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TMI Blog2021 (11) TMI 503X X X X Extracts X X X X X X X X Extracts X X X X ..... hat: `If any person satisfies the Assessing Officer that the amount of tax paid by him or on his behalf or treated as paid by him or on his behalf for any assessment year exceeds the amount with which he is properly chargeable under this Act for that year, he shall be entitled to a refund of the excess. Technically speaking, the AO has not passed an order u/s 237 but only u/s 139(9) of the Act. We have noticed above that firstly, the AO could not have treated the return as invalid u/s 139(9) of the Act because of mismatch between the figure of income shown in the return and that in Form 26AS and secondly, if at all he did so on a wrong footing, he ought to have issued notice u/s 142(1)(i) of the Act for enabling the assessee to file its return so that a regular assessment could take place determining the correct amount of income and the consequential tax/refund. Here is a case in which the assessee has been deprived by the DCIT (CPC), Bengaluru of any legal recourse to claim the refund. Considering the intent of section 237 in mind and the unusual circumstances of the case, we hold that the order passed by him is also akin to an order refusing refund u/s 237 making it appeala ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rore due to the assessee as per the return of income got eclipsed with the return having been declared as defective and invalid as if never filed and the CIT(A) not entertaining the appeal. Undoubtedly, the assessee declared an income of ₹ 474.37 crore in its return and the corresponding figure in Form 26AS stood at ₹ 478.61 crores. On a notice issued u/s 139(9) of the Act on this count, the assessee furnished its reply through the e-portal, which is as under:- The total of receipts shown in return of income is computed as per provisions of Rule 115 of Income Tax Rules, 1962. Accordingly, to compute Assessee‟s taxable income in India, invoices raised in foreign currency is converted into INR on the basis of SBI TT Buying Rate of such currency prevailing on the date of credit to the account of the payee or payment, whichever is earlier. The Indian entities have converted the foreign currency amount into Indian Rupees and deducted taxes on a basis of the exchange rates other than SBI TT Buying rate which appear in Form 26AS and also there are certain reimbursements and reversals on which TDS had been deducted which has been claimed as refund in the return. Hence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Indian entity, which deducted tax at source on 100 USD. However, later on the assessee issued credit note on that invoice, say, to the tune of 15 USD. Even though the tax was deducted at source initially on 100 USD by the Indian entity, but the ultimate amount includible in the total income of the assessee would be equivalent of 85 USD. 7. On going through the assessee‟s reply given to the DCIT (CPC), Bengaluru, it emerges that a case was set up that it did not omit to include any income in the total income. Rather, the difference arose either due to conversion of invoice value from the foreign currency into Indian rupees or certain amounts on which tax was deducted by Indian entities, which were not chargeable to tax in its hands by reason of reimbursement or reversal of some invoice value. The three reasons noted above are bound to bring difference in the figure of income reported by the assessee in its return and as appearing in Form No. 26AS. However, such a differential amount, in principle, would not constitute income chargeable to tax in the hands of the assessee. 8. Before coming to the core issue as to whether such a mismatch in the figures of income returned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the following conditions fulfilled‟. Then there are clauses (a) to (f). The AO has activated clause (a), which states that: the annexures, statements and columns in the return of income relating to computation of income chargeable under each head of income, computation of gross total income and total income have been duly filled in . A cursory glance at the Explanation (a) manifests the nature of defect, being, not duly filling in the annexures, statements and columns in the return of income relating to computation of income chargeable under each head of income, computation of gross total income and total income. In other words, if all the annexures, statements and columns etc. of the return have been duly filled in, there can be no defect as per clause (a). The defect referred to herein is of non-filling of the requisite columns of the return of income and not filling of columns but non-tallying of the figures due to a valid difference of opinion. If the intention of the Legislature had been to treat the mismatch of income between Form 26AS and as shown in the return of income rendering the return defective, then there was no need to incorporate clause (vi) of section 143 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by taking recourse to assessment u/s 143(3) of the Act by issuing notice u/s 143(2) of the Act. In fact, section 143(2) unambiguously provides that where a return has been furnished u/s 139 ., the Assessing Officer ., if considers it necessary or expedient to ensure that the assessee has not understated the income , shall serve on the assessee a notice . . It means that where the assessee claims a particular amount as not chargeable to tax, with which the AO is not prima facie agreeable, as is the case under consideration, the only option with the AO is to take up the assessment after issuing notice u/s 143(2) of the Act. The position of law which prevails from the A.Y. 2018-19, that is, after the insertion of the third proviso to section 143(1)(a), is similar to what it was before the A.Y. 2017-18. Thus except for the A.Y. 2017-18, when the AO could have made adjustment on account of such a mismatch while processing the return u/s 143(1), the AO has no power to correct a mismatch, as is instantly the case, otherwise than through making assessment u/s 143(3) in the years before or after that. We are concerned with the A.Y. 2016-17 and, as such, the DCIT (CPC), Bengaluru could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut saying that every piece of legislation ultimately aims at the well being of the society at large. No technicality can be allowed to operate as a speed breaker in the course of dispensation of justice. In the context of taxes, if a particular relief is legitimately due to an assessee, the authorities cannot circumscribe it by creating such circumstances leading to its denial. A look at different clauses of section 246A(1) transpires that an order u/s 139(9) is ex facie not covered therein. However, there are two clauses of section 246A(1), namely, (a) and (i), which can provide succor to the assessee. 14. Clause (a) of section 246A provides for filing an appeal before CIT(A), inter alia, against an order against the assessee where the assessee denies his liability to be assessed under this Act . It is pertinent to note that such an order has been covered in the provision separately and distinct from an intimation u/s 143(1) or an order of assessment u/s 143(3). The word `order‟ in the expression `an order against the assessee where the assessee denies his liability‟ is not preceded or succeeded by the word `assessment‟. Thus any order passed under the Act ag ..... X X X X Extracts X X X X X X X X Extracts X X X X
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