2019 (12) TMI 76 - AT - Income Tax

Intimation u/s 143(1) on the basis of which order under section 154 was passed by the learned ACTT - HELD THAT - As laid down by the honorable Supreme Court in Catena of judgement that the purpose of tax administration is to collect just and fair tax from the citizen and should not be an endeavor of the revenue authority to take benefit of ignorance of the citizen. In the present case the individual assessee is before us and he had wrongly included the exempted income in the total income as a result thereof there is an increasing the taxability of the assessee which resulted in issuing the tax demand by the revenue authorities. In our considered opinion the interest of justice, requires that the matter be sent back to the file of the learned CIT appeal for a fresh adjudication on merit without being influenced by the fact that the application under section 154 was filed belatedly on 30 March 2011. The delay in any filing the rectification application, stand condoned by this tribunal. In the result the appeal of the assessee is allowed our direction issued to the Commissioner appeal to decide the grounds on merit and decide whether the assessee has wrongly included the exempted income in the total income or not and shall also decide if the said accept incoming excluded from the total income then in that eventuality whether the assessee would be liable to pay any tax demand or not. Appeal of the assessee is allowed for statistical purposes.

Issues:
1. Denial of receipt of intimation under section 143(1) for passing order under section 154
2. Failure to receive communication about tax demand due to change in address
3. Disallowance of exempt incomes and deductions under chapter VI-A
4. Lack of proper opportunity of being heard in sustaining the assessment order under section 154

Issue 1: Denial of receipt of intimation under section 143(1) for passing order under section 154
The assessee challenged the order passed by the Commissioner of Income Tax (Appeals) sustaining the order of the ACIT without acknowledging that the appellant never received any intimation under section 143(1) which led to the order under section 154. The tribunal observed that the interest of justice necessitates a fresh adjudication on merit without being influenced by the belated filing of the rectification application.

Issue 2: Failure to receive communication about tax demand due to change in address
The appellant contended that they only became aware of the tax demand raised in 2013 after the revision period had lapsed due to the communication being sent to their old address. The tribunal recognized the inadvertent inclusion of exempted income in the total income, leading to an increased tax liability. The tribunal directed a reevaluation by the Commissioner to determine the correctness of including the exempted income and the consequent tax liability.

Issue 3: Disallowance of exempt incomes and deductions under chapter VI-A
The Commissioner upheld the addition of disallowed amounts, leading to a tax demand. The tribunal emphasized the importance of tax administration to collect fair taxes without taking advantage of the taxpayer's ignorance. It directed a reevaluation on merit without being influenced by the delay in filing the rectification application, ultimately allowing the appeal for a fresh assessment on the grounds of exempted income and deductions.

Issue 4: Lack of proper opportunity of being heard in sustaining the assessment order under section 154
The appellant argued that they were not given a proper opportunity to be heard in the assessment order under section 154. The tribunal, after considering arguments from both sides, directed a reevaluation by the Commissioner to decide on the grounds of merit and the tax liability concerning the inclusion of exempted income in the total income.

In conclusion, the tribunal allowed the appeal for statistical purposes and issued directions for a fresh adjudication on the grounds of exempted income and deductions, emphasizing the importance of fair tax collection and justice in tax administration.

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