2024 (11) TMI 767 - AT - Income Tax

Rejection of Rectification application u/s 154 - Charging of interest under sections 234A, 234B, and 234C - return processed by CPC u/s 143 (1) holding that the due date for filing the return falls on 05.08.2013 and wrongly charged interest u/s 234A, 234B and 234C - case of the assessee was selected for scrutiny and notice u/s 143(2) was issued to the assessee. The rectification rights were then transferred from CPC Bangalore to the AO - HELD THAT - As decided in Pankaj Bansal case 2024 (4) TMI 1199 - ITAT DELHI . As per provisions of section 139(1) of the Act, the due date for the partnership firm not liable for tax audit would be 05.08.2013 for the year under consideration end the due date for partnership which is eligible for tax audit would be 31.10.2013. This is very clear from Explanation to section 139 of the Act, which defines the expression due date . Hence, the department in the hands of the firm holding had accepted the fact that it is liable for tax audit and accordingly had accepted the due date of filing of return of income u/s 139(1) to be 31.10.2013. Hence, the department cannot take the divergent stand for the assessee herein by holding that the firm in which assessee is a partner is not liable for tax audit u/s 44AB of the Act and consequently, the due date for assessee would get advanced to 05.08.2013, instead of 31.10.2013. In view of this, we have no hesitation to direct the AO to delete the chargeability of interest u/s 234A and u/s 234B - Decided in favour of assessee.

Summary

Issues:
1. Rectification application under section 154 of the Income Tax Act.
2. Dismissal of appeal by the ld. CIT (A) regarding the rectification application.
3. Charging of interest under sections 234A, 234B, and 234C of the Act.
4. Recovery of impugned demand by wrongfully attaching the bank account of the assessee.
5. Violation of principles of natural justice by the ld. CIT (A) in not affording a reasonable opportunity of being heard to the assessee.

Detailed Analysis:

1. The appeal was filed by the assessee against the order of the ld. Commissioner of Income-tax Appeals-3, Gurgaon, regarding a rectification application filed under section 154 of the Income Tax Act. The assessee revised its return of income, and the case was selected for scrutiny. Despite no adverse inference during the assessment under section 143(3) of the Act, the rectification application was rejected without passing a rectification order. The ld. CIT (A) dismissed the appeal filed by the assessee, leading to the current appeal.

2. The grounds of appeal raised by the assessee included contentions that the orders of the Assessing Officer and the ld. CIT (A) were contrary to law and facts of the case. The ld. CIT (A) erred in upholding the rejection of the rectification application under section 154 of the Act. The appellant argued that no adverse inference was drawn during the assessment under section 143(3) and that the rectification application was not disposed of by the Assessing Officer. The appellant also highlighted the wrongful attachment of the bank account for recovery of demand without proper procedures being followed.

3. The charging of interest under sections 234A, 234B, and 234C of the Act was a key issue in the appeal. The discrepancy arose from the due date for filing the return of income, with the appellant arguing that the charging of interest was unlawful as the return was filed on the due date. The appellant contended that the ld. CIT (A) failed to consider the revised return filed by the assessee, which resulted in a nil demand notice under section 156 of the Act.

4. The recovery of the impugned demand through the wrongful attachment of the bank account was a significant concern for the appellant. The appellant argued that the actions taken by the Assessing Officer in recovering the demand without passing a rectification order under section 154 of the Act or providing an opportunity for the assessee to be heard were unjust. The appellant emphasized the violation of natural justice principles, especially during the COVID-19 pandemic, as the ld. CIT (A) proceeded ex-parte without affording a reasonable opportunity for the assessee to present their case.

In conclusion, the appellate tribunal allowed the grounds raised by the assessee, following a similar decision in a previous case. The appeal was allowed, setting aside the order of the ld. CIT (A) and granting relief to the assessee.