2023 (5) TMI 784 - AT - Income Tax

Validity of order of the National Faceless Appeal CIT Centre passed u/s 250 - Correct tax liability of the assessee - assessee has been doubly taxed - assessee was a unit of Kabir welfare trust which was registered under Societies Registration Act as registered u/s 12AA - assessee polytechnic being part/unit of the Kabir welfare trust hence its income and financial transactions have been duly included and taken care of in the return of income filed by the Kabir welfare trust which has already been assessed u/s 143(3) - HELD THAT - It has been held time and again that the Income Tax authorities should charge only legitimate taxes from the assessee. At both the stages either by the Appellate Assistant Commissioner or before the Appellate Tribunal the appellate authority can consider the proceedings before it and the material on record before it for the purpose of determining the correct tax liability of the assessee. The Hon ble full bench of the Bombay High Court in Ahmedabad Electricity Company Ltd.and Godavari Sugar Mills Ltd. 1992 (4) TMI 29 - BOMBAY HIGH COURT that there was nothing in section 254 or section 251 which would indicate that the appellate authorities are confined to considering only the objections raised before them or allowed to be raised before them either by the assessee or by the department as the case may be. They can consider the entire proceedings to determine the tax liability of the assessee. The issue is required to be examined at the end of the Assessing Officer. We therefore restore the matter to the file of the Assessing Officer with a direction that the Assessing Officer will examine the contentions of the assessee that the income declared by the assessee and taxes paid thereon have already been included and part of the income declared by the Kabir welfare trust . If the contention of the assessee that in the light of the above narrated facts and circumstances there is a double taxation of the same amount is found correct the Assessing Officer will process the refund of the taxes paid by the assessee - the assessee will not be entitled to any interest on the refund amount upto 3 months from the date of receipt copy of this order. However the assessee will be entitled to the interest on the refund as provided in the relevant provisions of the Income Tax Act after 3 months from the date of receipt copy of this order.

Summary

Issues:
The judgment involves the issue of double taxation and the correct tax liability of the assessee under the Income Tax Act.

Summary:
The appeal was filed against the order of the National Faceless Appeal Centre under section 250 of the Income Tax Act. The Assessing Officer reopened the assessment as the assessee did not file its return of income despite declaring turnover in the service tax return and engaging in a property transaction. The assessee claimed that its income was already included in the return of "Kabir welfare trust" and thus was not liable for tax. The CIT(A) dismissed the appeal, but the Tribunal held that the authorities should charge only legitimate taxes and can consider the entire proceedings to determine tax liability.

The Tribunal referred to precedents emphasizing that income cannot be assessed less than the returned income and that appellate authorities have the jurisdiction to entertain claims even if not made before the Assessing Officer. It was noted that the authorities should not burden taxpayers for genuine mistakes. The Tribunal directed the Assessing Officer to examine if there was double taxation and process a refund if necessary, without interest for the first 3 months from the date of the order.

Therefore, the appeal of the assessee was allowed, and the matter was restored to the Assessing Officer for further examination in light of the contentions raised by the assessee regarding double taxation.