2022 (1) TMI 227 - AT - Income Tax

Intimation u/s. 143(1) - Rectification of mistake u/s 154 - period of limitation - intimation set off of brought forward losses were not allowed because of which assessee was asked to pay the demand - HELD THAT - Intimation u/s. 143(1) should be communicated to the assessee, if there is an adjustment made in the return resulting either in demand or reducing in refund. The un-communication orders/intimations cannot be enforced and are not valid. The onus to show that the order was communicated and served on the assessee is on the revenue and not upon the assessee. Here in the case of the assessee the lower authority has not demonstrated from any material that the intimation u/s. 143(1) for the assessment year 2006-07 was served within the four years of passing the intimation. It is mentioned in the finding of the Hon ble High Court 2013 (3) TMI 316 - DELHI HIGH COURT that while deciding application u/s. 154, the Assessing Officer is required to know and follow the aforesaid principle laid down in the finding of the Hon ble High Court. Since the Assessing Officer has not communicated the intimation u/s. 143(1) to the assessee as elaborated supra, therefore, in the light of the finding of the Hon ble High Court as supra, we direct to consider the case of the assessee on merit after examination of the claim of the assessee. In the result, this ground of appeal of the assessee is allowed for statistical purposes.

Summary

Issues:
1. Rejection of application u/s. 154 on the ground of time barring.
2. Disallowance of set off of b/f business loss against business income.

Analysis:

Issue 1: Rejection of application u/s. 154
The assessee filed the return for AY 2006-07 on 29th December 2016. The Assessing Officer issued a recovery notice on 07-06-2016 for an outstanding demand. The assessee claimed not to have received any intimation u/s. 143(1) until 26th June 2016, which led to the demand. The application for rectification u/s. 154 was rejected as time-barred. The ITAT observed that the CIT(A) did not address the fact that no intimation was received within the stipulated period. Referring to a Delhi High Court decision, it was emphasized that uncommunicated intimations under section 143(1) cannot be enforced. The ITAT directed a merit-based review of the case due to the lack of communication of the intimation within the specified time frame.

Issue 2: Disallowance of set off of b/f business loss
The Assessing Officer disallowed the set off of b/f business loss against business income for AY 2006-07. The CIT(A) upheld this decision. During the appeal, the assessee argued that the intimation u/s. 143(1) was not received, affecting the disallowance. The ITAT noted that the lower authorities did not prove the intimation was served within four years, as required by law. Referring to the principle laid down by the Delhi High Court, the ITAT emphasized the importance of communicating adjustments to the assessee. Consequently, the ITAT allowed the appeal for statistical purposes.

Additional Ground of Appeal
The assessee raised an additional ground challenging the CIT(A)'s interpretation of intimation u/s. 143(1)(a) as an order under section 154(7). The ITAT dismissed this ground, stating that section 154(1)(b) applies to intimation u/s. 143(1). Therefore, the additional ground of appeal was rejected.

In conclusion, the ITAT partly allowed the assessee's appeal for statistical purposes, directing a merit-based review of the rejection of the application u/s. 154 and the disallowance of set off of b/f business loss against business income. The additional ground of appeal was dismissed.