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TMI Blog2024 (12) TMI 244X X X X Extracts X X X X X X X X Extracts X X X X ..... plication No.22/Rjt/2024, for assessment year (AY).2016-17, have been taken into consideration for deciding these two Miscellaneous Applications en masse. 3. The contention raised by the assessee, in the sample Miscellaneous Application,('lead case') in MA No. 22/Rjt/2024, for assessment year (AY) 2016-17, are reproduced below: "The applicant (being an appellant in the above matters) most respectfully begs to submit the following for the kind and sympathetic consideration of the Honourable Members: 1.0 The applicant had filed appeals in ITA No. 06/Rjt/2022 against the order passed by the Ld. Commissioner of Income Tax (Appeals)-11, Ahmedabad. 2.0 The appellant raised following additional ground of appeal and requested the Hon'ble Tribunal to admit the same and decide on merits: "1.0 Alternatively and without prejudice to grounds of appeals mentioned in Form 36, Ld. CIT(A) erred in law and on facts of case in not allowing set off of brought forward business loss determined by him for AY 2015-16 against the alleged unaccounted business profit for the year under consideration. The AO may kindly be directed to allow set off of brought forward business loss for AY 2015-16 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the assessee and there is undisclosed income in the hands of the assessee. In the return of income filed by the assessee, in response to notice under section 153A of the Act, the assessee, has neither shown and undisclosed income nor and undisclosed loss. That is, undisclosed income, as per seized material, and undisclosed loss, as per seized material, both were not shown by the assessee, in the return of income, filed by the assessee, in response to notice under section 153A of the Act. The assessee, was in the view that if the Revenue, takes undisclosed income, and tax the undiscovered income, as per seized material, then the Revenue should also take into consideration the undisclosed loss, as per seized material. However, the assessing officer, took only undisclosed income, to tax, in the hands of the assessee, as seized material, but did not take into account, the undisclosed loss, as per seized material. 5. The principle of equity demands that if the assessing officer, takes into account the undisclosed income, to tax, in the hands of the assessee, as per seized material, then undisclosed loss, as per seized material, should be considered and benefit of set -off of losse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls for our consideration in these appeals is whether on the failure or inability of the authorities to frame a regular assessment after the earlier assessment is set aside or nullified, the tax deposited by an assessee by way of advance tax or self-assessment tax, or tax deducted at source is liable to be refunded to the assessee, since its retention by the revenue would result in breach of Article 265 of the Constitution which prohibits the levy or collection of any tax except by authority of law. The revenue does not dispute the position that if an assessment is framed, which is later nullified in appeal or revision or other proceedings any amount paid by way of income-tax pursuant to the order of assessment, over and above the advance tax and self-assessment tax is undoubtedly refundable under section 240 of the Act. The only dispute is with regard to the refund of the advance tax and self-assessment tax which is paid by the assessee on his own assessment of his liability and is based on the return of income filed by him. According to the revenue, the tax so paid represents the admitted liability of the assessee, and failure or inability to frame another assessment after the ear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. Since all this is done under authority of law, there is no scope for contending that Article 265 is violated. 30. What then is the effect of the failure to make an order of assessment after the earlier assessment made is set aside or nullified in appropriate proceedings? If the assessing authority cannot make a fresh assessment in accordance with the provisions of the Act it amounts to deemed acceptance of the return of income furnished by the assessee. In such a case the assessing authority is denuded of its authority to verify the correctness and completeness of the return, which authority it has while framing a regular assessment. It must accept the return as furnished and shall not in any event raise a demand for payment of further taxes. Accepting the income as disclosed in the return of income furnished by the assessee, it must refund to the assessee any tax paid in excess of the liability incurred by him on the basis of income disclosed. Even if the tax paid is found to be less than that payable, no further demand can be made for recovery of the balance amount since a fresh assessment is barred. In other words, the tax paid by the assessee must be accepted as it is, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1 1989. Proviso (b) is applicable to the facts of the case under consideration. Section 240 reads as under: "240. Refund on appeal, etc.-Where, as a result of any order passed in appeal or other proceeding under this Act, refund of any amount becomes due to the assessee, the Assessing Officer shall, except as otherwise provided in this Act, refund the amount to the assessee without his having to make any claim in that behalf: Provided that where, by the order of aforesaid,- (a) an assessment is set aside or cancelled and an order of fresh assessment is directed to be made, the refund, if any, shall become due only on the making of such fresh assessment; (b) the assessment is annulled, the refund shall become due only of the amount, if any, of the tax paid in excess of the tax chargeable on the total income returned by the assessee." It was submitted that after April 1, 1989, in case the assessment is annulled the assessee is entitled to refund only of the amount, if any, of the tax paid in excess of the tax chargeable on the total income returned by the assessee. But before the amendment came into effect the position in law was quite different and that is why the legi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cement did not permit retention of even the tax due on the basis of the returned income. Several High Courts had held that in such a case even the tax paid by way of tax deducted at source or advance tax and the tax which was due on the basis of the returned income had to be refunded to the assessee. Equity demanded that even where an assessment was annulled for any reason, the liability of the assessee, at least to the extent of tax payable on the basis of the income declared in the return, should remain. To overcome this difficulty and to make the position clear, the proviso to section 240, inserted by the Amending Act, 1987, provides that where the assessment is annulled, the refund shall become due only in respect of the amount, if any, paid in excess of the tax chargeable on the total income returned by the assessee." [Emphasis supplied] The respondents contend that the Circular of the Board is binding upon the authorities of the Income-tax Department and, therefore, so far as the Income-tax authorities are concerned, they must give to the amendment brought about in section 240 only prospective operation. 34. We find that paragraph 13.2 of the Circular does not advance the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TAT [1988] 174 ITR 579 (Ker.)], it is not necessary for us to enter into the said question in the present case. 39. As stated earlier, the decision was rendered in appeal by the Income-tax Appellate Tribunal, Rajkot. Miscellaneous Application came to be filed by the assessee under sub-section (2) of section 254 of the Act stating therein that a decision of the 'Jurisdictional Court', i.e., the High Court of Gujarat in Hiralal Bhagwati's case (supra) was not brought to the notice of the Tribunal and thus there was a "mistake apparent from record" which required rectification. 40. The core issue, therefore, is whether non-consideration of a decision of Jurisdictional Court (in this case a decision of the High Court of Gujarat) or of the Supreme C1ourt can be said to be a "mistake apparent from the record"? In our opinion, both - the Tribunal and the High Court - were right in holding that such a mistake can be said to be a "mistake apparent from the record" which could be rectified under section 254(2). 41. A similar question came up for consideration before the High Court of Gujarat in Suhrid Geigy Ltd.'s case (supra). It was held by the Division Bench of the H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial to anyone. Rule of stare decisis is adhered for consistency but it is not as inflexible in Administrative Law as in Public Law. Even the law bends before justice. Entire concept of writ jurisdiction exercised by the higher courts is founded on equity and fairness. If the Court finds that the order was passed under a mistake and it would not have exercised the jurisdiction but for the erroneous assumption which in fact did not exist and its perpetration shall result in miscarriage of justice then it cannot on any principle be precluded from rectifying the error. Mistake is accepted as valid reason to recall an order. Difference lies in the nature of mistake and scope of rectification, depending on if it is of fact or law. But the root from which the power flows is the anxiety to avoid injustice. It is either statutory or inherent. The latter is available where the mistake is of the Court. In Administrative Law, the scope is still wider. Technicalities apart if the Court is satisfied of the injustice then it is its constitutional and legal obligation to set it right by recalling its order...." (p. 618) 47. In the present case, according to the assessee, the Tribunal decided the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relied on the order of Co-ordinate Bench of ITAT, Rajkot in case of ACIT vs. Rajeshkumar Govindlal Patel, in MA Nos.20 & 49/Rjt/2023, dated 20.03.2024 and contended that Tribunal has passed a speaking order, hence there is no mistake apparent on record, therefore, both the miscellaneous applications filed by the assessee, may be dismissed. 13. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. For the sake of clarity and also being pertinent, we reproduce the relevant para No.69 of the order of the Tribunal in IT(SS)A Nos.6 & 7/RJT/2022, order dated 12.06.2024, which is the disputed issue in these two miscellaneous applications. The para No.69 of the order of the Tribunal, reads as follows: "69. We have heard both the parties. The assessee's contention is that the assessed loss of immediately preceding year i.e. Asst. Year 2015-16 amounting to Rs. 9,61,09,539/- be set off against the profits assessed for the impugned year amounting to Rs. 12,69,69,992/- for Asst. Year 2016-17 and Rs. 12,50,99,546/- for Asst. Year 2017-18. We are not agreeable with the same. It is an undispute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition with regards to set off and carry forward of losses as opposed to an honest assessee. This surely cannot be the intention of law. The decision of the ITAT Delhi Bench in the case of HBN Dairies (supra) does not help the case of the assessee since in the said case losses claimed to be set off against profits were disclosed in the return filed u/s 153A of the Act. As for the other decisions relied upon by the ld.counsel for the assessee, they only lay down the proposition that the claim of set off of losses is to be examined in the year in which the set off is claimed. How these decisions are of any assistance to the assessee's claim in the impugned year, we fail to understand, considering the fact that even as per the provision of law, the assessee is not eligible to claim the set off of losses since the losses were not returned in the return of income filed in response to the notice under section 153A of the Act. We, therefore, are in complete agreement with the ld.CIT(A) that the assessee is not entitled to any set off of loss brought forward from the preceding years and these contentions of the ld.counsel for the assessee is accordingly dismissed." 14. We note that ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed material, however, the assessing officer has taken into account to tax the undisclosed income and ignored the undisclosed losses, which is not acceptable. It is a common knowledge that seized material must be read as a whole, that is, every part of the seized material must be constructed within the four corners of the Act. When the undisclosed income has been taken from seized material, then why not the undisclosed losses should not be taken from the seized material. Apple to Apple comparison is needed, which is required, as per the principle of equity and justice. No any seized material should be interpreted in isolation, if the assessing officer, takes the undisclosed income from seized material, then he has to take into account the undisclosed losses from the same seized material, and benefit of set-off of losses, should be given to the assessee, on account of undisclosed losses, which the assessing officer has failed to do so. 17. We are of the view that every part of the seized material, must be analyzed, within the four corners of the Act, when the undisclosed income is considered by the assessing officer, based on the seized material, then assessing officer ought to have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 assessee 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 refunds and reliefs. 4. Public Relation Officers have been appointed at important centres, but by the very nature of their duties, their field of activity is bound to be limited. 19. The Hon'ble Justice Khanna in the case of Simon Carves (105 ITR 12) (SC) has held that tax authorities would not be acting properly and judiciously, if they exercise their power in the manner most beneficial to the revenue and consequently most adverse to the assessee...." The various courts have held that if excess tax has been paid by the assessee, in advance, the Assessing Officer is bound to refund it under the general law and independently of Chapter X ..... X X X X Extracts X X X X X X X X Extracts X X X X
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