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TMI Blog2018 (8) TMI 644X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) has erred in applying the average GP rate of previous three years @ 15.34 % as against loss returned at Rs. 5075/- by the assessee without looking at the facts of the case and thus the returned loss may be allowed. 5. That the Ld. CIT(A) has erred in charging interest u/s 234A, 234B, 234C & 234D of the Income-tax Act, 1961. 6. In view of the above, the order passed u/s 143(3) is erroneous, illegal, wrong, without any basis & without looking at the facts of the case. Hence needs to be deleted. 3. Briefly stated, the facts of the case are that the assessee firm derives income from manufacturing of Umbrella. The assessee filed the return of income declaring total loss of Rs. 5,075/- on 30.10.2000. The AO made the addition of Rs. 14,71,147/- on account of low gross profit and made addition of Rs. 50,000/- out of expenses. The assessee preferred an appeal before ld. CIT, who after considering the submissions partly allowed the appeal, thereby he deleted the addition of Rs. 50,000/- and reduced the gross profit rate from 15.34 % to 15.03 % thereby he confirmed addition of Rs. 10,29,121/- in this respect. Now the assessee is in appeal before this Tribunal. 4. The Ld. Counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... timation although deem to the notice of demand u/s 156 can not taken as assessment order. " 2.2 Rectification u/s 154 not processed by Assessing Officer The assesse had filed rectification u/s 154 on 3/11/2004. Then the assesse filed an application u/s 119(1)(b)(c) on 21/12/2004 because no action taken against the application u/s 154 filed on 3/11/2004. The assessing officer should suo-moto rectify the mistake apparent on record. The same has also been held in the case of Ardor International Pvt Ltd v/s ACIT, Ahmedabad (2016) ITA No. 1170/Ahd/2013 by Income Tax Appellate Tribunal, Ahmedabad that "the ld. Assessing Officer using his inherent power u/s 154 of the Act for amending any mistake apparent on record should have examined the claim of the assessee by verifying the books of accounts of the assessee as well as the relevant ledger accounts wherein the impugned amount on which TDS has been deducted, is duly reflected. " As per sec 155(14) of the act, "Where in the assessment for any previous year or in any intimation or deemed intimation under sub-section (1) of section 143 for any previous year, credit for tax deducted or collected in accordance with the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. " Hon'ble Karnataka High Court in the case of A. Balakrishnan Vs. General Manager Hindustan Machine Tools Ltd. and others reported in (2007) 290 ITR 227 held that" It is the duty of the functionaries under the IT act to implement the provisions of the act in accordance with law. A return filed is bound to be processed by the Income tax authorities within the reasonable time. Section 119(2)(b) of the act cannot relieve the authorities from the obligation of examining a return filed by the petitioner. It cannot be used as an excuse for inaction on the part of respondents. " Therefore, assessee should not be penalized because of delay caused in deciding the application by the Income tax authorities and thus notice issued u/s 143(2) beyond the time limit is illegal, bad in law and needs to be annulled. 3. Grant the refund as claimed of Rs. 1,75,815/- along with interest:- That the refund claimed of Rs, 1,75,815/- in the revised return should be paid to the assesse as the revised return filed in within the due date prescribed in the act. The said fact has neither been controverted by Ld. Assessing Officer nor by CIT (Appeals). The Commissioner of Income Tax (Appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n this regard the officers should take the initiative in guiding taxpayer where proceedings or other particulars before them indicate that some refund or relief is due to him. This attitude would, in the long run, benefit the department, for, it would inspire confidence in him that he may be sure of getting a square deal from the department. Although, therefore, the responsibility for claiming refunds and reliefs rests with the assessees on whom it is imposed by law, officers should (a) draw their attention to any refunds or reliefs to which they appear to be clearly entitled but which they have omitted to claim for some reason or other; (b) freely advise them when approached by them as to their rights and liabilities and as to the procedure to be adopted for claiming refund and reliefs ". In view of the above, officer should be directed to grant refund claimed of Rs. 175815/- with interest till the date of making the payment to him. 4. Addition by estimating the arbitrary G.P. rate is wrong:- The CIT(A)erred in confirming the addition of Rs. 10,29,121/- towards Gross profit by making estimation of gross profit at 15.34 of gross turnover. The Gross profit arbitrarily estim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itled to know the basis and to be given an opportunity to rebut the same. Therefore CIT (A) was not justified in confirming the addition. Looking to the above submission and evidence, kindly delete the arbitrary addition made by the Ld. Assessing officer and confirmed by CIT(A). 5. The Ld. assessing officer erred in charging and CIT(A) erred in confirming the charging of interest U/s 234A, 234B, 234C and 234D of the Income tax act, 1961. 6. In view of the above, huge additions of Rs. 10,29,121/- are wrong, without any basis and without looking to the facts of the case. Hence, needs to be deleted. " 5. Apropos ground no.1, the Ld. Counsel for the assessee submitted that the Ld. CIT(A) has not afforded sufficient opportunity to the assessee. 6. The Ld. Departmental Representative opposed the submission and submitted that sufficient opportunity was granted. 7. We have heard the rival submissions. We have perused the record. From the impugned order, it is evident that the Ld. Authorized Representative of the assessee has appeared before the Ld. CIT(A) and filed written submission. The Ld. CIT(A) has considered the written submissions. Therefore, we do not see any merit int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not a non-est. The Ld. Counsel for the assessee placed reliance on the decision in the case of S.R. Koshti v. Commissioner of Income-tax [2005] 276 ITR 165 Gujarat High Court, in which the Hon'ble Court held that "the assessee can file revised return even after intimation is served. " The Ld. Counsel for the assessee further relied on the decision of Hon'ble Supreme Court in the case of ACIT vs. Rajesh Jhaveri Stock Brokers (P) Ltd., 291 ITR 500 (2007) in which it was held that "intimation although deem to the notice of demand u/s 156 can not be taken as assessment order. " The Ld. Counsel for the assessee further contended that the assessee filed application for rectification u/s 154, which was not processed by the AO. Then the assessee filed an application u/s 119(1)(b)(c) on 21st December, 2004. The Ld. Counsel for the assessee further contended that the application u/s 119(1)(b)(c) was filed on 21st December, 2004, before the ld. CIT, which was decided on 17-01- 2008. The application filed ought to have been decided within the reasonable time i.e. order passed after 3 years, hence, delay caused is unreasonable. The Ld. Counsel for the assessee contended that the prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt was not regular return. The revised return has been regularized vide order u/s 119(2)(b) dated 17.01.2008. Therefore, from the date of filing of the revised return till the date of condonation the return remained as non est. The revised return came into the existence only on 17.01.2008 i.e. date of order u/s 119(2)(b) of the I. T. Act. Therefore, the return deemed to have been filed on 17.01.2008 for all practical purpose and the same has been processed, the appellant has been given the refund and at the same time the AO has issued notice u/s 143(2) on 16.05.2008. Therefore, this ground of appeal is Dismissed. " 12. The moot question is whether the ld. CIT is empowered to direct the AO for issuing notice u/s 143(2) after expiry of normal limitation period. Section 119 of the Income-tax Act, 1961, reads as under :- "[Instructions to subordinate authorities. 119. (1) The Board may, from time to time, issue such orders, instructions and directions to other income-tax authorities as it may deem fit for the proper administration of this Act, and such authorities and all other persons employed in the execution of this Act shall observe and follow such orders, instructions and d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eduction thereunder, subject to the following conditions, namely:- (i) the default in complying with such requirement was due to circumstances beyond the control of the assessee; and (ii) the assessee has complied with such requirement before the completion of assessment in relation to the previous year in which such deduction is claimed : Provided that the Central Government shall cause every order issued under this clause to be laid before each House of Parliament.]" 13. We find that the Ld. CIT(A) has relied upon the Instruction No.13/2006 dated 22.12.2006 . For the sake of clarity Instruction No.13 of 2006 is reproduced as under :- "INSTRUCTION NO. 13/2006, DATED 22-12-2006 1. The procedure for dealing with the applications for condonation of delay in filing returns and claiming refund is presently governed by the Board's earlier Orders/Circulars issued under section 119(2)(b) of the Income-tax Act, 1961, namely, F. No. 225/208/93-ITAII, dated 12-10-1993, read with Board's Circular No. 670, dated 26-10-1993 issued from F. No. 225/208/93- ITA-II, Circular No. 812001, dated 16-5-2001 issued from F. No. 212/35/99-ITA-II and also Instruction No. 12/2003 date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Income-tax Act, 1961. The Instruction No. 13/2006 would not override these provisions. From a bare reading of the instructions, it is evident that the Instruction is related to condonation of delay in respect of refund due. This instruction is issued with an objective to mitigate the hardship to the assessee. Para 7 of the Instruction, in our view, is limited to the extent of ascertaining the claim of the assessee. This does not empower the Assessing Officer to make scrutiny of the entire case, which goes against the spirit of the law. In the case in hand, the AO was required to ascertain that the tax has been deducted at source and on the returned income, such refund is available to the assessee or not. In our view, the AO has misconstrued direction of the ld. Commissioner of Income-tax and assessed the income by making scrutiny assessment. It is also noticed that there is an inordinate delay in disposing the application by the ld. Commissioner of Income-tax. Under these facts, we are constrained to hold that the impugned assessment order as framed by the AO is contrary to the provisions of law and beyond the jurisdiction of the AO. Accordingly, the assessment is quashed. Gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ze the case in accordance with provisions of the Income-tax Act to ascertain the correctness of the claim. "According to this, case should be scrutinized as per the provisions of the Act and old case can only be scrutinized through sec. 147. The Ld. Counsel for the assessee further drew our attention towards CBDT Circular No. 14 (XL-35) dated 11-04-1955 which reads as follows:- "Officers of the department must not take advantage of the ignorance of an assessee as to his rights. It is one of their duties to assist a taxpayer in every reasonable way, particularly in the matter of claiming and securing reliefs and in this regard the officers should take the initiative in guiding taxpayer where proceedings or other particulars before them indicate that some refund or relief is due to him. This attitude would, in the long run, benefit the department, for, it would inspire confidence in him that he may be sure of getting a square deal from the department. Although, therefore, the responsibility for claiming refunds and reliefs rests with the assessees on whom it is imposed by law, officers should (a) draw their attention to any refunds or reliefs to which they appear to be clearly enti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing order u/s 144, estimated the gross profit at Rs. 18,93,045/- (Rs. 10,29,1211- confirmed by CIT (A), Ujjain) and passed order u/s 143(3). The Ld. Counsel for the assessee further contended that the assesse produced all the books of accounts before the Assessing Officer. The Ld. Counsel for the assessee contended that estimating the profit on ad hoc basis without rejecting books of accounts is baseless, illegal and wrong. The Ld. Counsel for the assessee drew our attention to comparative chart of gross profit of assessed year and previous three years, which is as under :- Assessment Year Gross Profit (Rs.) Turnover (Rs.) G.P. Rate Type of sale 2000-01 42189 9465225 4.46 Local sales 1999-00 1927729 9625250 20.02 Export sale 1998-99 2001171 15284610 13.09 Export sale 1997-98 1295566 10024355 12.92 Export sale The Ld. Counsel for the assessee contended that the business of assessee was export oriented and the assessee did not deal in the local market. During the assessment year under consideration i.e. 2000-01, due to rejection of Export order and spoilage of stock, assessee had to sell entire stock in the local market at a very low profit. This result ..... X X X X Extracts X X X X X X X X Extracts X X X X
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