment Year: 2015-16 Al Kabir Polytechnic its return of income and had shown an income of Rs.20,94,200/- and paid the applicable tax thereon amounting to Rs.1089,278/-. The Assessing Officer accepted the said return of income.
However, the assessee preferred appeal before the CIT(A) stating therein that the assessee has been doubly taxed. That the assessee was a unit of “Kabir welfare trust” which was registered under Societies Registration Act and also registered u/s 12AA of the Income Tax Act. That the assessee polytechnic being part/unit of the Kabir welfare trust, hence, its income and financial transactions have been duly included and taken care of in the return of income filed by the Kabir welfare trust, which has already been assessed u/s 143(3) of the Act. However, inadvertently, in response to the notice u/s 148 of the Act, the assessee filed return of income and paid the tax of Rs.10,89,278/- but that the assessee was not exigible to any tax as the income of the assessee has already been taken into account while furnishing return of income of “Kabir welfare trust”. However, the ld. CIT(A) dismissed the appeal of the assessee observing that the Assessing Officer has accepted the return of income of the assessee and no further action was warranted.
We have heard the rival contentions and gone through the record. It has been held time and again that the Income Tax authorities should charge only legitimate taxes from the assessee. Further, the full bench of the Hon’ble Bombay High Court in the cases of “Ahmedabad Electricity Company Ltd. vs. CIT” and “Godavari Sugar Mills Ltd. vs. CIT” by way of a common order dated 30.04.1992 (1993) 199 ITR 351 has observed that the basic purpose of an appeal procedure in an income tax matter is to ascertain the correct tax liability of the assessee in accordance with law. Therefore, at both the 2
Assessment Year: 2015-16 Al Kabir Polytechnic stages, either by the Appellate Assistant Commissioner or before the Appellate Tribunal, the appellate authority can consider the proceedings before it and the material on record before it for the purpose of determining the correct tax liability of the assessee. The Hon’ble full bench of the Bombay High Court observed that there was nothing in section 254 or section 251 which would indicate that the appellate authorities are confined to considering only the objections raised before them or allowed to be raised before them either by the assessee or by the department, as the case may be. They can consider the entire proceedings to determine the tax liability of the assessee.
The co-ordinate bench of the Tribunal in the case of “Shri Chandrashekhar Bahirwani” and 6599/M/2011 vide order dated 17.06.2015 while deciding the question as to whether the income cannot be assessed less than the returned income has observed as under:
“5. Now coming to the finding of the Ld. CIT(A), that income cannot be assessed less than the returned income, the Ld. A.R. of the assessee has submitted before us that the action of the Ld. CIT(A) in rejecting the claim of the assessee on this ground was not justified. He has further relied upon the decision of the Hon’ble Gujarat High Court in the case of “Gujarat Gas Ltd. vs. JCIT” (2000) 245 ITR 84. In the said case, the words of the Circular No.549, para 5.12, dt. 31st October, 1989, providing that the assessed income under section 143(3) shall not be less than the returned income was considered by the Hon’ble High Court and it was held that as per proviso to section 119 of the Act, the Board cannot issue instructions to the Income Tax Authority to make a particular assessment or to dispose of a particular case in a particular manner as well as not to interfere with the discretion of the Commissioner in exercise of his appellate functions. It was further held that the AO, while exercising his quasi judicial powers, was not bound by the said circular and should have exercised his powers independently. The Hon’ble High Court, therefore, directed the AO to make the assessment without keeping in mind the said circular. It may be further observed that the Hon’ble Bombay High Court in the case of ‘Pruthvi Brokers & Shareholders Pvt. Ltd.’ of 2010 decided on 21.06.12, while relying upon the various decisions of the Hon’ble 3
Assessment Year: 2015-16 Al Kabir Polytechnic Supreme Court and other Hon’ble High Courts has held that even if a claim is not made before the AO, it can be made before the appellate authorities. The jurisdiction of the appellate authorities to entertain such a claim is not barred. The Hon’ble High Court has further observed that the decision of the Hon’ble Supreme Court in the case of ‘Goetze (India) Limited v. CIT’ (2006) 157 Taxman 1, relating to the restriction of making the claim through a revised return was limited to the powers of the Assessing Authority and the said judgment does not impinge on the power or negate the powers of the appellate authorities to entertain such claim by way of additional ground. Even otherwise, the Ld. CIT(A) ought to have considered the claim of the assessee in exercise of his appellate jurisdiction under section 250 of the Act. Moreover, if the assessee is, otherwise, entitled to a claim of deduction but due to his ignorance or for some other reason could not claim the same in the return of income, but has raised his claim before the appellate authority, the appellate authority should have looked into the same. The assessee cannot be burdened with the taxes which he otherwise is not liable to pay under the law. Even a duty has also been cast upon the Income Tax Authorities to charge the legitimate tax from the tax payers. They are not there to punish the tax payers for their bonafide mistakes. In view of our above observations, it is held that the assessee is not liable to pay Capital Gains Tax, though originally he had subjected himself to the said tax as per his return of income. The AO is directed to process the claim of refund in this respect as per provisions of the law.”
In view of the above discussion, the issue is required to be examined at the end of the Assessing Officer. We, therefore, restore the matter to the file of the Assessing Officer with a direction that the Assessing Officer will examine the contentions of the assessee that the income declared by the assessee and taxes paid thereon have already been included and part of the income declared by the “Kabir welfare trust”. If the contention of the assessee that in the light of the above narrated facts and circumstances, there is a double taxation of the same amount, is found correct, the Assessing Officer will process the refund of the taxes paid by the assessee. However, it is made clear that the assessee will not be entitled to any interest on the refund amount upto 3 months from the date of receipt copy of this order. However, the assessee will be entitled to the interest on the refund as 4
Assessment Year: 2015-16 Al Kabir Polytechnic provided in the relevant provisions of the Income Tax Act after 3 months from the date of receipt copy of this order.
With the above observations, the appeal of the assessee stands allowed.