2020 (8) TMI 616 - HC - Income Tax

Rectification of mistake u/s 154 - Deduction u/s 80P - HELD THAT - Respondent failed to consider the actual issue that was raised in the rectification application, and proceeded on the assumption that what was agitated in the rectification application was the merits of the disallowance of the deduction under Section 80P of the Income Tax Act. The issue urged in the rectification application was the propriety of the observation in the assessment order that the return had been filed beyond time, whereas it is the specific contention of the petitioner that the return was filed within time. Quash Ext.P12 communication of the respondent, and direct the respondent to consider the rectification application under Section 154 of the Income Tax Act, afresh, after hearing the petitioner. The respondent shall pass fresh orders, as directed, after hearing the petitioner, within an outer time limit of three months from the date of receipt of a copy of this judgment.

Summary

Issues:
Rectification application under Section 154 of the Income Tax Act not considered properly by the respondent.

Analysis:
The petitioner approached the court aggrieved by a communication (Ext.P12) stating that the rectification application could not be considered as the issue did not fall within the scope of rectification. The petitioner contended that the rectification application was filed to correct a mistake apparent from the record, where the assessing authority wrongly assumed that the return was filed belatedly under Section 80P of the Income Tax Act. The petitioner clarified that the deduction was disallowed solely based on the timing of the return filing, which was actually done on time. The respondent, however, misunderstood the rectification application, assuming it challenged the deduction under Section 80P on merits rather than the factual aspect of the timing of return filing.

During the hearing, the learned counsel for the petitioner argued that the respondent failed to consider the actual issue raised in the rectification application. The court agreed with the petitioner's contention, noting that the rectification application's focus was on the propriety of the observation in the assessment order regarding the timing of the return filing. The court found merit in the petitioner's argument that the return was filed within time, contrary to the assumption made by the respondent. Consequently, the court quashed the communication (Ext.P12) and directed the respondent to reconsider the rectification application under Section 154 of the Income Tax Act. The respondent was instructed to pass fresh orders after hearing the petitioner within a maximum of three months from the date of the judgment. The petitioner was further directed to provide a copy of the writ petition and the judgment to the respondent for further action.