2020 (10) TMI 90 - AT - Income Tax

Dismissing appeal of the assessee on the grounds of limitatio n - appeal as preferred against the intimation u/s 143(1) - appeal was filed with learned CIT(A) with delay of 3417 days beyond the time prescribed u/s 249(2) - rectification application u/s 154 filed with AO beyond four years from the end of the financial year in which intimation u/s 143(1) was issued by the AO and hence AO was right in dismissing rectification application u/s 154 of the 1961 Act filed by the assessee - HELD THAT - We have observed that jurisdictional error has taken place at the end of learned CIT(A) as he has dismissed the first appeal of the assessee in limine on the short grounds of limitation that the appeal is filed late by assessee before learned CIT(A) late by 3417 days beyond the time prescribed u/s 249(2) of the 1961 Act , thereby erring on the ground as the order which was assailed by assessee before him was an order dated 16.08.2018 passed by AO u/s 154 of the 1961 Act dismissing rectification application dated 08.01.2018 filed by assessee , and not the intimation dated 29.03.2009 issued by the AO u/s 143(1) of the 1961 Act. Jurisdictional error has taken place at the end of learned CIT(A) and the end of justice demands that the appellate order dated 21.05.2019 passed by learned CIT(A) be set aside and all the issues raised by assessee before learned CIT(A) in its first appeal filed on 05.09.2018 before learned CIT(A) stand restored for fresh adjudication of all the said issues by learned CIT(A) in set aside proceedings, as directed by us.

Summary

Issues:
1. Dismissal of appeal on the ground of limitation by the Commissioner of Income Tax (Appeals).
2. Jurisdictional error by the Commissioner of Income Tax (Appeals) in dismissing the appeal based on limitation.
3. Rectification application filed by the assessee beyond the statutory period.
4. Incorrect claim of tax withheld on foreign income.
5. Relief for taxes paid in the USA under Section 90 of the Income-tax Act, 1961.
6. Discrepancy in the order assailed before the Commissioner of Income Tax (Appeals).

Issue 1: Dismissal of appeal on the ground of limitation by the Commissioner of Income Tax (Appeals):
The appeal was dismissed by the Commissioner of Income Tax (Appeals) on the basis of limitation, with a delay of 3417 days in filing the appeal beyond the time prescribed under Section 249(2) of the Income-tax Act, 1961. However, it was argued that the jurisdictional error occurred as the order assailed before the Commissioner was not the intimation dated 29.03.2009 but the order dated 16.08.2018 passed by the Assessing Officer under Section 154 of the Act. The Tribunal found that the dismissal on the grounds of limitation was erroneous and set aside the appellate order for fresh adjudication.

Issue 2: Jurisdictional error by the Commissioner of Income Tax (Appeals) in dismissing the appeal based on limitation:
The Tribunal noted that the Commissioner of Income Tax (Appeals) committed a jurisdictional error by dismissing the appeal solely on the grounds of limitation. The order assailed by the assessee was not the intimation dated 29.03.2009 but the order dated 16.08.2018 passed by the Assessing Officer under Section 154 of the Act. The Tribunal directed a fresh adjudication of all issues raised by the assessee, emphasizing the importance of providing the assessee with proper opportunity to be heard in accordance with principles of natural justice.

Issue 3: Rectification application filed by the assessee beyond the statutory period:
The assessee had filed a rectification application under Section 154 of the Act dated 08.01.2018, which was rejected by the Assessing Officer on 16.08.2018. The rejection was based on the application being filed beyond the statutory period of four years from the end of the financial year in which the intimation dated 29.03.2009 was issued under Section 143(1) of the Act. This rejection led to the subsequent appeal and the jurisdictional errors highlighted in the judgment.

Issue 4: Incorrect claim of tax withheld on foreign income:
The assessee had claimed relief for taxes paid in the USA on foreign income, which was wrongly considered as Tax Deducted at Source (TDS). The Assessing Officer rejected the claim, stating that the amount was initially claimed as TDS in the return of income filed with Revenue. This discrepancy in the treatment of taxes paid in the USA as TDS led to the subsequent rectification application and appeal process.

Issue 5: Relief for taxes paid in the USA under Section 90 of the Income-tax Act, 1961:
The assessee sought credit for taxes paid in the USA under Section 90 of the Act, claiming relief for the taxes paid on foreign income. The rejection of this claim by the Assessing Officer and subsequent dismissal of the appeal by the Commissioner of Income Tax (Appeals) based on limitation raised significant legal issues regarding the correct interpretation and application of tax relief provisions under Section 90.

Issue 6: Discrepancy in the order assailed before the Commissioner of Income Tax (Appeals):
The central issue revolved around the incorrect identification of the order being challenged before the Commissioner of Income Tax (Appeals). The Tribunal clarified that the order dated 16.08.2018 passed by the Assessing Officer under Section 154 of the Act was the subject of the appeal, not the intimation dated 29.03.2009. This discrepancy led to the jurisdictional error and subsequent setting aside of the appellate order for fresh adjudication.

This detailed analysis of the legal judgment highlights the key issues involved in the case and the Tribunal's decision to set aside the Commissioner of Income Tax (Appeals) order for fresh adjudication.