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TMI Blog2022 (8) TMI 894X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 154 to the extent permitted by the Board's Circular No. 669 dated 25-10-1993. The Assessing Officer was not right in law in disallowing the rectification application only on the ground that the assessee had failed to furnish the audit report along with the return of income. Tribunal was right in law in extending the benefit of Board's circular to the assessee's case as well. The Assessing Officer has rightly been directed to rectify his order and extend the benefit of deductions under sections 80HHE and 80GG to the assessee in terms of the Board's circular. For the reasons stated above, the substantial questions of law on which the appeal is admitted are answered in the affirmative, i.e., in favour of the assessee and against the revenue. - ITA Nos.16 And 17/Lkw/2022 - - - Dated:- 23-5-2022 - Shri T.S. Kapoor, Accountant Member For the Appellant : Shri Swaran Singh, CA For the Respondent : Shri Harish Gidwani, (DR) ORDER These two appeals have been filed by the assessee against separate orders of ld. CIT(A) dated 16.11.2021 and 07.12.2021 respectively. Identical issues are involved in these appeals and these were heard toget ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and on facts in sustaining the alleged Addition/disallowances arbitrarily made by the Ld. AO is much too high and excessive and deserves to be deleted. 7. That the Ld. CJ.T.(A), National Faceless Appeal Centre Delhi has erred in law and on facts in sustaining the alleged Addition/disallowances arbitrarily made by the Ld. A.O. is contrary to the Principles of natural justice and equity and deserves to be deleted. 8. That the impugned Assessment Order is without Jurisdiction and therefore is liable to be quashed. 3. The ld. AR Submitted that the only issue involved in these appeals is denial of exemption u/s.80IB of the Act for the reason that the audit report in Form-10CCB was not filed alongwith the return of income and was only filed after the intimation u/s. 143(1) was issued. The ld. AR submitted that auditor of the assessee who was also dealing with tax matters omitted to upload the audit report in Form-10CCB and therefore the CPC rejected the claim of the assessee u/s. 80IB of the Act and the assessee on receipt of intimation u/s. 143(1) filed application u/s. 154 of the Act after uploading the copy of audit report in Form3 10CCB which was rejected by CPC and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... horises, with effect from assessment year 1989-90, inter alia, disallowance of any loss carried forward, deduction, allowance or relief claimed which, on the basis of information available in the return or the accompanying accounts or documents, is prima facie inadmissible. The earlier instructions of the Board were to the effect that no disallowance should be made of items on which two opinions are possible. The matter has been further considered by the Board in the light of the recommendations of the See [1992] 197 ITR (St.) 177 Tax Reforms Committee headed by Prof. Raja J. Chelliah and it has been decided that prima facie disallowance shall be made only in respect of the following types of claims : (a) an incorrect claim, if such incorrect claim is apparent from the existence of other information in the return or the accompanying accounts or documents. Example : If a deduction has been claimed under the head Capital gains under section 54F, and if there is information in the return of income or the accompanying accounts or documents to show that the unutilised net consideration had not been deposited in an account specified in the notified scheme as stipulated under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e head house property and the like. The items of disallowance should be such that no two opinions are possible on their inadmissibility. 3. The Board desires that no other prima facie, disallowance should be made except with the previous approval of the Commissioner of Income-tax who will, after according approval in suitable cases, bring the same to the notice of the Board. 4. The above procedure applies to all returns pending processing under section 143(1) on the date of issue of this circular. Clarification one Section 143 relating to assessments has been substituted with effect from 1st April, 1989 by a new section by the Direct Tax Laws (Amendment) Act, 1987 (hereinafter referred to as the Amendment Act). 2. Clause (a) of sub-section (1) of the substituted section provides that where a return has been made under section 142(1) of the Act, and any tax or interest is found due on the basis of the return, an 'intimation' shall be sent to the assessee specifying the sum so pay able. Similarly if any refund is due on the basis of the return it shall be granted to the assessee. 3. For the purposes of computing the tax or interest payable by or refundable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e permissible to refer to the record of past assessments in the case of the assessee. For instance, it will not be permissible for the Assessing Officer to make an addition to the profits by applying a higher rate of gross profit than that shown in the books, even though in an assessment for an earlier year the profits so estimated should have been confirmed in appeal. Similarly it will not be permissible for the Assessing Officer to dis allow the claim in respect of interest on loans even though the amounts on which interest is claimed to have been paid had been added to the assessee's income as unexplained cash credits in the assessment for an earlier year. Again the Assessing Officer will not be able to make any disallowance in respect of estimated expenses attributable to the personal use of motor car, telephone etc., by relying on a similar disallowance for an earlier year, which may not have been contested by the assessee or, if contested has been confirmed in appeal. 7. Of the three types of adjustments permitted under clauses (i) to (iii) of the proviso to the substituted section 143(1)(a) of the Act, the adjustment relating to the rectification of any arithmetica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. The resultant additional work of making a speaking order under section 154 could be avoided if the Assessing Officers exercised due care in the matter and strictly confined the scope of the adjustments to patent or obvious mistakes as determined within the parameters laid down by the Supreme Court. 6. I further find that taking cognizance of this circular the Hon'ble High Court of Karnataka in the case of ITO vs. Smt. Mandira D Vakharia vide order dated 17.11.2000 has decided similar issue in favour of the assessee. The findings of Hon'ble Karnataka High Court are reproduced below: Aggrieved against the order passed by the Tribunal Bangalore in IT Appeal No.173(Bang.) of 1993 dated 23.9.1999, relating to the assessment year 1992-93, the revenue has come up in appeal under section 260A of the Income-tax Act, 1961 ('the Act'). According to the revenue, the following substantial questions of law arise from the order of the Tribunal: 1. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the disallowance made by the assessing authority in the assessee's case under section 143(l) of the Act was not pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in accordance with the Board's circular. That the assessing authority had erred in not rectifying the order under section 154 after the assessee furnished the requisite proof/certificate in support of the claim made by her under sections 80H1IE and 80GG. 7. Operative portion of the Board s Circular reads: Scope of prima facie disallowance under section I43(1)(a) of the income- Tax Act, 1961 - Clarification regarding. Section 143(1)(a) authorises, with effect from assessment year 1989-90, inter alia, disallowance of any loss carried forward, deduction, allowance or relief claimed which, on the basis of information available in the return or the accompanying accounts or documents is prima facie inadmissible. The earlier instructions of the Board were to the effect that no disallowance should be made on items on which two opinions are possible. The matter has been further considered by the Board in the light of the recommendations of the Tax Reforms Committee headed by Prof. Raja J. Chellaiah and it has been decided that prima facie disallowances shall be made only in respect of the following types of claims: (a) Not relevant for the purpose of this appeal. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39;s circular is that in case the audit report required to be filed was not furnished with the return of income, then the deduction claimed can be disallowed as a prima facie adjustment. But, if it is furnished subsequently, then rectification should be carried out to the extent permitted by the Board's Circular No. 669 dated 25-10-1993. The illustrations given in the Board's circular being not exhaustive, it would include the provisions like sections 80HHE and 80GG as well. The assessee has claimed the same relief as would have been admissible to an assessee who was claiming deduction under section 80HHC(4) and other sections mentioned in the Board's circular. The assessee claiming deduction under sections 80HHE and 80GG would be similarly situated as an assessee claiming deduction under section 80HHC(4) or other provisions mentioned in the Board's circular. The use of the words '. . . and the like in the Board's circular would include the assessee who are claiming a similar relief although the provision of the Act is not specifically mentioned in the Board's circular. 10. The assessee would be entitled to the deductions in the rectification under ..... X X X X Extracts X X X X X X X X Extracts X X X X
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