TITAGARH CAPITAL MANAGEMENT SERVICES(P)LTD,KOLKATA vs. ITO, KOLKATA

order : November 21, 2023 आदेश / ORDER संजय गग�, �या�यकसद�य�वारा/ Per Sanjay Garg, Judicial Member: The present appeal has been preferred by the assessee against the order dated 22.02.2023 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’). 2. The sole issue raised by the assessee through its grounds of appeal

is relating to the confirmation of disallowance of Rs.72,84,803/- u/s 14A of the Act r.w.r 8D of the Income Tax Rules on account of notional expenditure for earning of tax exempt income.

3. At the outset, the ld. Counsel for the assessee has submitted that the assessee in the return of income inadvertently out of mistake made Assessment Year: 2013- M/s Titagarh Capital Management Services (P) Ltd suo moto disallowance of entire expenditure of Rs.72,84,803/- u/s 14A of the Act. However, the assessee realising its mistake, during the assessment proceedings brought to the knowledge of the Assessing Officer that the assessee had also earned interest income of Rs.54,00,207/- and therefore, net interest expenditure was only Rs.18,81,370/-. That the notional interest disallowance u/s 14A r.w.r. 8D of the Income Tax Rules was required to be worked on the net expenditure of Rs.18,81,370/- only. However, the Assessing Officer ignoring the submissions of the assessee, calculated the disallowance u/s 14A of the Act r.w.r 8D of the Income Tax Rules at Rs.51,34,346/- but retained the disallowance at Rs.72,84,803/- only, observing that the assessee, itself, has offered the said amount as disallowance u/s 14A of the Act.

3.1 The ld. Counsel for the assessee, in this respect, has relied upon the decision of the Hon’ble Supreme Court in the case of Commissioner Of Income Tax-LTU vs Reliance Industries Ltd reported in 410 ITR 466. The ld. counsel has further made the following submissions:

Assessment Year: 2013- M/s Titagarh Capital Management Services (P) Ltd c) In CIT v. Bharat General Reinsurance Co. Ltd [1971] 81 ITR 303 (Delhi), this court held that merely because the assessee wrongly included the income in its return for a particular year, it cannot confer jurisdiction on the department to tax that income in that year even though legally such income did not pertain to that year. d) The Bombay High Court in Balmukund Acharya v. Dy. CIT, Special Range [2009] 310 ITR 310/176 Taxman 316 held that Tax can be collected only as provided under the Act. If any assessee, under a mistake, misconception or on not being properly instructed is over assessed, the authorities under the Act are required to assist him and ensure that only legitimate taxes due are collected. e) The Bombay High Court in Nirmala L. Mehta v. A. Balasubramaniam, CIT v. [2004] 269 ITR 1/139 Taxman 394 held that there cannot be any estoppel against the statute. Article 265 of the Constitution of India unmistakable terms provides that no tax shall be levied or collected except by authority of law. Acquiescence cannot take away from a party the relief that he is entitled to .here the tax is levied or collected without authority of law. f) Circular No. 14(XL-35) of 1955, dated 1 1.4.1955, issued by the Central Board Direct Taxes and relied upon by the Petitioner reads as under: "0fficers of the department must not take advantage of ignorance of an assessee as to his rights. It is one of their duties to assist a taxpayer in every reasonable way, particularly in the matter of claiming and securing reliefs and in this regard the officers should take the initiative in guiding a taxpayer where proceedings or other particulars before them indicate that some refund or relief is due to him. This attitude would, in the long run, benefit the department, for it would inspire confidence in him that he may be sure of getting a square deal from the department. Although, therefore, the responsibility for claiming refunds and reliefs rests with the assessees on whom it is imposed by law, officers should - (a) draw their attention to any refunds or reliefs to which they appear to be clearly entitled but which they have omitted to claim for some reason or other: (b) freely advise them when approached by them as to their rights and liabilities and as to the procedure to be adopted for claiming refunds and reliefs". g) A reading of the circular shows that a duty is cast upon the assessing officer to assist and aid the assessee in the matter of taxation. They are Assessment Year: 2013- M/s Titagarh Capital Management Services (P) Ltd obliged to advise the assessee and guide them and not to take advantage of any error or mistake committed by the assessee or of their ignorance. The function of the Assessing Officer is to administer the statute with solicitude for public exchequer with an inbuilt idea of fairness to taxpayers. ACIT v. Rajesh Jhaveri Stock Brokers Pvt. Ltd. (2007) 291 ITR 500/161 Taxman 316 (SC). Hence the claim of the appellant as made before the AO should have been considered by the A.O and allowed accordingly.”