2014 (1) TMI 248 - AT - Income Tax

Addition/disallowance on TDS certificate not allowed Rectification application u/s 154 not made within four years Held that - The return was processed u/s.143(1) of IT Act on 30/06/1999, however both the copies of the intimation was found to be placed in the case records - the intimation u/s.143(1) remained to be served upon the assessee thus, the intimation was not sent to the assessee, thus, the question of limitation raised by the Revenue was against the natural justice as well as unjustifiable - The law prescribes that an intimation has to be sent to the assessee specifying the sum so payable and that intimation shall be deemed to be a notice of demand u/s.156 of IT Act thus, the issuance of such an intimation is absolutely necessary - the assessee was not aware about the adjustments and the fate of its return; stated to be filed in the due course. When it was came to the notice of the assessee that the credit of the TDS was not properly given, then the assessee moved an application before the AO - a photocopy of the impugned intimation u/s.143(1)(a) was received by the assessee in the month of March-2006 - Immediately, thereafter an application u/s.154 was moved on 20th March-2006 - 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 - the grievance of the assessee is well-founded - the AO is directed to entertain the rectification application dated 20/03/2006 and dispose it off as per law after verification of record as also the eligibility of the claim Decided in favour of Assessee.

Summary

Issues:
1. Whether the rectification application filed by the Assessee was rightly dismissed by the ld.CIT(A) on the ground of limitation under section 154(7) of the IT Act?
2. Whether the intimation u/s.143(1)(a) was served on the Assessee within the prescribed time limit?

Analysis:
Issue 1:
The Assessee filed a rectification application for AY 1998-99, which was rejected by the AO citing section 154(7) of the IT Act, stating that the application was beyond the four-year limitation period. The ld.CIT(A) upheld the AO's decision, emphasizing that the rectification must be made within four years from the end of the financial year in which the order sought to be amended was passed. The AO's action was considered valid, and the appeal failed. However, the Assessee argued that the intimation u/s.143(1)(a) was not served, and hence, the limitation period should be calculated from the date of receipt of the intimation.

Issue 2:
The Assessee contended that the intimation u/s.143(1)(a) was not served, as both copies were found in the Revenue Department's records. The Assessee highlighted that the intimation was crucial for determining the tax liability and refund due. The Assessee cited legal precedents to support the argument that the limitation period for rectification should start from the date of receipt of the intimation. The Revenue Department relied on section 154(7) of the IT Act, which specifies the four-year limitation for amendments. However, the Tribunal found that the AO's failure to serve the intimation on the Assessee was a breach of statutory duty. Referring to relevant CBDT Circulars, the Tribunal directed the AO to consider the rectification application even after the expiry of the limitation period, emphasizing the importance of rectifying genuine errors and hardships faced by taxpayers.

In conclusion, the Tribunal allowed the Assessee's appeal, directing the AO to process the rectification application dated 20/03/2006 and make necessary corrections in accordance with the law. The decision was based on the principles of natural justice and the Assessee's right to rectify genuine errors, emphasizing the importance of statutory obligations and fair treatment of taxpayers.