M/S. GOEL SPUNTEX PVT. LTD,PANIPAT vs. ITO, PANIPAT

ORDER PER O.P. KANT, AM:

This appeal by the assessee is directed against the order dated 20th February, 2017 passed by the learned Commissioner of Income Tax (Appeals), Karnal [in short ‘learned CIT(A)’] for assessment year 2009-10 arising out of rectification order passed under Section 154 of the Income-tax Act, 1961 (in short ‘the Act’) by the Assistant Commissioner of Income Tax (CPC), Bangalore. 2. Grounds of appeal raised by the assessee are reproduced as under:

3.1 On further appeal by the assessee before the learned CIT(A), a report from the local Assessing Officer was called for wherein he expressed that copy of e-filed return of income was not available with him. In view of no manual record available with the Assessing Officer, the learned CIT(A) rejected the appeal of the assessee observing as under:

“2.4 After going through the facts and submissions, it is observed that the appellant has not been able to provide any clear documentation to claim that there was any mistake apparent from record. The AO has also stated that there was no manual record on his office on the basis of which the contentions of the assessee could be accepted. In view of the facts available, there does not appeal to be any case for rectification u/s 154 of the I.T. Act. Accordingly, the Grounds of the appellant are rejected.”

4.1 Thus, according to the application the assessee by mistake has claimed the set-off of loss under the head ‘other sources’ instead of ‘business losses’. In our opinion, merely mistake of claim of set-off under wrong column cannot disentitle the assessee from the claim of the loss, if same is otherwise allowable as per the law. According to section 72 of the Act, brought forward business loss shall be set-off against the profit and gains in business profession carried on by the assessee and assessable for that assessment year and if the whole of the loss cannot be set-off, the amount of loss not so set-off, shall be carried forward to the following assessment year and so on. If the facts mentioned in the application of the assessee are correct, then the mistake is eligible for rectification under Section 154 of the Act. 4.2 In the case of CIT Vs. Mahalaxmi Sugar Mills Co. Ltd., reported in 1986 AIR 2111, 1986 SCR (3) 150, the Hon’ble Supreme Court held that “there is a duty cast on the Income-tax Officer to apply the relevant provisions of the Indian Income-tax Act for the purpose of determining the true figure of the assessee’s taxable income and the consequential taxability and if the assessee fails to claim the benefit of a set-off cannot relieve the Income-tax Officer of his duty to apply section 24 in an appropriate case”. The CBDT Circular No. 14(XL-35), dated 11.04.1955 also has laid down that Officers 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. 4.3 We find that the learned CIT(A) has simply rejected the appeal of the assessee on the grounds that electronic return of income filed by the assessee was not available with the Assessing Officer, without making any attempt to verify the claim of the assessee. In view of the facts and circumstances of the case and in the interest of justice, we feel it appropriate to restore this issue back to the file of CIT(A) with the direction to verify the claim of the assessee from electronic return of income filed and decide the issue, applying the provisions of law as existed during the relevant period. It is needless to mention, both the parties i.e. the Assessee and the Assessing Officer shall be afforded adequate opportunity of being heard. Accordingly, the grounds raised by the assessee are allowed for statistical purposes.