I.T.O., WARD-12(2), KOLKATA, KOLKATA vs. M/S SEARCH ENGINE RANKING SYSTEM CONSULTANTS PVT. LTD., KOLKATA

The main grievance of the revenue is against the action of the Ld. CIT(A) in directing the AO (TDS) to re-examine the rectification petition of the assessee which according to revenue, the Ld. CIT(A) does not have the power to do so.

Brief facts of the case are that according to revenue the Ld. CIT(A) has only power to confirm, reduce, enhance or annul the assessment but he cannot set aside the matter to the AO. We note that the assessee had filed its e-return of income on 14.01.2009 showing a gross total income of Rs.88,89,386/-. It was assessed by the CPC, Bangalore on 20.10.2010 in the intimation given by the Department, the gross total income was accepted at the returned figure of Rs.88,89,386/-. However, the net amount of tax payable was determined at Rs.15,39,567/- on account of normal tax payable. Likewise, a sum of Rs.9,34,730/- was shown as DDT payable. The assessee filed a rectification petition u/s. 154 of the Income- tax Act, 1961 (hereinafter referred to as the “Act”) before the CPC, Bangalore which was Search Engine Ranking System Consultants Pvt. Ltd. AY- 2009-10 summarily rejected on the ground that there was change in gross total income in the rectification petition filed by the assessee and that there was no mistake apparent from record. According to the assessee, it is carrying on the business of I. T enabled services since its inception and it exports 100% of its product/services as it is registered with the software technology for Govt. of India and was claiming 100% of the profit exempt u/s. 10B of the Act. However, during the year under consideration, the assessee failed to claim the benefit inadvertently because of the mistake of the Accountant. When the assessee realized the fact of non-claiming of the exemption u/s. 10B of the Act, the assessee filed revised return of income on 14.04.2011, intimation u/s. 143(1) of the Act was already made by the AO on 20.10.2010 and demand was raised of an amount of Rs.15,39,570/-. It was also pointed out to the AO in sec. 154 rectification petition that there was another mistake in the intimation given u/s. 143(1) of the Act wherein the AO has shown aggregate of taxable liability ascertained at Rs.32,89,369/- and, therefore, the total tax credit has been ascertained at Rs.8,15,077/- but at the end there is a liability shown as payable for Rs.15,39,567/-. It was also pointed out in the 154 rectification petition that the total dividend distribution tax ascertained was Rs.9,34,725/- and, therefore, the balance should be shown as nil balance payable. However, column no. 72 thereof is showing Rs.9,34,725/- is payable so, these mistakes/anomalies were brought to the notice of the AO by rectification petition dated 14.04.2011 which has been summarily rejected by the AO on 20.07.2011 by observing that since there is a change in gross total income in the rectification application and there was no apparent mistake on record, it was rejected. On appeal, the Ld. CIT(A) has taken note of the aforesaid facts and remanded the matter back to the AO for passing a speaking order. Aggrieved, the revenue is before us.

We have heard rival submissions and gone through the facts and circumstances of the case. We are not repeating the facts aforestated for the sake of brevity. The assessee inadvertently did not claim exemption u/s. 10B of the Act which it enjoyed since its inception. The return of income was filed on 14.01.2009 electronically. Later, it was processed by CPC, Bangalore on 20.10.2010 wherein the assessee came to know that it has not claimed exemption u/s. 10B of the Act and there were few other mistakes/anomalies which the assessee has brought to the notice of the AO by filing revised return as well as Search Engine Ranking System Consultants Pvt. Ltd. AY- 2009-10 rectification petition u/s. 154 of the Act. It has been summarily rejected by the AO by stating that there was a change in the gross total income and there was no mistake apparent from the record. The Ld. CIT(A) has taken note of the fact that the assessee’s grievance raised in the 154 rectification petition has not been addressed/adjudicated by the AO. It has to be remembered that reason is the soul of a judicial/quasi judicial order. We note that though the Ld. CIT(A) has got the power to confirm, reduce, enhance or annul the assessment, the power to set aside/remand to the AO has not been given to the Ld. CIT(A), therefore, we set aside the order of Ld. CIT(A) and in the interest of justice, remand the matter to the file of the AO and direct the AO to de novo adjudicate the issues raised by the assessee in the rectification petition filed by the assessee u/s. 154 of the Act on 14.04.2011 untramelled by any observations given while explaining the facts (supra). Needless to say, the assessee may be given adequate opportunity of being heard before passing the speaking order. Therefore, appeal of revenue is allowed for statistical purposes.

In the result, appeal of the revenue is allowed for statistical purposes.