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Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD
Before: SHRI PRADIP KUMAR KEDIA & SHRI MAHAVIR PRASAD
आदेश/O R D E R
PER PRADIP KUMAR KEDIA - AM:
The captioned appeal has been filed at the instance of the assessee against the order of the Commissioner of Income Tax (Appeals)-6, Ahmedabad (CIT(A)’ in short), dated 28.12.2017 arising in the order dated 09.06.2016 passed by the Assistant Commissioner of Income Tax (ACIT) under s. 154 of the Income Tax Act, 1961 (the Act) concerning AY 2010-11.
The grounds of appeal filed by the assessee read as under:
“1. Ld. CIT (A) erred in law and on facts confirming the order dated 09.06.2016 passed by AO u/s 154 enhancing assessed income of the Appellate without issuing notice and affording an opportunity of hearing to the assessee as contemplated under Sub-section (3) of Section 154 of the Act.
2. Ld. CIT (A) erred in law and on facts confirming the order dated 09.06.2016 passed by AO u/s 154 without appreciating that there was no error apparent on record so as to enhance the income of the Appellant as was originally assessed u/s 143(3) of the Act.
3. That learned CIT(A) erred in law and on facts confirming the order dated 09.06.2016 passed by AO u/s 154 of the Act as AO has failed to comply with primary terms of rectification order u/s 154 of the Act which is that the mistake in the original order should be apparent from the records.
4. Ld. CIT (A) erred in law and on facts confirming the order dated 09.06.2016 passed by AO under Section 154 without appreciating that under Sub-section (8) of Section 154 the AO cannot enhance the assessed income on a rectification application made by an Assessee.
5. Ld. CIT (A) erred in law and on facts confirming the order dated 09.06.2016 passed by AO under Section 154 by relying upon Goetz (India) Ltd vs. CIT (2006) 284 ITR 323 (SC) without appreciating that facts in said case are completely different in as much as in the said case assessee without there being any assessment proceedings, assessee made new claim through a letter without filing revised return whereas in the present case the Appellant has filed revised computation of income during assessment proceeding which was duly discussed and accepted by the assessing officer.”
When the matter was called for hearing, none appeared for the assessee. It is seen that the assessee has remained delinquent in earlier occasions also and neglected to either attend the hearing or sought adjournment. The matter is accordingly proceeded ex parte in the absence of the assessee.
The learned DR for the Revenue relied upon the order of the lower authorities.
We have perused the order of the lower authorities and case records. The assessee in the instant case has sought to challenge the action of the AO in denying the additional refund arising from the assessed income qua the return of income.
5.1 Briefly noted, the assessee filed return of income declaring total income at Rs.50,36,440/-. The assessment was carried out under s.143(3) of the Act and the assessed income was determined at lower figure of Rs.38,69,029/-. The refund was claimed at Rs.3,05,770/-. A refund of Rs.2,91,240/- was granted to the assessee on processing the return under s.143(1) of the Act based on income of Rs.50,36,440/- returned by assessee. However, when the income was assessed under s.143(3) of the Act at Rs.38,69,029/- as per the order dated 01.11.2012, the assessee asked for additional refund. Vide order passed under s.154 of the Act dated 09.06.201, the additional refund was denied on the ground that the assessee has failed to revise his return of income to claim such refund. The rectification order under s.154 of the Act, being short, is reproduced for easy reference:
“The Assessee had e-filed his return of income showing total income of Rs.50,36,439/- claiming refund of Rs.3,05,770/-. The same was processed u/s 143(1) by the CPC with income of Rs.51,67,840/- resulting in to a refund of Rs.2,91,240/- which was paid to the assessee on 25.05.2011. Thereafter, the case was selected for scrutiny u/s 143(3) and assessment was completed on total income of Rs.38,69,029/- vide assessment order u/s 143(3) dtd 01.11.2012 which was below the returned income. Now, the assessee has filed an application for rectification u/s 154 claiming that the amount of refund payable is Rs.5,46,258/-. The application of the assessee has been considered carefully but found not to be acceptable because of the fact that the assessee had himself filed his return of income declaring his total income at Rs.50,36,439/-. He did not revise his return of income, which was the correct course of action. Instead he sought to revise his computation of income thereby enhancing his claim for refund. However, in view of the judgment of Hon’ble Supreme Court in the case of Goetze (India) Ltd. Vs. CIT (284 ITR 323) the assessed income cannot be below the returned income. Therefore, the claim of the assessee to change the return income by revising the computation of capital gain is not allowable. Accordingly his application for rectification u/s 154 of the IT Act is hereby rejected and the revised income remains the returned income i.e. Rs.50,36,439/-. Revised Assessed income Rs.50,36,439/- Rounded off to Rs.50,36,440/- Issue demand notice and challan, charge interest u/s 234B/234C.”
5.2 Against the order passed under s.154 of the Act by the AO, the assessee preferred appeal before the CIT(A).
5.3 The CIT(A) relied upon the decision of the Hon’ble Supreme Court in Goetze (India) Ltd. vs. CIT [2006] 284 ITR 323 (SC) and upheld the action of the AO. In short, the refund arisen to the assessee due to income assessed at lesser figure than the return of income was denied to the assessee.
5.4 The aforesaid action of the CIT(A) has been controverted before us.
5.5 To begin with, we observe that Section 154 of the Act postulates rectification of a mistake apparent on record. Notwithstanding the case where the income has been admittedly assessed at a lesser amount, the consequences of such assessment will automatically follow in accordance with law. Thus, as a corollary, the assessee would be entitled to appropriate refund of taxes by operation of law as paid in excess on the basis of income wrongly returned at a higher figure. Such additional claim of refund does not involve any long drawn process of reasoning and there cannot be any debate conceivable on such view. Therefore, there was no reason to deny the refund entitled to the assessee based on assessed income by the appellate authority i.e. CIT(A). The decision of the Hon’ble Supreme Court in Goetze (India) Ltd. (supra) does not prevent an appellate authority from doing such logical thing. The order of the CIT(A) is accordingly set aside and the AO is directed to determine the refund based on assessed income and consequently assign appropriate refund entitled to the assessee based on assessed income.
In the result, appeal filed by the assessee is allowed ex parte.
This Order pronounced in Open Court on 17/01/2020
Sd/- Sd/- (MAHAVIR PRASAD) (PRADIP KUMAR KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad: Dated 17/01/2020 True Copy S. K. SINHA आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. राज�व / Revenue 2. आवेदक / Assessee 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त- अपील / CIT (A) 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाइल / Guard file. By order/आदेश से,
उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद ।