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2018 (8) TMI 644
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....d as claimed of Rs. 1,75,815/- with interest. 4. That the Ld. CIT(A) has erred in applying the average GP rate of previous three years @ 15.34 % as against loss returned at Rs. 5075/- by the assessee without looking at the facts of the case and thus the returned loss may be allowed. 5. That the Ld. CIT(A) has erred in charging interest u/s 234A, 234B, 234C & 234D of the Income-tax Act, 1961. 6. In view of the above, the order passed u/s 143(3) is erroneous, illegal, wrong, without any basis & without looking at the facts of the case. Hence needs to be deleted. 3. Briefly stated, the facts of the case are that the assessee firm derives income from manufacturing of Umbrella. The assessee filed the return of income declaring total loss of Rs. 5,075/- on 30.10.2000. The AO made the addition of Rs. 14,71,147/- on account of low gross profit and made addition of Rs. 50,000/- out of expenses. The assessee preferred an appeal before ld. CIT, who after considering the submissions partly allowed the appeal, thereby he deleted the addition of Rs. 50,000/- and reduced the gross profit rate from 15.34 % to 15.03 % thereby he confirmed addition of Rs. 10,29,121/- in....
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....ed to rest by the decision of Supreme Court in the case of ACIT vs. Rajesh Jhaveri Stock Brokers (P) Ltd., 291 ITR 500 (2007) in which it was held that "intimation although deem to the notice of demand u/s 156 can not taken as assessment order. " 2.2 Rectification u/s 154 not processed by Assessing Officer The assesse had filed rectification u/s 154 on 3/11/2004. Then the assesse filed an application u/s 119(1)(b)(c) on 21/12/2004 because no action taken against the application u/s 154 filed on 3/11/2004. The assessing officer should suo-moto rectify the mistake apparent on record. The same has also been held in the case of Ardor International Pvt Ltd v/s ACIT, Ahmedabad (2016) ITA No. 1170/Ahd/2013 by Income Tax Appellate Tribunal, Ahmedabad that "the ld. Assessing Officer using his inherent power u/s 154 of the Act for amending any mistake apparent on record should have examined the claim of the assessee by verifying the books of accounts of the assessee as well as the relevant ledger accounts wherein the impugned amount on which TDS has been deducted, is duly reflected. " As per sec 155(14) of the act, "Where in the assessment for any previous year or ....
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....d u/s. 143(2) by the Assessing Officer was barred by limitation and was thus invalid. The proceedings arising from the said notice are also vitiated. Thus, the assessment order passed in pursuance thereof is annulled. " Hon'ble Karnataka High Court in the case of A. Balakrishnan Vs. General Manager Hindustan Machine Tools Ltd. and others reported in (2007) 290 ITR 227 held that" It is the duty of the functionaries under the IT act to implement the provisions of the act in accordance with law. A return filed is bound to be processed by the Income tax authorities within the reasonable time. Section 119(2)(b) of the act cannot relieve the authorities from the obligation of examining a return filed by the petitioner. It cannot be used as an excuse for inaction on the part of respondents. " Therefore, assessee should not be penalized because of delay caused in deciding the application by the Income tax authorities and thus notice issued u/s 143(2) beyond the time limit is illegal, bad in law and needs to be annulled. 3. Grant the refund as claimed of Rs. 1,75,815/- along with interest:- That the refund claimed of Rs, 1,75,815/- in the revised retu....
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....h reads as follows:- "Officers of the department must not take advantage of the 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 taxpayer where proceedings or other particulars before them indicate that some refund or relief is due to him. This attitude would, in the long run, benefit the department, for, it would inspire confidence in him that he may be sure of getting a square deal from the department. Although, therefore, the responsibility for claiming refunds and reliefs rests with the assessees on whom it is imposed by law, officers should (a) draw their attention to any refunds or reliefs to which they appear to be clearly entitled but which they have omitted to claim for some reason or other; (b) freely advise them when approached by them as to their rights and liabilities and as to the procedure to be adopted for claiming refund and reliefs ". In view of the above, officer should be directed to grant refund claimed of Rs. 175815/- with interest till the date of m....
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....ed down the business in the assessed year and no further transaction was being carried in any of the following years. The estimate of turnover and fixation of gross profit rate are two important parameters which affect the assessment. If these are fixed or calculated in such a way that they adversely affect the assessee's case, then he is entitled to know the basis and to be given an opportunity to rebut the same. Therefore CIT (A) was not justified in confirming the addition. Looking to the above submission and evidence, kindly delete the arbitrary addition made by the Ld. Assessing officer and confirmed by CIT(A). 5. The Ld. assessing officer erred in charging and CIT(A) erred in confirming the charging of interest U/s 234A, 234B, 234C and 234D of the Income tax act, 1961. 6. In view of the above, huge additions of Rs. 10,29,121/- are wrong, without any basis and without looking to the facts of the case. Hence, needs to be deleted. " 5. Apropos ground no.1, the Ld. Counsel for the assessee submitted that the Ld. CIT(A) has not afforded sufficient opportunity to the assessee. 6. The Ld. Departmental Representative opposed the submissio....
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.... return filed was valid. The Ld. Counsel for the assessee further contended that Ld. CIT(A) , Ujjain, has also mentioned in para 4.1 of his order that "the revised return filed by the appellant was not regular return. " The assesse had filed the revised return on 9th April, 2001, which was a regular return. Since the revised return could be filed upto 31st March, 2002, therefore it was not a non-est. The Ld. Counsel for the assessee placed reliance on the decision in the case of S.R. Koshti v. Commissioner of Income-tax [2005] 276 ITR 165 Gujarat High Court, in which the Hon'ble Court held that "the assessee can file revised return even after intimation is served. " The Ld. Counsel for the assessee further relied on the decision of Hon'ble Supreme Court in the case of ACIT vs. Rajesh Jhaveri Stock Brokers (P) Ltd., 291 ITR 500 (2007) in which it was held that "intimation although deem to the notice of demand u/s 156 can not be taken as assessment order. " The Ld. Counsel for the assessee further contended that the assessee filed application for rectification u/s 154, which was not processed by the AO. Then the assessee filed an application u/s 119(1)(b)(c) on 21st December,....
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....llant filed the return of income on 3-0.10.2000. The same has been processed u/s 143(1)(a) of the I.T.Act on 16.02.2001. Subsequently the appellant filed the revised return on 09.04.2001 i.e. after processing ,of original return. The appellant filed the application before CIT,Ujjain, for condonation of delay u/s 119(2)(b) to regularize the revised return. The revised return filed by the appellant was not regular return. The revised return has been regularized vide order u/s 119(2)(b) dated 17.01.2008. Therefore, from the date of filing of the revised return till the date of condonation the return remained as non est. The revised return came into the existence only on 17.01.2008 i.e. date of order u/s 119(2)(b) of the I. T. Act. Therefore, the return deemed to have been filed on 17.01.2008 for all practical purpose and the same has been processed, the appellant has been given the refund and at the same time the AO has issued notice u/s 143(2) on 16.05.2008. Therefore, this ground of appeal is Dismissed. " 12. The moot question is whether the ld. CIT is empowered to direct the AO for issuing notice u/s 143(2) after expiry of normal limitation period. Section 119 of the Income-tax ....
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....nd deal with the same on merits in accordance with law; [(c) the Board may, if it considers it desirable or expedient so to do for avoiding genuine hardship in any case or class of cases, by general or special order for reasons to be specified therein, relax any requirement contained in any of the provisions of Chapter IV or Chapter VI-A, where the assessee has failed to comply with any requirement specified in such provision for claiming deduction thereunder, subject to the following conditions, namely:- (i) the default in complying with such requirement was due to circumstances beyond the control of the assessee; and (ii) the assessee has complied with such requirement before the completion of assessment in relation to the previous year in which such deduction is claimed : Provided that the Central Government shall cause every order issued under this clause to be laid before each House of Parliament.]" 13. We find that the Ld. CIT(A) has relied upon the Instruction No.13/2006 dated 22.12.2006 . For the sake of clarity Instruction No.13 of 2006 is reproduced as under :- "INSTRUCTION NO. 13/2006, DATED 22-12-2006 1. The proce....
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....ship on merits. 7. The CCsIT/CsIT are empowered to direct the Assessing Officer to make necessary enquiries or scrutinize the case in accordance with provisions of the Income-tax Act to ascertain the correctness of the claim. 8. This instruction will also cover those applications/claims for condonation of delay under section 119(2)(b) which are pending as on the date of issue of this instruction. " 14. There is no ambiguity under the law that the scrutiny assessment is to be framed as per the provisions of Section 143 of the Income-tax Act, 1961. The Instruction No. 13/2006 would not override these provisions. From a bare reading of the instructions, it is evident that the Instruction is related to condonation of delay in respect of refund due. This instruction is issued with an objective to mitigate the hardship to the assessee. Para 7 of the Instruction, in our view, is limited to the extent of ascertaining the claim of the assessee. This does not empower the Assessing Officer to make scrutiny of the entire case, which goes against the spirit of the law. In the case in hand, the AO was required to ascertain that the tax has been deducted at source and on the ....
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....or relaxes the rigour of law."Also held that "the interest u/s 244A would be admissible on belated refund claims and that the instructions cannot run counter to the legislative provisions and create rights and obligation which are contrary to statute. Instructions should supplant the law and not supplement the law. " 18. The Ld. Counsel for the assessee further drew our attention to Para 7 of Instruction no. 13/2006, dated 22-12-2006 of Board, "the CCsIT/CsIT are empowered to direct the Assessing Officer to make necessary enquiries or scrutinize the case in accordance with provisions of the Income-tax Act to ascertain the correctness of the claim. "According to this, case should be scrutinized as per the provisions of the Act and old case can only be scrutinized through sec. 147. The Ld. Counsel for the assessee further drew our attention towards CBDT Circular No. 14 (XL-35) dated 11-04-1955 which reads as follows:- "Officers of the department must not take advantage of the 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 o....
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....n assessee keeps accounts is that the assessee's books should have been found to be unreliable or otherwise not capable of proving the assessee's income. The Ld. Counsel for the assessee contended that the assessee maintained proper books of account as per requirement of Section 44AA of the Incometax Act, 1961. Assessee's books were also got audited by Chartered Accountants. No adverse opinion was recorded in the audit report. The Ld. Counsel for the assessee further contended that the A.O. without rejecting the books of accounts u/s 145 and without passing order u/s 144, estimated the gross profit at Rs. 18,93,045/- (Rs. 10,29,1211- confirmed by CIT (A), Ujjain) and passed order u/s 143(3). The Ld. Counsel for the assessee further contended that the assesse produced all the books of accounts before the Assessing Officer. The Ld. Counsel for the assessee contended that estimating the profit on ad hoc basis without rejecting books of accounts is baseless, illegal and wrong. The Ld. Counsel for the assessee drew our attention to comparative chart of gross profit of assessed year and previous three years, which is as under :- Assessment Year Gross Profit (Rs.) Turnove....