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Income Tax Appellate Tribunal, DELHI BENCH: ‘SMC-3’ NEW DELHI
Before: SMT. DIVA SINGH
The present appeal has been filed by the assessee assailing the correctness of the order dated 16.01.2015 of CIT(A), Ghaziabad pertaining to 2010-11 assessment year on the following grounds:-
1. “That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in rejecting the application filed by the assessee u/s 154 and that too without any basis, material or evidences.
2. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in rejecting the application filed by assessee and further erred in not allowing the brought forward of losses and depreciation and that too by recording incorrect facts and findings and without appreciating the submissions of assessee. 3. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in rejecting the application filed by assessee and further erred in not allowing the brought forward of losses and depreciation and framing the impugned assessment order which is contrary to law and facts and without providing adequate opportunity of hearing and without confronting the entire adverse material which was used against the assessee and by recording incorrect facts and findings and in violation of principles of natural justice and the and the same is not sustainable on various legal and factual grounds and which deserves to be quashed.
I.T.A .No.-2289/Del/2015 4. That the appellant craves to leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other.”
The Ld. AR inviting attention to the assessment order submitted that the AO in the 143(3) proceedings has recorded the fact and started from the position that the assessee has e-filed its return on 20.09.2010 declaring an income of Rs.96,450/-. It was his submission that infact he would be able to demonstrate from the material on record that the assessee had e-filed its return declaring NIL income. In response to the notice u/s 143(2) dated 06.09.2011, it was his submission that scrutiny assessment proceedings was started where books of accounts etc. were produced. A perusal of the order it was submitted would show that the issues were looked into and inquired into by the AO. However since the benefit of set off of brought forward losses was not given, the assessee filed a petition u/s 154. It was his submission that the said petition was dismissed holding that return of income e-filed on 20.09.2010 declared an income of Rs. 96,540/- and it was processed by CPC, Banglore on an income of Rs.1,21,240/-. It was submitted by the Ld.AR that this is a wrong assertion of facts. Against this order dated 12.10.2010, it was his submission the assessee came in appeal and the submissions of the assessee have been noted at pages 3 & 4 by the CIT(A) wherein in his finding, he comes to a conclusion that the assessee had e-filed its return declaring NIL income. It was submitted that he has also held that as per intimation u/s 143(1) dated 26.01.2011, the assessee had claimed a loss of Rs.96,543/- but in the processing u/s 143(1) no such adjustment has been allowed. In view of the same, the appeal was dismissed holding as under:- Page 2 of 5
I.T.A .No.-2289/Del/2015
“Facts of the case and rival contentions have been considered by me. I find that the return of income for A.Y. 2010-11 was filed through e-filing on 20.09.2010 at total income of Rs. 'Nil'. In the statement of computation of income for this year, total Income is computed at Rs.96,542/- against which brought forward losses of the same amount has been claimed and income has been computed at Nil. Intimation u/s 143(1) dated 26.01.2011 reveals that though the assessee has claimed loss of Rs. 96,543/-, brought from previous years but in the processing u/s 143(1) no such adjustment has been allowed and thus, aggregate income has been computed at Rs. 96,540/-. Thus, it is seen that brought forward losses have not been allowed to the assessee in the intimation u/s 143(1) for A. Y. 2009- 10. If there was any mistake, it was in the intimation u/s 143(1). As far as order u/s 143(3) is concerned, the income has been adopted as per intimation u/s 143( 1). Therefore, there is no mistake rectifiable u/s 154 in the order u/s 143(3). The appeal is rejected.” (emphasis provided)
Referring to the assessment year mentioned as 2009-10 AY, it was his submission that this is a typographical error. It was his submission that the genuineness of the claim was not under the doubt. Reliance was placed upon the decision of Jurisdictional Delhi High Court in the case of CIT vs Punjab National Bank [2001] 249 ITR 0763 (Del.).
Ld. Sr.DR, Ms. Anima Barnwal placed heavy reliance upon the impugned order. Referring to facts, it was submitted that the intimation u/s 143(1) is dated 26.01.2011 and notice u/s 143(2) was issued on 26.09.2011. It was her submission that if there was a mistake u/s 143(1), it should have been addressed at that stage. In the facts of the present case it was her submission that the genuineness of the claim has not been examined or considered by anyone infact for very valid and cogent reason. The assessment order it was submitted has been passed in 143(3) proceedings after hearing the assessee and considering the material on record including the TDS refund etc.
I.T.A .No.-2289/Del/2015 Accordingly, the AO on facts was justified in rejecting the petition u/s 154 vide his order dated 12.10.2012 holding as under:-
“Application u/s 154 of the I.T Act, 1961 filed by the assessee was perused. On going through the E-filed return, it has been found that the assessee has not claimed any set off of loses and taxable income was declared at Rs.96,540/- and total tax payable was worked by the assessee himself at Rs.32,276/-. Claim of TDS amounting to Rs.4,555/- was also taken and after taking benefit of TDS of Rs.4,555/- balance tax payable at Rs.27,722/- was paid as Self Assessment. On going through above facts, the then A.O. was correct in taking returned income at Rs.96,540/- which was reflected in the return E- filed by the assessee and issue of set off of losses is not genuine.” (emphasis provided)
4.1. Addressing the impugned order it was her submission that though the CIT(A) has given a finding that the assessee has e-filed its return declaring NIL income it was her argument that mistake if in any order may have been in intimation u/s 143(1) and was not in the order u/s 143(3) and thus on facts its dismissal was in accordance with law.
5. The Ld.AR in reply submitted that the assessee had also moved a petition u/s 154 against the order u/s 143(1) and this was dismissed holding that the subsequent assessment/proceedings have been initiated by the AO which is the correct legal position as per the decision of the Hon’ble Delhi High Court in the case of CIT vs Punjab National Bank (cited supra).
Having heard the submissions and perused the material available on record, I find that there is a contradiction on basic facts. Where the Assessing Officer in the order passed u/s 143(3) and the order u/s 154 holds that the return declaring an income of Rs.96,540/- was filed by the assessee. The CIT(A) holds that the NIL return had been filed. Accordingly in order to address the legal position it is first necessary to address the correct facts. As Page 4 of 5
I.T.A .No.-2289/Del/2015 far as the legal issue as laid down in CIT vs Punjab National Bank (cited supra) relied upon is concerned, law is clear that once proceedings u/s 143(2) have been initiated, rectification of intimation u/s 143(1) is not permissible. If any Rectification was to be effected in the intimation it can be done u/s 143(3) and not by exercising power u/s 154. Accordingly the issue is restored back to the CIT(A) with the direction to first address the correct facts as the facts noticed by the CIT(A) in the impugned order do not reconcile with the consistent findings of the AO in the 143(3) order and the 154 order. After addressing the correct factual position, the CIT(A) is directed to pass a speaking order in accordance with law after giving the assessee a reasonable opportunity of being heard.
In the result, the appeal of the assessee is allowed for statistical purposes.
The order is pronounced in the open court on 21st of September, 2016.