2020 (6) TMI 536 - HC - Income Tax

Rectification of mistake - petitioner was astonished to notice the intimation u/s 143(1), whereby the adjustment of brought forward losses to the extent was not considered - HELD THAT - Ext.P9 dated 18th February 2020, which reveals the pendency of the rectification application which stands transferred to the Jurisdictional AO. The grievance of the petitioner can be vindicated by issuing directions to the first respondent to takes a call on the rectification application and to decide the same within a period of 45 days from the date of receipt of the copy of the order. Till then, the demand raised vide notices Exts.P5 and P7 is ordered to be kept in abeyance. However, it is made clear that the petitioner is at liberty to assail the outcome of the decision of the rectification petition, if he so chooses, in accordance with law. The writ petition stands disposed of. Liberty is granted to the Income Tax Authority to move appropriate application in case the averments of the writ petition are found to be false or incorrect.

Summary

Issues:
Quashing of ex-parte assessment orders for the assessment years 2012-13 and 2013-14.

Analysis:
The petitioner, a manufacturing company operating as a partnership firm, sought to quash ex-parte assessment orders for the years 2012-13 and 2013-14. The petitioner had filed a Nil income tax return for 2012-13 and discovered that brought forward losses were not considered in the assessment. Subsequently, a rectification application was submitted under Section 154 of the Income Tax Act. For the following year, 2013-14, the petitioner filed a return claiming brought forward losses, but adjustments were not made as expected. The department issued demands for both years, leading to the petitioner filing replies and a rectification application, which remained pending without action. The court noted the pendency of the rectification application and directed the Income Tax Department to decide on it within 45 days, suspending the demands until then. The petitioner was granted the liberty to challenge the rectification decision if desired.

The petitioner's counsel highlighted discrepancies in the assessment process, supported by documentary evidence. Despite the petitioner's efforts to rectify the errors through applications and replies, the Income Tax Department did not address the issues satisfactorily. The court acknowledged the petitioner's grievances and intervened to ensure a timely resolution by directing the department to process the rectification application promptly. The court's decision aimed to provide relief to the petitioner by suspending the demands until the rectification process is completed, while also allowing the petitioner the option to challenge the final decision legally if necessary.

The court considered the submissions from both parties and reviewed the relevant documents, particularly noting the pending rectification application forwarded to the Jurisdictional Assessing Officer. By issuing directions for the department to address the rectification application within 45 days and suspending the demands until resolution, the court aimed to provide a fair opportunity for the petitioner to rectify the assessment discrepancies. The court's decision emphasized the importance of addressing the petitioner's concerns promptly and in accordance with the law, granting the Income Tax Authority the option to challenge the writ petition if any false or incorrect information was found.