TMI Blog2018 (8) TMI 644X X X X Extracts X X X X X X X X Extracts X X X X ..... iny 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. AO directed to allow refund with interest - Decided in favor of assessee. - I.T.A. No. 185/Ind/2016 - - - Dated:- 27-6-2018 - SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER For The Appellant : Shri Rajesh Mehta, C. A. For The Respondent : Shri Satiksh Solanki, DR ORDER PER KUL BHARAT, J.M. : This appeal by the assessee is directed against the order of ld. Commissioner of Income tax, Ujjain, dated 02.12.2015 pertaining to the assessment year 2000-01. 2. The assessee has raised the following grounds of appeal :- 1. That the Ld. CIT(A), Ujjain has erred in passing the order which is arbitrary, illegal and without affording an opportunity of hearing. 2. That the issue of Notice u/s 143(2) is illegal and time barred as prescribed in proviso to clause 2 to Section 142 of the Income-tax Act, 1961, and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es that no notice under this sub-section shall be served on the assessee after the expiry of twelve months from the end of the month in which the return is furnished. 2.1 Revised return is within due date as per the act The assesse filed the revised return on 09/04/2001 vide receipt no.0027 enclosing the TDS form no. 16A and claiming the TDS at ₹ 1,75,815/- which could be filed till 31-03-2002 and hence revised return filed is valid since the original return was filed before the due date. Revised return was filed only for claiming TDS of ₹ 1,75,815/- which was not claimed in the original return by mistake. The revised return has been filed after processing of return but since the assessment has not been completed till 09/04/2001 i.e. date of filing of revised return and therefore revised return filed is valid. Hon'ble Commissioner of Income Tax (Appeals), Ujjain has mentioned in its own order in Para no. 4.1 that the revised return filed by the appellant was not regular return. The assesse had filed the revised return on 09/04/2001 which is a regular return. Since the revised return can be filed upto 31/03/2002 therefore it was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the relevant assessment year. The assesse has also shown the income in its return on which TDS has been claimed. 2.3 0rder passed u/s 119(2)(b) after 3 years of application: The application u/s 119(1)(b)(c) was filed on 21-12-2004 before the Hon'ble Commissioner of Income tax 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. 2.4 Notice issued u/s 143(2) is invalid : The proviso to sec 143(2) states that no notice under this subsection shall be served on the assessee after the expiry of twelve months from the end of the month in which the return is furnished . Since the notice issued u/s 143(2) on 16-05-2008 i.e. after 30/04/2002. Therefore, the same is invalid and barred by limitation. The directions of the Hon'ble Commissioner of Income tax to issue notice u/s 143(2) beyond the time prescribed under the law is illegal. In the case of Shri Ashok Jayaram Jadhav v/s Income Tax Officer,Ward - 2(1), Pune, Income Tax Appellate Tribunal, Pune (2015) held that the notice u/s. 143(2) was issued and served a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eased to the petitioner within three months from the date of receipt of certified copy of order along with interest at the rate of 12 per annum till the date of making the payment to him. Also held in the case of Dinakar Ullal v/s Commissioner of Income Tax (2010) 323 ITR 452 by the Karnataka High Court that a condition in derogation of the statue is not for the proper administration of the Act and further held that a circular cannot impose any burden on the tax payer can deviate from the provisions of the Act if it is beneficial to the assessee and mitigates or relaxes the rigour of law. Also held that the interest U/s 244A would be admissible on belated refund claims and that the instructions cannot run counter to the legislative provisions and create rights and obligation which are contrary to statute. Instructions should supplant the law and not supplement the law. As per Para 7 of Instruction no. 13/2006, dated 22-12- 2006 of board, the CCsIT/CsIT are empowered to direct the Assessing Officer to make necessary enquiries or scrutinize the case in accordance with provisions of the Income-tax Act to ascertain the correctness of the claim. According to this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accounts as required U/S 44AA of Income tax Act, 1961. Assessee's books are also audited by a Chartered Accountant and no adverse opinion has been given in the audit report. That the Ld. Assessing Officer without rejecting the books of accounts U/S 145 and without passing order U/S 144, estimated the gross profit of ₹ 18,93,045/- (Rs. 10,29,1211- confirmed by CIT (A), Ujjain) and passed order U/S 143(3). Also assesse had produced books of accounts before the Assessing Officer same has been written in Para no. 4 of his order. Therefore, estimating the profit on ad hoc basis without rejecting books of accounts is baseless, illegal and wrong. The comparison of gross profit of assessed year and previous three assessment years are 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2) which is illegal and time barred as prescribed in proviso to clause 2 to Section 142 of the Income-tax Act, 1961. 9. The Ld. Counsel for the assessee contended that the assessee firm derives income from manufacturing of Umbrella. The assessee filed return of Income declaring total loss of ₹ 5075/- on 30-10-2000 and filed revised return on 9th April, 2001, claiming refund of TDS of ₹ 1,75,815/-. The assesse also filed application for rectification u/s 154 on 3rd November, 2004. Then assesse filed application u/s 119(1)(b)(c) on 21st December, 2004 before CIT, Ujjain. The CIT, Ujjain passed order u/s 119(2)(b) on 17/01/2008. The assessee had received first notice U/s 143(2) of the Income Tax Act, 1961 on 16-05- 2008. The Ld. Counsel for the assessee further contended that the notice issued u/s 143(2) of the Act is barred by limitation and thus illegal. The proviso to sec 143(2) states that no notice under this sub-section shall be served on the assessee after the expiry of twelve months from the end of the month in which the return is furnished. The Ld. Counsel for the assessee further contended that the revised return was filed within due date as per the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eturn is furnished . Since the notice issued u /s 143(2) on 16th May, 2008, i.e. after 30th April, 2002, the notice is invalid and barred by limitation. The directions of the ld. CIT to issue notice u/s 143(2) beyond the time prescribed under the law is illegal. The Ld. Counsel for the assessee contended that the 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. 10. The Ld. Departmental Representative relied on the orders of the lower authorities. 11. We have considered the facts, rival submissions and perused the material available on record. Now the issue is required to be adjudicated as to whether the notice issued u/s 143(2) by the AO is barred by time. Before adverting to the rival submissions, for the sake of clarity, undisputed facts are that the original return was filed on 30.10.2000. The fact is that return was revised on 09.04.2001 to claim refund of TDS amounting to ₹ 1,75,815/-. The assessee filed an application u/s 199(2)(b) of the Income-tax Act, 1961. The said application came to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome-tax authority to make a particular assessment or to dispose of a particular case in a particular manner; or ( b) so as to interfere with the discretion of the Commissioner (Appeals) in the exercise of his appellate functions. ( 2) Without prejudice to the generality of the foregoing power,- ( a) the Board may, if it considers it necessary or expedient so to do, for the purpose of proper and efficient management of the work of assessment and collection of revenue, issue, from time to time (whether by way of relaxation of any of the provisions of sections [115P, 115S, 115WD, 115WE, 115WF, 115WG, 115WH, 115WJ, 115WK,] 80[139,] 143, 144, 147, 148, 154, 155 [, 158BFA], [sub-section (1A) of section 201, sections 210, 211, 234A, 234B, 234C [, 234E]], [270A] 271 and 273 or otherwise), general or special orders in respect of any class of incomes [or fringe benefits] or class of cases, setting forth directions or instructions (not being prejudicial to assessees) as to the guidelines, principles or procedures to be followed by other income-tax authorities in the work relating to assessment or collection of revenue or the initiation of proceedings for the imposition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to earlier Instructions/Circulars, this Instruction vests the Chief Commissioners of Income-tax (CCsTT) with powers for acceptance/rejection of applications/claims under section 119(2)(b) for condonation of delay in filing return involving refund claims above ₹ 10,00,000 and up to ₹ 50,00,000. It also vests the Commissioners of Income-tax (CsIT) with powers of acceptance/rejection of applications/claims under section 119(2)(b) for condonation of delay in filing return involving refund claims up to ₹ 10,00,000. 3. The applications/claims under section 119(2)(b) for condonation of delay involving refund claims exceeding ₹ 50,00,000 would continue to be processed by Central Board of Direct Taxes, both for acceptance and rejection. 4. No fresh application for claim of refund will be entertained beyond six years from the end of the assessment year for which the application/claim is made. 5. The powers of acceptance/rejection within the monetary limits delegated to the CCsIT/CsTT would be subject to the following conditions:- ( a) The refund has arisen as a result of excess tax deducted/collected at source and payments of advance tax unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 of the assessee s appeal is allowed. 15. Ground no. 3 relates to refund claimed at ₹ 1,75,815/- with interest. 16. The Ld. Counsel for the assessee contended that the refund claimed at ₹ 1,75,815/- in the revised return should be paid to the assesse as the revised return filed was within the due date prescribed in the Act. The Commissioner of Income Tax (Appeals), Ujjain mentioned in its order in Para no. 4.6 that the A 0 is directed to grant the interest on refund as per law. The Ld. Counsel for the assessee relied on the decision in the case of Tarsem Kumar vs. ITO and others, CWP No. 19906 of 2011, wherein the Hon'ble High Court Of Punjab and Haryana at Chandigarh (2012), also held that the assessee for assessment year 2005-06 could file the revised return after complying with the provisions of Section 139(5) of the Act up to 31.3.2007. The revised return filed on 26.9.2006 was thus validly filed within limitation. Consequently, the claim of the petitioner-assessee for the refund of the additional tax deposited amounting to ₹ 3,61,188/- is valid and justified. Also held that we allow the writ petition and direct that the refund be relea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 . 19. The Ld. Counsel for the assessee concluded the arguments that in view of the above, the Officer should be directed to grant the refund claimed at ₹ 1,75,815/- with interest till the date of making the payment to him. 20. The Ld. Departmental Representative supported the orders of the lower authorities. 21. We have considered the facts, rival submissions and perused the material available on record. Since we have decided ground no.2 in favour of the assessee, the AO is directed to allow the refund with interest as per law. 22. Ground no. 4 relates to application of average gross profit rate of previous three years @ 15.34 % as against loss returned at ₹ 5075/- by the assessee without looking to the facts of the case and thus the returned loss may be allowed. 23. The Ld. Counsel for the assessee contended that the the Ld. CIT(A) erred in confirming the addition of ₹ 10,29,121/- towards G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 resulted in low Gross profit rate during the year. Assessee also closed down the business in the assessed year and no further transaction was being carried out in any of the following years. The Ld. Counsel for the assessee contended that the estimation of turnover and fixation of gross profit rate are two important parameters which affect the assessment. The Ld. Counsel for the assessee contended that the ld.CIT (A) was not justified in confirming the addition. The Ld. Counsel for the assessee concluded that looking to the above submission and evidence, kindly delete the arbitrary addition made by the Ld. Assessing officer and confirmed by CIT(A). 24. The Ld. Departmental Representative relied on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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