TaxTMI 
TaxTMI 
2025 (1) TMI 1501
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....ing the due date for e-filing of the income-tax return to ensure that taxpayers eligible for the rebate under Section 87A are allowed to exercise their statutory rights without facing procedural impediments. Pursuant to the said direction, the Board issued a notification on 31 December 2024 extending the last date for furnishing returns under Section 139(4)/139 (5) for the assessment year 2024-25 in the case of a resident individual from 31 December 2024 to 15 January 2025. Thereafter, on the matter being mentioned, an administrative order dated 10 January 2025 was passed assigning the said PIL to this Bench. PETITIONERS : 3. The Chamber of Tax Consultants files this Public Interest Litigation (PIL) against the respondents through its President and taxpayer assessees. Petitioner No. 1 is a society registered under the Societies Registration Act of 1860 and the Bombay Public Trusts Act of 1950. It has more than 3800 members comprising of Advocates, Chartered Accountants, and tax practitioners. 4. The objectives of petitioner No. 1 are (i) to spread education in matters relating to tax laws and other laws and accountancy and allied subjects of professionals' interest;....
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....he Act read with the proviso to section 87A, in their return of income for the AY 2024-25 and subsequent years including revised returns to be filed under section 139 (5) of the Act. (b) that this Hon'ble Court be pleased to issue a writ of mandamus or a writ in the nature of mandamus or any other appropriate writ, direction or order directing the Respondents to allow assesses to file a manual return of income for claiming rebate under section 87A of the Act in their return of income for the AY 2024-25 and subsequent years including revised returns to be filed u/s 139 (5) of the Act. [(c) that this Hon'ble Court be pleased to issue a writ of mandamus or a writ in the nature of mandamus or any other appropriate writ, direction or order directing the Respondents to make the utilities for filing the return of income online flexible so as to allow an assessee to self-compute his/her income and there should not be any restriction on making of any claim whatsoever and to direct the Respondents to not release any utilities or make any changes in the utilities for filing of the Return of Income under section 139 of the Act which does not allow any assessee to rais....
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....ction 87A of the Act in their return of income for the AY 2024-25 and subsequent years including revised returns to be filed u/s 139 (5) of the Act. (ii) To restore the utility which was available before 05.07.2024 for filing return of income which allowed assessees to make a claim of rebate under section 87A of the Act in their return of income for the AY 2024-25 and subsequent years including revised returns to be filed under section 139 (5) of the Act; (iii) Or in the alternate, to allow filing of a manual return of income for claiming rebate under section 87A of the Act in the return of income for the AY 2024-25 and subsequent years including revised returns to be filed under section 139 (5) of the Act. (g) that pending the hearing and final disposal of this petition the Respondents, their subordinates, servants and agents be restrained by an order and injunction of this Hon'ble Court from implementing the intimations already issued under section 143 (1) of the Act processing the return of income, denying the claim of rebate under section 87A of the Act from tax payable at special rates except tax levied under section 112A of the Act. SUBMISSIO....
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....rn in my capacity as and I am also competent to make this return and verify it. I am holding permanent account number." Thus, an assessee has to declare in the return that the return filed is to the best of his knowledge and belief and is correct and complete and is in accordance with the provisions of the Act. iv) Section 140A of the Act the heading of which is "Self-Assessment", requires an assessee to pay tax with interest payable under the Act before furnishing the return of income and the return is to be accompanied with the proof of payment of such self-assessment tax. Such furnishing of proof is now dispensed with under the e-filing regime. v) Without paying self-assessment tax, a return of income cannot be filed. Such return is also treated as defective in terms of section 139(9) of the Act. 2. The above provisions demonstrate that under the Act, an assessee is required to self-compute the income and the tax liability thereon as per his belief and understanding. Thus, the form of the return of income has to allow an assessee to declare and compute his income as per his belief and understanding. 3. The term "return" in the context....
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....be his income or which is finally assessed by the Income-tax Officer. It is clear that at the time when a person is required to file a voluntary return, no assessment has yet been made against him. He is thus to be guided by what he himself believes to be his income. It is possible and it happens very frequently that an assessee may not consider a particular item to be his income and yet the Income-tax Officer may hold otherwise. In such a case, if what he considers to be his income is less than the amount which is not chargeable to income-tax, he is not required to file a voluntary return even if the income finally assessed is more than the maximum amount which is not chargeable to income-tax. Of course, the belief of the assessee must be bona fide" 7. Similar view has been taken by the Hon'ble Supreme Court in case of CIT vs. Ranchhoddas Karsondas reported in [1959] 36 ITR 569 (SC). It has held as under: "It is a little difficult to understand how the existence of a return can be ignored, once it has been filed. A return showing income below the taxable limit can be made even in answer to a notice under section 22 (2). The notice under section 22 (1) requires in....
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....s) or Director General of Income-tax (Systems) shall specify the procedures, formats and standards for ensuring secure capture and transmission of data and shall also be responsible for evolving and implementing appropriate security, archival and retrieval policies in relation to furnishing the returns in the manners (other than the paper form) specified in column (iv) of the Table in sub-rule (3) and the report of audit or notice in the manner specified in proviso to sub-rule (2)." Thus, the role of Respondent No. 1 is to only "ensure secure capture and transmission of data and for evolving and implementing appropriate security, archival and retrieval policies" in relation to furnishing the returns. It can in no manner prescribe a utility which prohibits or debars an assessee from making any claim in the return of income. This is irrespective of the fact that the claim made by an assessee may not be in accordance with the interpretation placed by the Tax Department on a statutory provision. Thus, when Respondent No. 1 designs a utility in a manner which is not allowing an assessee to make a claim under the Act, then, the said action is clearly contrary to the provisions o....
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....olative of Article 265. Thus, the action of the Respondent No. 1 in not allowing an assessee to make a claim in the return of income per se, would be violative of Article 265 of the Constitution of India. 15. If a return of income prohibits an assessee from making a claim, then, it would amount to deciding the issue at the stage of filing return of income itself. The validity of such claim can be tested at the stage of assessment proceeding and if rejected, by agitating the matter through various appellate stages. Because of an interpretation of the Tax Department, it would be imperssible to not allow an assessee to make a claim in the return of income. The validity of a claim can be tested by an adjudicating or appellate authority including courts and tribunals. If an assessee is not allowed to make a claim per se because the Tax Department feels such a claim is not correct as per their interpretation, then, there is no requirement for appellate courts to exist. In fact, reference is made to the following provisions which show that, there are provisions to ensure that an assessee has not understated his income: i) Section 143 (1) (a) empowers the Respondent to ma....
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....on to allow the same. In fact, the judgment in the case of Goetze (supra) itself suggests that a claim has to be validly made in the return of income and by no other mode. 17. It is submitted that by not allowing an assessee to raise a claim in return, an assessee is denied a fundamental right to agitate an issue. This clearly amounts to violation of Article 14, 19 (1) (g) and 265 of the Constitution of India. 18. It is submitted that in similar facts, this Hon'ble Court has allowed assessees to file a manual return by making a claim which was not available in the return to be filed online when the revenue refused to accede to the assessee's request to modify the utility. The Petitioners have relied upon the orders of this Hon'ble Court in the case of Samir Bhojwani (supra) and in case of Lupin Limited vs. DCIT in WP No. 3565 of 2023 (order dated 26.03.2024). In fact, similar view is taken by this Hon'ble Court in Tata Sons Pvt. Ltd. vs. DCIT [WP No. 3109 of 2022 and 1296 of 2023] vide order dated 26.03.2024. The Ld. ASG had submitted to the contrary that in case of Tata Sons (supra), the assessee therein had withdrawn the writ petition. 19. The Ld. ASG a....
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....ets the same fate. Though no furor is raised over this as such assessees are free to approach the appellate authorities and the same is being done. Be that as it may, it is of utmost importance to note that the processing of return of income cannot be the guiding light to design the return of income. It is like the proverbial "putting a cart before the horse" concept. How the returns would be processed cannot be the basis to design the return. This itself shows the fundamental fallacy in designing the return of income. 21. It is submitted that if the electronic return does not allow an assessee to put forth his claim basis a perception of the revenue of the correctness of such claim, then, such return has to be categorized as arbitrary. It is a settled principle that humans cannot be made slaves of technology. Time and again, this Hon'ble Court and other Courts have come down heavily on the technological impediments causing harassment to assessees. 22. Here, the Petitioners are more concerned with the action of the Respondents in disabling an assessee from making a claim, which he feels he is entitled to. This is clearly a human action, as such claim was allowed t....
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....assessee is neither a constitutional nor a statutory right. It is submitted that the said submission of the Ld. ASG is legally and factually incorrect as submitted hereinbefore. Moreover, he also submitted that even if such a right is considered to be a statutory right then it is subject to statutory restrictions. It is submitted that the Ld. ASG did not refer to any provision of law or rules which provides for any such restriction. On the contrary, as mentioned earlier, the action of Respondent No. 1 to not allow an assessee to make a claim on the return of income is contrary to the provisions of the Act and Rules framed thereunder. 26. In light of the above submission, to avoid inconvenience to the assessees and Courts, the Petitioner prays that the Rule should be made absolute in terms of prayer clause (c). B. Allowability of rebate u/s 87A from tax levied at special rates, where new regime is opted for 27. The Respondents have, without prejudice to their contention on merits, allowed the assessees at large from claiming rebate as per the directions of this Hon'ble Court vide order dated 20.12.2024. The Ld. ASG has argued, in great detail, that the ass....
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.... v) if the income exceeds Rs. 7,00,000/- and the income tax payable on such total income exceeds the amount by which the total income is in excess of Rs. 7,00,000/-, then, the assessee shall be entitled to a deduction from the amount of income-tax on his total income, of an amount equal to the amount by which the income-tax payable on such total income is in excess of the amount by which the total income exceeds Rs.7,00,000/-. Thus, rebate under section 87A of the Act, is allowed from the tax on total income irrespective of the fact, whether the same is computed at special rates. 31. The term 'total income' is defined in section 2 (45) as total amount of income referred to in section 5, computed in the manner laid down in the Act. There can be only one total income which is the sum total of all income under various heads of income. There is no provision that income taxable at special rates are not to form part of total income or is to form a separate total income. Rebate is allowable on the tax on total income, which represents a summation of tax payable at special rates and tax payable in accordance with the rates provided for in the relevant Finance Act or....
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....d one tax liability. 34. It is submitted that the concept of two "total income" is completely alien to the Act. In fact, acceptance of such an argument would have its own perils like: a. Deductions under Chapter VIA are allowed from total income. While understanding total income, which income is to be seen? b. Penalty is levied u/s 270A if there is any variation from total income. A formula is laid down for how to compute under-reporting of income where total income forms the starting point. While understanding total income, which income is to be seen? 35. It is submitted that wherever, the Legislature intended to not give any benefit to any category of income which forms part of total income or from tax at special rates, specific exceptions have been prescribed without violating the definition of the term "total income". For instance, see section 80AB, 111A (2), 112(2), 112A (5) and 112A (6). 36. It is thus submitted that; rebate is allowable from total income including tax levied at special rates. If the Legislative Intent were to deny the rebate, then, a specific provision would have to be made either in section 87A or the relevant pr....
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.... the following Table, namely: - ....." Thus, it can be seen that the total income of a person is taxable under section 115BAC (1A). It is only for rate purposes in respect of certain categories of income, one has to go to other sections of Chapter XII, otherwise, total income is taxable under section 115BAC (1A) of the Act. A combined reading of the proviso to section 87A and section 115BAC (1A) also gives the same interpretation that where a person opts for new regime rebate shall be allowed from tax on total income, irrespective of the fact that any income is taxable at special rates. 39. Section 115BAC (2) provides for conditions to fall within section 115BAC (1A). A person, to opt for a new regime, has to give up on various deductions / exemptions/ allowances etc. However, reference to rebate under section 87A is conspicuously absent in section 115BAC (2). In fact, vide Finance Act 2023, the Legislature provided for higher rate of rebate for a person opting for new regime. Thus, there is no express bar from claiming rebate from tax chargeable at special rates. 40. It is submitted that the sections providing for payment of tax at special rates....
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...."With a view to provide tax relief to the individual tax payers who are in lower income bracket, it is proposed to provide rebate from the tax payable by an assessee, being an individual resident in India, whose total income does not exceed five lakh rupees." iii) Budget Speech for the FY 2016-17 "Relief to small tax payers 118. In order to lessen tax burden on individuals with income not exceeding Rs. 5 lakhs, I propose to raise the ceiling of tax rebate under section 87A from Rs. 2,000 to Rs. 5,000. There are 2 crore tax payers in this category who will get a relief of Rs. 3,000 in their tax liability." iv) Explanatory memorandum to Finance Bill 2016 "Rationalization of limit of rebate in income-tax allowable under Section 87A The existing provisions of section 87A of Income-tax Act, provide for a rebate of an amount equal to hundred per cent of such income-tax or an amount of two thousand rupees, whichever is less, from the amount of income-tax to an individual resident in India whose total income does not exceed five hundred thousand rupees. With the objective to provide relief to resident individuals in the lower income slab, it is proposed ....
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....dent individual under the new regime so that they do not pay tax if their total income is up to Rs. 7,00,000." viii) Explanatory memorandum to Finance Bill 2023 "IV. Rebate under section 87A ix) Under the provisions of section 87A of the Act, an assessee, being an individual resident in India, having total income not exceeding Rs 5 lakh, is provided a rebate of 100 per cent of the amount of income-tax payable i.e., an individual having income till Rs 5 lakh is not required to pay any income-tax. x) From assessment year 2024-25 onwards, an assessee, being an individual resident in India whose income is chargeable to tax under the proposed sub-section (1A) of section 115BAC, shall now be entitled to a rebate of 100 per cent of the amount of income-tax payable on a total income not exceeding Rs 7 lakh" Thus, from the above, it can be deduced, that the intention always was that rebate is to be allowed from tax on total income without any conditions, whether any income is taxable at a special rate or the normal rate. The purpose of the rebate is to provide reliefs to small taxpayers whose income does not exceed say Rs. 5,00,000/- or Rs. 7,00,000....
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....re to push people to go under new regime. 46. There is no legal basis to say that the plain reading of the proviso to section 87A gives only one interpretation that rebate is available only in respect of tax leviable under section 115BAC (1A) of the Act. The Petitioner has also annexed to the Petition, representations made by other professional bodies which makes it clear that the professional fraternity including the ICAI, are of the same view in contrast to the view of the Respondent 47. Thus, clearly, the interpretation of the Respondent is not tenable and therefore, should not be countenanced. The benefits available under the Act to small taxpayers should be allowed to them without any fetters. 48. An intimation under section 143 (1) denying such claim of rebate, is in contravention of law, is invalid and, therefore, ought to be quashed and set aside. Further, the Respondents should be directed to not make any such disallowance in any future processing and to reverse the disallowance of claim already made by the Respondents. Consequential refunds to the assessees should be granted immediately with interest as per law. 49. In light of the abov....
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....on of persons (other than a cooperative society), Body of individuals whether incorporated or not or an Artificial Juridical Person referred to in Sub-clause (vii) of Clause (31) of Section 2 of the Act. c. Sub-clause (1A) again could override all the provisions of the Income Tax Act, 1961 except the provisions of this Chapter namely Chapter 12. This is self-evident by virtue of the expressions "notwithstanding anything contained in this act but subject to the provisions of this chapter". d. Those who come under this default scheme of Section 115BAC (1A) would have to forgo those deductions and exemptions stipulated under clause (2) and would be entitled to pay Income-tax at the reduced rates as prescribed in sub-clause 1A of the said Section. 5. On the introduction of Clause 1A to Section 115BAC which was with effect from 01.04.2024, Parliament simultaneously introduced a proviso to Section 87A which also came into effect from 01.04.2024 extending the threshold rebate to a total income of Rs. 7 lakhs and doubling the quantum of rebate from Rs. 12,500 to Rs. 25,000, in line with the schedule of rates prescribed under Sub-clause 1A to Section 115BAC. ....
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.... would all finally get assimilated to form total income. 13. Two things are therefore apparent and evident from a plain reading of clause 1A of Section 115BAC: a. Total income is one which is scattered over various provisions of Chapter 12 and what is taken into reckoning for reduced rates of taxation are only such categories of total income which would fall under clause (1A) of Section 115BAC, excluding every other total income falling under other Sections of Chapter 12. This interpretation is inevitable for the simple reason that though clause (1A) is a notwithstanding clause, and the override is across the Income Tax Act, 1961 but with one singular limitation that the same is still subject to the provision of Chapter 12. In other words, clause (1A) does not override Sections 110 to 115BBJ of Chapter 12. b. Once this is clear, the second inference in natural and consequential. Only such of those total income which falls under clause (1A) will get the benefit of reduced rate of taxation while such of those total income falling under other provisions of Chapter 12 will continue to be taxed at the specified rates referred to in those respective provisions.....
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....s streams which would form part of total income for the purpose of taxation. c. The assumption that clause (1A) of Section 115BAC has assimilated all the income arising out of Chapter 12 as total income within one single bucket, namely clause (1A) is clearly wrong. The contrary is well espoused by clause (1A). It makes it abundantly clear that only such total income other than the total income falling under other provisions of chapter 12 would alone get captured under clause (1A) and only those total income would have the preferential rate of taxation, while the rest of the total income spread across chapter 12 would be get assessed as per those provisions. 21. It is therefore very clear that both in the case of total income as well as preferential rate of taxation, a clear distinction is made between clause (1A) of Section 115BAC and rest of the provisions, and therefore the submissions by the assessees that clause (1A) is only with reference to rates and not total income is unsustainable. 22. Now coming to the proviso to Section 87A, here again the reference is only to total income falling under clause (1A) of Section 115BAC, whereas the assesses conten....
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.... are much needed virtues for a highly digitised system or gateway to function, may it be an income-tax portal or a GST portal, which are considered the largest gateways in the world. j. The contention of the petitioners that even if law gets settled against the petitioners, still they should be vested with a right to file a return which they believe it to be correct has to be rejected outright in an electronic regime, which has exhibited high level of accuracy and performance. If returns have to allowed to be filed based on one's belief and not based on statutory provisions and mandate, endless and countless types of returns would get filed which cannot be assimilated and processed in a digitised mechanism. k. Constitutional democracy permits only enforcement of rights guaranteed either as Constitutional Right or Fundamental Right or as a Statutory Right. The exposition that one's belief should accrue as a right to a citizen is too vulnerable and dangerous a proposition to be sustained. l. If every belief of an assessee becomes an automatic right under the Income Tax Act, 1961, it would be the end of era of Constitutional democracy and beginning of era of....
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....nding in the Writ Petition and the same was disposed of. A copy of the said order passed on 26.03.2024 in WP No.3565/2023 in Lupin Ltd is annexed herewith and marked as EXHIBIT-R-3. s. Whereas, in the case of Tata (supra), the same Bench on the very same day allowed the petitioners to withdraw and purse alternative remedy. The assessees had to resort to this remedy since it was pointed out that there was no fallacy in the law or in the digitised system, However, in both these matters, the core argument which was attempted was the right to file a return in any manner based on one's belief. . A copy of the said order dated 26-03-2023 in WP No. 3109 of 2022 in Tata Sons Pvt Ltd is annexed herewith and marked as EXHIBIT-R-4 t. This Hon'ble court after hearing both parties for a full day decided not to grant the prayer of the petitioners and as petitioners advocate advanced the argument of pursuing an alternate remedy available to them, this Hon'ble Court allowed the petitioners to have the writ petitions and in accordance closed Writ Petition No. 3109 of 2022, and whereas the same was also followed in the case of Lupin in Writ Petition No. 3565 of 2023 & Writ Petition....
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.... seven hundred thousand rupees. Section 115 BAC- Tax on income of individuals [, Hindu undivided family and others] (1) ......... (1A) Notwithstanding anything contained in this Act but subject to the provisions of this Chapter, the income-tax payable in respect of the total income of a person, being an individual or Hindu undivided family or association of persons (other than a co-operative society), or body of individuals, whether incorporated or not, or an artificial juridical person referred to in sub-clause(vii) of clause (31) of section 2, other than a person who has exercised an option under sub-section (6), for any previous year relevant to the assessment year beginning on or after the 1st day of April, 2024, shall be computed at the rate of tax given in the following Table, namely:- TABLE Sr. No. (1) Total income (2) Rate of tax (3) 1. Upto Rs. 3,00,000 Nil 2. From Rs. 3,00,001 to Rs. 6,00,000 5 per cent 3. From Rs. 6,00,001 to Rs. 9,00,000 10 per cent 4. From Rs. 9,00,001 to Rs. 12,00,000 15 per cent 5. From Rs. 12,00,001 to Rs. 15,00,000 20 per cent 6. Above Rs. 15,00,000 30 per ....
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....or section 33ABA or sub-clause (ii) or sub-clause (iia) or sub-clause (iii) of sub-section (1) or sub-section (2AA) of section 35 or section 35AD or section 35CCC or under any of the provisions of Chapter VI-A other than the provisions of sub-section (2) of section 80CCD or sub-section (2) of section 80CCH or section 80JJAA;] (ii) without set off of any loss,- (a) carried forward or depreciation from any earlier assessment year, if such loss or depreciation is attributable to any of the deductions referred to in clause (i); (b) under the head "Income from house property" with any other head of income; (iii) by claiming the depreciation, if any, under any provision of section 32, except clause (iia) of sub-section (1) of the said section, determined in such manner as may be prescribed; and (iv) without any exemption or deduction for allowances or perquisite, by whatever name called, provided under any other law for the time being in force. (3) ......... (4) ......... (5) ......... (6) Nothing contained in sub-section (1A) shall apply to a person where an option is exercised by such person, in the manner....
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.... scheme will assist us in appreciating the parties' submissions. 13. Under Article 265 of the Constitution of India, no tax shall be levied or collected except by authority of law. Article 300A of the Constitution provides that no person shall be deprived of his property save by the authority of law. The legislature's power to enact the Income-tax Act can be traced in List 1 of Schedule VII to the Constitution of India, read with Article 246 of the Constitution. The power to tax is an incident of sovereignty and the Constitution of India is the supreme law of the land. Therefore, the Income-tax Act is subordinate to the Constitution and must be read and interpreted in light of the constitutional provisions. As per Article 265, not only the levy but also the collection of tax must be under some authority of law, and the law would mean law enacted by the legislature and cannot include an executive order. Any act of the authorities under the Income-tax Act which seeks to impose or collect the tax by denying at the threshold a person from making a debatable and arguable claim would be unconstitutional. 14. Section 2 (24) of the Act defines 'income' to include various items sp....
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....with and subject to the provisions of this Chapter, the deductions specified under sections 80C to 80U. Section 80A(2) provides that the aggregate amount of the deductions under Chapter VI-A shall not exceed the gross total income of an assessee. Section 80B(5) defines 'gross total income' as the total income computed in accordance with the provisions of this Act before making any deduction under Chapter VI-A. It means that the total income has to be computed in accordance with the provisions of this Act which will amount to gross total income and from such gross total income deductions under Chapter VI-A shall be made to arrive at the total taxable income. 21. Chapter VIII deals with rebates and reliefs. Section 87 (1) provides that in computing the amount of income-tax on the total income of an assessee with which he is chargeable for any assessment year, there shall be allowed from the amount of income-tax (as computed before allowing the deductions under Chapter VIII), in accordance with and subject to the provisions of sections 87A and 88E, the deductions specified in those sections and the aggregate amount of deductions under Section 87A or Section 88E shall not exceed the....
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....e payable in accordance with the provisions of Sections 208 to 219 in respect of the income chargeable to tax for the assessment year immediately following that financial year and said income is referred to as 'current income'. Section 209 provides for computation of advance tax. Section 209 (1) (a) provides that the assessee shall estimate his current income and Income-tax thereon shall be calculated at the rates in force in the financial year. Section 210 provides for payment of advance tax by the assessee of his own accord or in pursuance of an order of Assessing Officer on or before due dates specified in Section 211 in accordance with the calculation made in the manner laid down under Section 209. Section 211 provides for various due dates on or before which advance tax has to be paid. 25. Section 139 provides for furnishing a return of income by a person in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed. Section 139D empowers the Board, i.e., Central Board of Direct Taxes to make rules providing for the class of persons who shall be required to furnish the return in electronic form, the form and manne....
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....143 (1). 30. The adjustments under Section 143 (1) consist of arithmetical error, incorrect claim apparent from records, etc. which are specified in Section 143 (1)(a). Explanation to Section 143 (1) defines 'incorrect claim'. Section 143 (2) provides that the Assessing Officer, if he considers it necessary or expedient to ensure that the assessee has not understated the income, or has not computed excessive loss, or has not under-paid tax shall serve on the assessee a notice requiring him to attend the office of the Assessing Officer along with evidence on which the assessee may rely in support of the return. Section 143 (3) provides for passing the assessment order by an Assessing Officer after hearing the assessee and considering all the documents produced before the Assessing Officer by the assessee. Section 144B deals with Faceless Assessment, which aims to eliminate the direct interface between the Officer and the assessee during the course of assessment proceedings. 31. The intimation and assessment orders passed are further subjected to appeals, reassessment and revisional proceedings under Section 246, 263, 264, 260A, etc. where the difference of views between assess....
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....hat is, to aid tax governance should not overtake tax governance and decide which claim an assessee may make or not. The facility to raise a claim, which was very much available till 5 July 2024, could not have been abruptly discontinued simply because the revenue officials, acting in their administrative capacities, felt that such a claim was untenable. This is almost like some Court registry declining to accept a filing because, in the opinion of the filing clerk, the suitor's suit was untenable on merits. The access to justice cannot be denied in this manner. 35. In our view, any such attempt which restricts or prohibits an assessee from making a particular claim concerning the determination of income and/or tax payable thereon would be contrary to the scheme of the Act and would also be unconstitutional since by the said prohibition or restriction an assessee is prohibited not only from making a claim, but would also be denied his right to access justice by not permitting him to test such claim by the process provided under the Act i.e., assessment, appeal, etc. Any such restriction or prohibition is not permissible and would be unconstitutional. 36. The Act provides for ....
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....in which case certainly the incorrect claim is expressly barred by the Act could be added to the total income. Merely because few selected cases are picked up for scrutiny does not mean and would not authorise any authority under the Act to prevent an assessee from making the claim on which more than one view is possible. The circumstance that only a few cases are selected for scrutiny applies across the board. There are bound to be instances where an assessee's claims may not be tenable but have escaped scrutiny because of the policy adopted and applied across the board. But, this cannot be a ground to tweak the utility to prevent at the very threshold, an opportunity to raise a claim on a debatable issue based upon the interpretation of the provisions in Section 87A and 115 BAC of the IT Act. 40. The claim we are concerned about in the present proceedings is under Section 87A. It is the contention of the petitioners that the rebate under Section 87A is to be allowed not only from the tax computed under Section 115BAC but also from the tax computed following other provisions of Chapter XII of the Act unless such other provisions expressly debar them from making the claim. This ....
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....aised by an assessee cannot be said to have been prohibited expressly by any of the provisions of the Act, and therefore, an assessee is entitled to atleast make a claim which later on can be subjected to adjudication as per the provisions of the Act, but prohibiting/restraining an assessee to make a claim at the threshold of filing the return would undoubtedly be unconstitutional and contrary to the provisions of the Act. 41. Per contra, the learned Additional Solicitor General submits that based on the intention of introduction of Section 115BAC, which deals with giving up of all the deductions, exemptions and simplifying the taxation and thereby encouraging the assessees to pay tax at lower rate, a rebate under Section 87A can be given only from the tax determined under Section 115BAC and not from the tax under any other provisions of Chapter XII. The learned ASG submits that on a reading of the proviso to Section 87A, it clearly provides that the rebate would be granted from the total income of an assessee which is chargeable to tax under Section 115BAC (1A) and not from any other section provided in Chapter XII of the Act. According to the learned ASG, the total income refe....
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.... device of simply tweaking the utility and preventing the assessee from even raising a claim. Therefore, the main question is not whether the interpretation proposed by the learned counsel for the petitioners or that proposed by the learned ASG is correct, but the main question is whether the revenue can insist that its interpretation prevails or triumphs because it has the capacity to and has exercised this capacity to tweak the utility and prevent an assessee to even raise a debatable claim. The provisions of the IT Act do not permit the revenue to do this without transgressing the constitutional boundaries. 44. On a reading of paras 3, 4(a), 8, 9, 10, 13(a), 13(b), 16, 19 and 20 of respondents' written submissions, which we have reproduced earlier, itself shows that it is by the interpretative process of various provisions of the Act and by applying various techniques and canons of interpretation, respondents are seeking to justify their action. Based on these submissions, the issue raised for our consideration on the claim under Section 87A is, at best, highly debatable and contentious. Therefore, the revenue would not be justified in assuming that its interpretation is open....
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....ct a person has to estimate and compute his income and make payment of tax which the authorities will verify under the Act. If by any act of the authorities under the Income-tax Act, any person is deprived or restrained from computing his income by denying a person to raise a claim, same would be contrary to the provisions of the Act and the Constitution of India. It would be like putting a cart before the horse. 48. Respondents did not show any provision under the Income-tax Act which expressly debars an assessee to raise or make the claim under Section 87A qua the tax computed at the rates specified in the provisions of Chapter XII other than Section 115BAC. If that be so, then certainly one cannot accept the argument that the respondents' case is crystal clear. There was no rebuttal to the petitioner's contention that a provision like Section 112A (6) has been expressly enacted wherever the legislature intended to deny such a benefit. Therefore, in our view, insofar as the prayers of the petitioners are concerned that the utility should permit an assessee to at least make a claim under Section 87A of the Act, it cannot be rejected at the threshold. 49. In our view ....
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....pertise that specialises only in taxation laws. It is not that in every case the interpretation canvassed by an assessee or the department is bound to be correct except by undergoing the process of adjudication, appeals, etc. If the respondents' stand is to be accepted, then in our view and more so on the facts of the present case and provisions with which we are concerned, the statutory remedies available under the Act would be rendered redundant and infructuous. We once again make it clear that we have not examined whether the stand of the revenue or the petitioners is correct, but certainly at least for the purpose of whether to permit an assessee to make a claim or not is an issue, which cannot be thrown away at the threshold by the respondents by simply tweaking the utility. 53. Section 87 which provides for rebate under Section 87A from the amount of income-tax uses the phrase 'there shall be allowed from the amount of income tax....'. The proviso to Section 87A uses the phrase '.... assessee shall be entitled to a deduction....'. In our view, a combined reading of Section 87 and Section 87A would mean an assessee has to make a claim, the entitlement of which is to be ....
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....ied from being made by modifying utilities, which prohibits an assessee from raising a claim in the return of income at the threshold itself. 58. We may draw support based on the observations made by various Courts for arriving at our aforesaid analysis and conclusions: (a) In the case of 'Commissioner of Income Tax Vs Ranchhoddas Karsondas' (1959) 36 ITR 569 (SC), the Supreme Court made the following observations with respect to taking cognizance of a return filed which was below the taxable limit; It is a little difficult to understand how the existence of a return can be ignored, once it has been filed. A return showing income below the taxable limit can be made even in answer to a notice under section 22 (2). The notice under section 22 (1) requires in a general way what a notice under section 22 (2) requires of an individual. If a return of income below the taxable limit is a good return in answer to a notice under section 22 (2), there is no reason to think that a return of a similar kind in answer to a public notice is no return at all. The conclusion does not follow from the words of section 22 (1). No doubt, under that sub-section only those persons are require....
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....on with respect to the right of an assessee while filing the return of income. Now, under section 139 (1) a duty is cast upon every person to file a voluntary return if his income exceeds the maximum amount which is his chargeable to income-tax. The question arises as to which income is contemplated by this provision, the income which the assessee believes to be his income or which is finally assessed by the Income-tax Officer. It is clear that at the time when a person is required to file a voluntary return, no assessment has yet been made against him. He is thus to be guided by what he himself believes to be his income. It is possible and it happens very frequently that an assessee may not consider a particular item to be his income and yet the Income-tax Officer may hold otherwise. In such a case, if what he considers to be his income is less than the amount which is not chargeable to Income-tax, he is not required to file a voluntary return even if the income finally assessed is more than the maximum amount which is not chargeable to income-tax. Of course, the belief of the assessee must be bona fide. In the instant case, the total income assessed by the Income-tax Off....
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....o be his income and not the income which is finally assessed. In such a case, if what the assessee considers to be his income is less than the maximum not chargeable to tax, he is not required to file a voluntary return. Even if, ultimately, his income is assessed at a figure which is taxable, he may not be liable for penalty under section 271(1)(a). To that extent, the Tribunal is right in principle. The holding of a bona fide belief of an assessee that his income is less than the maximum not chargable to tax is essentially a question of fact. Merely because the accounts disclosed a loss, it could not be a bona fide ground for not filing a return under section 139 (1). According to accountancy principles, there may not be profit/but from the point of view of taxation, there may be profit having regard to the exclusion or inclusion of certain items of income and expenditure. (d) The Delhi High Court in the case of CIT Vs. DCM Ltd. (2013) 359 ITR 101 authored by His Lordship Sanjiv Khanna J., (as he then was) observed that law does not bar or prohibit an assessee from making a claim, which he believes may be accepted or is plausible. 59. We may also observe that in the c....
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....ts duty under the Act, such a writ as prayed for in prayer clause (c) cannot be granted. We also agree with the learned ASG that unless there is some concrete instance, the Court should grant no relief in such broad and general terms. Such reliefs, in general terms, are typically not to be granted because the ramifications would be unclear. For the present, we do not propose to consider relief in terms of the prayer clause (c) of the petition by leaving the question open. 64. Because of the above, we pass the following order: - ORDER (i) Rule is made absolute in terms of prayer clause (a) which reads as under: - (a) that this Hon'ble Court be pleased to issue a writ of mandamus or a writ in the nature of mandamus or any other appropriate writ, direction or order directing the Respondents to modify the utilities for filing of the return of income under section 139 of the Act immediately, thereby allowing assessees to make a claim of rebate under section 87A of the Act read with the proviso to section 87A, in their return of income for the AY 2024-25 and subsequent years including revised returns to be filed under section 139 (5) of the Act. (ii) ....