2023 (12) TMI 1086 - AT - Income Tax

Treating intimation u/s 143(1) as non-est - intimation u/s 143(1) of the Act was never communicated - whether CIT (A) exceeded his jurisdiction in entertaining appeal against intimation where no adjustment of income was carried out resulting in demand? - demand raised on the basis of book profit u/s 115JB as disclosed in the schedule 7 of return of the return of income for A.Y. 2008-09 - HELD THAT - The entire quarrel revolves around the following findings of the Hon'ble High Court of Delhi Court on its Own Motion 2012 (9) TMI 163 - DELHI HIGH COURT as held onus to show that the order was communicated and was served on the assessee is on the Revenue and not upon the assessee. We may note in case an order under Section 143(1) is not communicated or served on the assessee, the return as declared/filed is treated as deemed intimation and an order under Section 143(1). Therefore, if an assessee does not receive or is not communicated an order under Section 143(1), he will never know that some adjustments on account of rejection of TDS or tax paid has been made. While deciding applications under Section 154, or passing an order under Section 245, the Assessing Officers are required to know and follow the said principle. Thus the onus is on the Revenue to show that the TDS or tax credit had been fraudulently claimed by the assessee. Facts on record show that the Revenue has grossly failed in showing that the intimation u/s 143(1) of the Act ever served upon the assessee as the Revenue failed to give any proof of service of such intimation to the assessee. Therefore, intimation u/s 143(1) of the Act has to be treated as non-est or invalid. Coming to the observations of the Hon'ble High Court, again the onus is on the Revenue to show that the claim of TDS is fraudulent. A perusal of the computation sheet shows that inadvertently the assessee has mentioned the tax payable at normal rates at Sl. No. 3 instead of tax payable of deemed total income u/s 115JB of the Act. This by any stretch of imagination, cannot be considered as fraudulent activity of the assessee to deny the benefit of the decision of the Hon'ble Jurisdictional High Court of Delhi supra . Decided against revenue.

Summary

Issues involved:
The issues involved in the judgment are the treatment of intimation u/s 143(1) as "non-est" and cancellation of consequent demand, jurisdiction of CIT(A) in entertaining appeal against intimation, cancellation of demand raised based on book profit u/s 115JB.

Treatment of Intimation u/s 143(1) and Cancellation of Demand:
The appeal by the Revenue was against the order of the ld. CIT(A) regarding the treatment of intimation u/s 143(1) as "non-est" and the cancellation of consequent demand raised. The assessee claimed that since the intimation was never communicated to them, the adjustment made by the department u/s 143(1) was legally not sustainable. The Hon'ble High Court's finding emphasized that if an order under Section 143(1) is not communicated or served on the assessee, the return as declared/filed is treated as deemed intimation. The onus was on the Revenue to show that the intimation was served upon the assessee, which they failed to do. Therefore, the intimation u/s 143(1) was deemed non-est or invalid. The court also highlighted that the onus was on the Revenue to prove any fraudulent claim of TDS, which was not substantiated in this case. Consequently, the findings of the ld. CIT(A) were upheld, and the appeal of the Revenue was dismissed.

Jurisdiction of CIT(A) in Entertaining Appeal Against Intimation:
The Revenue contended that the ld. CIT(A) exceeded jurisdiction in entertaining the appeal against the intimation where no adjustment of income was carried out resulting in demand. However, the court observed that the assessee's claim was based on the failure of the Revenue to communicate the intimation u/s 143(1) to them. The Hon'ble High Court's directive emphasized that in cases where there is no communication of the order/intimation under Section 143(1) to the assessee, the Assessing Officer cannot enforce any demand created by such uncommunicated order. The court found that the Revenue failed to provide proof of service of the intimation to the assessee, leading to the conclusion that the intimation was non-est. Therefore, the ld. CIT(A)'s decision to cancel the demand was upheld.

Cancellation of Demand Based on Book Profit u/s 115JB:
The Revenue raised a grievance regarding the cancellation of the demand raised based on book profit u/s 115JB. The court examined the facts and noted that the Revenue failed to demonstrate any fraudulent claim of TDS by the assessee. It was observed that a mere inadvertent error in mentioning the tax payable cannot be construed as fraudulent activity. The court held that such an error did not warrant denying the benefit of the decision of the Hon'ble Jurisdictional High Court. Consequently, considering the totality of the facts, the court declined to interfere with the findings of the ld. CIT(A) and dismissed the appeal of the Revenue.