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Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI
Before: SHRI MAHAVIR SINGHAND SHRI MANOJ KUMAR AGGARWAL
आदेश / O R D E R
Per Mahavir Singh, Vice President :
This appeal by the assessee is arising out of the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, in Appeal No.CIT(A), Chennai-15/10006/2020- 21 dated 11.03.2022. The return of income was processed by the Income Tax Officer, Company Ward-VI(1), Chennai for the relevant
2 -: Assessment Year 2006-07 vide intimation dated 26.02.2008 u/s. 143(1) of the Income Tax Act, 1961 (hereinafter ‘the Act’).
The only issue in this appeal of assessee is against the order of CIT(A) in not condoning the delay in filing of appeal before CIT(A).
The second issue on merits is although there is no prima-facie adjustment in the return of income or loss but credit for TDS was not given by the A.O while processing return of income u/s. 143(1) of the Act. For this, the assessee has raised the following grounds:
(i) The order of the Assessing Officer is erroneous, is contrary to law, opposed to the facts and circumstances of the case and is opposed to the principles of natural justice. Adjustment vide Intimation u/s 143(1) is void (ii) The Learned Assessing Officer failed to appreciate that Sec 143(1)(a) can be done only for adjustments which are prima-facie in nature. (iii) The Learned AO erred in not examining the TDS certificates of the Appellant and making adjustments u/s 143(1) on a debatable issue. (iv) The Learned AO ought to have followed the mandate of various High Courts in Kamal Textiles v. ITO,(1991) 189 ITR 339, 343-44(MP), JKS Employees' Welfare Fund v. ITO, (1993) 199 ITR 765, 769(Raj), God Granites v. CBDT, (1996) 218 ITR 298, 308(Karn). Opportunity of being heard - TDS Denied without checking Form 16A (v) The Learned AO failed to give the Appellant an opportunity to be heard and has violated the principles of natural justice and equity. (vi) The Learned AO ought, to have allowed the Appellant an opportunity to furnish the TDS certificates/details or verified the same before passing the assessment order. (vii) The Learned CIT(A) also disposed of the appeal without condoning the delay despite the fact rectification petition was submitted by Appellant. (viii) The levy of interest u/s 234 is wholly arbitrary and bad in law, rendering it liable to be quashed. (ix) Any other ground that may be raised at the time of personal hearing.
We have heard the rival contentions and gone through the facts and circumstances of the case. The brief facts of the case are 3 -: that the assessee is a private limited company, filed its return of income for Assessment Year 2006-07 on 21.11.2006 returning an income of Rs. 15,25,940/- claiming a refund of Rs. 1,850/-. The A.O while processing return of income u/s.143(1) of the Act created a demand of Rs. 2,79,833/- and not allowed credit for TDS claimed.
The assessee subsequently moved rectification application u/s. 154 of the Act on 03.07.2008 providing the details of TDS deducted along with original TDS certificates for an amount of Rs. 2,21,216/- for which the A.O has not given credit while processing return of income u/s. 143(1) of the Act. However, the A.O has given credit only for advance tax at Rs. 2,75,000/- and self assessment tax of Rs. 25,475/- thereby given credit for prepaid tax of Rs. 3,00,475/-.
In the rectification application, the assessee claimed the credit of TDS of Rs. 2,21,216/- by enclosing the TDS certificates, but no credit till date has been given by the A.O. It means that the A.O has not disposed off rectification application filed by the assessee u/s. 154 of the Act. Ultimately, the assessee with utter disgust, filed an appeal before CIT(A) almost over 12 years i.e., on 25.05.2020 as against the processing of return was done on 26.02.2008. The assessee was pursuing alternative remedy u/s. 154 of the Act which was filed on 03.07.2008 providing the original TDS certificates and computation showing that the claim of TDS to the extent of 4 -: Rs.2,21,216/-. The CIT(A) has not considered the rectification and also not condoned the delay. The CIT(A) also noted the reasons given by the assessee for condonation of delay in para 4.1, which reads as under:
“4.1 First of all, this appeal was filed belatedly with the reasons stating that "the Appellant filed for rectification under section 154 of the Act, within the specified time. However, the learned AO did not reply to the same. However, in the Assessment order for AY 2018-19, the Learned AO has adjusted the refund against a demand for AY 2006-07. That is when we realised that the Learned AO has not given effect to 154 and is not doing so."
The CIT(A) also noted that there is a delay of 12 years 03 months for not filing this appeal and according to him there is no sufficient cause for filing delayed appeal. The CIT(A) recorded this fact in his order at para 4.3, which reads as under:
“4.3 In this case, it is not understandable as to why appellant took almost 12 years and 3 months to file the present appeal. The appellant's submission is general in nature stating that it has supposed that rectification has been done with allowance of credit of TDS. Thus, appellant has failed to establish reasonable and sufficient cause for delay in filing appeal.”
Now, the assessee contested before us that once the assessee has filed rectification application u/s. 154 of the Act and he waited for disposal of this rectification application and in this rectification simple reason was that the assessee was not given credit for TDS credits of Rs. 2,21,216/- while processing return u/s. 143(1) of the Act by the A.O. Admittedly, the assessee moved rectification application u/s. 154 of the Act before the A.O on 03.07.2008 providing the original TDS
5 -: certificates and computation of income showing the claim of TDS of Rs. 2,21,216/-. The A.O kept the rectification application pending for almost 14 years till now and no rectification is done or no credit was given on this rectification as is gathered from the records. When a query put to Ld. Sr. DR, Shri P. Sajit Kumar, fairly agreed that the delay has to be condoned before CIT(A) and this being a simple issue Tribunal itself can direct the A.O to give credit for TDS after verifying the TDS certificates within a time limit. The Ld. Sr. DR produced before us a CBDT Instruction and the relevant CBDT instruction reads as under:
“INSTRUCTION INCOME-TAX ACT Processing of returns of assessment year 2008-09 - Steps to clear the backlog INSTRUCTION NO.1/2010[F. NO.225/25/2010/ITA(II)], DATED 25-2-2010 The issue of processing of income-tax returns for the assessment year 2008-09 and giving credit for TDS has recently been considered by the Board and following decisions have been taken, in order to clear the backlog of returns pending for processing: (i) In all the returns filed in ITR-1 and ITR-2 for the assessment year 2008- 09, where the aggregate TDS claim does not exceed Rs. four lakh and where the refund computed does not exceed Rs. 25,000; the TDS claim of the taxpayer concerned should be accepted at the time of processing of return. (ii) In all the returns filed in forms other than ITR-1 and ITR-2 for the assessment year 2008-09, where the aggregate TDS claim does not exceed Rs. four lakh and the refund computed does not exceed Rs. 25,000, and there is 70 per cent matching of TDS amount claimed, the TDS claim of the taxpayer concerned should be accepted at the time of processing of return. (iii) In all remaining cases, TDS credit shall be given after due verification.” The ld. Sr. DR fairly considered that the assessee is entitled to the disposal of rectification application u/s. 154 of the Act.
6 -: 6. We have considered this issue and with utter shock noted that the Revenue i.e., A.O from the last 14 years sitting on this rectification application filed by the assessee u/s. 154 of the Act dated 03.07.2008 as against the processing of return of income u/s. 143(1) of the Act dated 26.02.2008. Now, the CIT(A) states that the delay cannot be condoned and he has given the reasons but whether that is a plausible reason as the assessee has sufficient and reasonable cause for not filing appeal before CIT(A) for 12 years and that reason is that he is awaiting the result of rectification petition filed u/s. 154 of the Act on 03.07.2008 and which was not disposed off. Accordingly, the assessee has chosen the right course of action for getting TDS credit and this is the utter failure of Revenue in not disposing of the rectification. We are very sorry to say that this is pity on the AO/Department not to dispose of the rectification application for such a long time. In entirety of facts, we condone the delay before CIT(A) and quash the order passed by CIT(A). We direct the AO to decide the rectification application filed by the assessee dated 03.07.2008 at the earliest point after allowing reasonable opportunity of being heard to the assessee.
We also bring this to the notice of the CBDT that they direct AO to decide the rectification application within a specified time.
7 -: 7. In the result, appeal of the assessee is allowed for statistical purposes with the above directions.
Order pronounced on 20th day of July, 2022 in Chennai.