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Income Tax Appellate Tribunal, LUCKNOW BENCH “SMC”, LUCKNOW
Before: SHRI T.S. KAPOOR
This is an appeal filed by the assessee against the order of ld. CIT(A), Bareilly, dated 26.02.2019. The assessee has taken the following grounds of appeal:
“1. That the appellate order is bad in law as well as on the facts and circumstances of the case. 2. That the Ld. CIT (Appeals). Bareilly has erred in law while rejecting condonation of delay that under section 154(7) states that no amendment shall be made after the expiry of four year from the end of financial year in which order sought to be amended was passed. The Ld. CIT (Appeals) has failed to consider that appellant filed return of income on 08/05/2007 and no intimation u/s 143(1)(a) or demand notice was served to the appellant, in time framed as stipulated by the Income Tax Act 1961. Demand was reflected by the department after the expiry of four year as stipulated under section 154(7) of the I.T. Act 1961. Principal of natural justice say that appellant condonation of delay should be condoned.” 2. The ld. AR at the outset submitted that assessee is a retired bank officer, who during the AY 2007-08 had filed the return of income and in the gross total
income, the exempted income was also included inadvertently, but the right taxes on income other than exempted income were paid and such return was processed also and a refund of Rs.5,690/- was also issued and in this respect my attention was invited to PB pg.8, where a copy of refund order was placed. It was submitted that during the assessment year 2016-17, there was certain refund due to the assessee, which was got adjusted against the demand for AY 2007- 08. It was submitted that appellant was informed about such adjustment by his tax consultant and on knowing the same he approached his consultant with the copy of return of income filed for AY 2007-08 and the tax consultant advised to file a rectification application and therefore, rectification application was filed before Assessing Officer on 13.11.2017, which the Assessing Officer has dismissed by holding that rectification application can only be filed within the prescribed period of four years. The ld. AR submitted that since the assessee came to know about the fact of adjustment of refund for AY 2016-17 against the demand for AY 2007-08 in the year 2017 itself, therefore there is no delay on the part of the assessee. It was submitted that ld. CIT(A) has also dismissed the appeal of the assessee by holding that the rectification is not maintainable. The ld.AR invited my attention to Circular No.4 of 2012 dated 20.6.2020, where the CBDT has instructed its officer to consider the rectification irrespective of fact that period of limitation of four years as provided u/s. 154(7) has passed and therefore it was prayed that the Assessing Officer be directed to condone the delay in filing the rectification application and decide the case on merits.
The ld. DR, on the other hand, relied on the orders of authorities below.
I have heard the rival parties and have gone through the material placed on record. I find that for AY 2007-08, the assessee inadvertently included exempted income in the total income, however the taxes on such income were paid on the correct taxable income. The assessee was issued a refund of Rs.5,960/- also, a copy of which is placed at PB pg.8. Thereafter, during AY 2016-17, the assessee was told by his tax consultant that his refund has been
adjusted against the demand of tax in 2007-08 and therefore the assessee came to know of the adjustment of demand only in the year 2017 and in that year itself he filed application for rectification of mistake, which the authorities below has rejected holding it to be beyond the period of four years. I find that Circular No.4 of 2012 dated 20.06.2012 deal similar situations where the Assessing Officer expressed their inability to correct/reconcile disputed of demand on the ground of period of limitation of four years as provided under sub (7) Section 154. The board has issued such circular keeping in view the genuine hardships faced by the assessees. The contents of such circular are reproduced below:
“Circular No. 4 of 2012, dated 20-6-2012 The Board has been apprised that in certain cases the assessees have disputed the figures of arrear demands shown as outstanding against them in the records of the Assessing Officer. The Assessing Officers have expressed their inability to correct/reconcile such disputed arrear demand on the ground that the period of limitation of four years as provided under sub- section (7) of section 154 of the Act has expired. Further, in some cases, the Assessing Officers have uploaded such disputed arrear demand on the Financial Accounting System (FAS) portal of Centralized Processing Center (CPC), Bengaluru which has resulted in adjustment of refund arising out of processing of Returns against such arrear demand which has been disputed by such assessees on the grounds that either such demand has already been paid or has been reduced/ eliminated in the appeals, etc. The arrear demands, in these cases also were not corrected / reconciled for the reason that the period of limitation of four years has elapsed. 2. The Board, in consideration of genuine hardship faced by the abovementioned class of cases, in exercise of powers vested under section 119(2)(b) of the Act, hereby authorize the Assessing Officers to make appropriate corrections in the figures of such disputed arrear demands after due verification/reconciliation and after examining the same on merits, whether by way of rectification or otherwise, irrespective of the fact that the period of limitation of four years as provided under section 154(7) of the Act has elapsed. 3. In view of the above the following has been decided:—
(a) In the category of cases where based on the figure of arrear demand uploaded by the Assessing Officer but disputed by the assessee, the Centralized Processing Center (CPC), Bengaluru has already adjusted any
refund arising out of processing of return, the jurisdictional Assessing Officer shall verify the claim of the assessee on merits. After due verification of any such claim on merits, the Assessing Officer shall issue refund of the excess amount, if any, so adjusted by CPC due to inaccurate figures of arrear demand uploaded by the Assessing Officer. The Assessing Officer, in appropriate cases, will also upload amended figure of arrear demand on the Financial Accounting System (FAS) portal of Centralized Processing Center (CPC), Bengaluru wherever there is balance outstanding arrear demand still remaining after aforesaid correction/ reconciliation. (b) In other cases, where the assessee disputes and requests for correction of the figures of arrear demand, whether uploaded on CPC or not uploaded and still lying in the records of the Assessing Officer, the jurisdictional Assessing Officer shall verify the claim of the assessee on merits and after due verification of such claim, will make suitable correction in the figure of arrear demand in his records and upload the correct figure of arrear demand on CPC portal. 4. It is specifically clarified that these instructions would apply only to the cases where the figures of arrear demand is to be reconciled/ corrected - whether such arrear demand has been uploaded by the Assessing Officer on to Financial Accounting System (FAS) of CPC or it is still in the records of the Assessing Officer. This may be brought to the notice of all the officers of your CCA region.”
In view of above facts and circumstances and in view of Circular No.4 of 2012, I deem it appropriate to remit the issue back to ld. Assessing Officer who should verify the claim of the assessee on merits after condoning the delay in terms of Circular No.4 of 2012.
In the result, appeal filed by the assessee is allowed for statistical purposes. (Order pronounced in the open court on 08/08/2022) Sd/- (T.S. Kapoor) Accountant Member Aks – Dtd. 08/08/2022
Copy of order forwarded to: (1) The appellant (2) The respondent (3) Commissioner (4) CIT(A) (5) Departmental Representative (6) Guard File
Assistant Registrar