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TMI Blog2025 (5) TMI 1085X X X X Extracts X X X X X X X X Extracts X X X X ..... by Ld. CIT(A) in the case of assessee company on 26.09.2024, which stood served on the e-portal of the assessee company. Against the order so passed, appeal could have been filed within 60 days, from the service of the order. However, the appeal got delayed by 84 days, as the appeal was filed on 19.02.2025 for the reasons as explained below: 1. That, the order was passed by The National Faceless Appeal Centre, Delhi on 26.09.2024. 2. That, upon review of the appeal status on the Income Tax E-Portal by the accountant of the assessee company, it was discovered that the order dated 26.09.2024 has been passed which was not received by the assessee company via E-mail ID i.e. on [email protected] [mentioned on Form 35] or hebothraassociates@ yahoomail.com [as mentioned in the notice of the Income Tax Department). Consequently, the present appeal is being submitted before your goodself with respect to the order dated 26.09.2024 which is delayed. 3. Thus, it is submitted that the delay in filing the appeal is absolutely inadvertent and has occurred due to circumstances beyond the control of assessee. 4. That, the assessee always has acted in bonafide and the delay is of only 84 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. That the Ld. CIT(A) further erred in law and on facts in upholding the demand of Rs. 66,11,560/- without properly appreciating the rectification request made under Section 154 of the Income Tax Act, 1961 before CPC against changes made by CPC and disallowing claim u/s 10AA. 3.1 That the Ld. CIT(A) failed to consider that the Centralized Processing Centre (CPC) made a mistake in processing the return by not interpreting the Section 115BAA of the Income Tax Act, 1961, properly and moreover the appellant had already paid tax under the normal provisions at 25% plus surcharge instead of availing concessional rate of tax u/s 115BAA. 3.2 That the Ld. CIT(A) erred in not allowing the legitimate claim of exemption under Section 10AA of the Income Tax Act, despite the fact that the appellant had filed the requisite Form 56F well before due date for claiming the exemption. 3.3 That the ld. CIT(A) has erred in upholding the rectification order passed by CPC dated 08.04.2024 despite the fact that it is apparent that assessee has not opted for the concessional tax scheme i.e. taxation u/s 115BAA of the Income Tax Act, 1961 and CPC arbitrarily and on its own changed the taxation option ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt finding of the ld. CIT(A) is reiterated here in below : "4. I have examined the facts and legal issues involved in this case and gone through the Order as well as grounds of appeal. The appellant has also relied upon various judgments of different courts of law on this issue, Since there are divergent views in this matter, the whole issue becomes contentious, This cannot, therefore, be said that there is an apparent mistake that had crept in the Order. It has been held by Hon'ble Supreme Court in Review Petition (Civil) no. 1620 of 2023 in Civil appeal no. 1661 of 2020 in the case of Sanjay Kumar Agarwal vs. State Tax Officer that an error which is not self-evident and has to be detected by a process of reasoning, cannot be said to be an error apparent on the face of record and that an error on the face of record must be such an error which, mere locking at the record should strike and it should not require any long-drawn process of reasoning on the points where there may conceivably be two opinions. Relevant part of the decision is reproduced below- "5. It is very pertinent to note that recently the Constitution Bench in Beghar Foundation vs. Justice K.S. Puttaswamy (Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee has preferred the present appeal before this Tribunal on the ground as reproduced hereinabove. To support the various grounds raised by the assessee, ld. AR of the assessee relied on the written submission which reads as follows : "With this background, ground-wise submission is made as under: Grounds of Appeal No. 1 to 2: In these grounds of appeal, assessee company has challenged the actions of ld. CIT(A) in passing the order without affording adequate opportunity of being heard and deciding the matter ignoring the facts stated by assessee company. In the matter, it is submitted that the impugned appellate order is vitiated by procedural irregularity and lack of adherence to the principles of natural justice. Ld. CIT(A) issued single notice dated 04.09.2024 with a due date to submit response on or before 11.09.2024. Further, the notice so issued was issued on the E-mail ID other than the E-mail Id mentioned in the Form 35 filed by the assessee company. It is evident that the ld. CIT(A) passed the order in undue haste, having issued only a single notice and decided the appeal within 15 days of the response deadline, without affording the appellant sufficient opportuni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , an income tax officer have the powers to rectify a mistake which was apparent from record that may have been occurred while passing an order u/s 143(1) of the Act. It is submitted the impugned error arising from the automated processing of return under Section 143(1), which led to the denial of deduction and incorrect alteration of the tax regime, clearly falls within the ambit of "mistake apparent from the record", as contemplated under Section 154 of the Income-tax Act, 1961. It is further submitted that the term "mistake apparent from the record" has not been explicitly defined in the Income tax Act, 1961. However, its legal scope and judicial contours have been decisively laid down by the Hon'ble Supreme Court in the authoritative judgment in the case of Assistant Commissioner of Income-tax vs. Saurashtra Kutch Stock Exchange Ltd. reported in [2008] 305 ITR 227 (SC). In the said judgment, the Hon'ble Court held as under: "37. In our judgment, therefore, a patent, manifest and self-evident error which does not require elaborate discussion of evidence or argument to establish it, can be said to be an error apparent on the face of the record and can be corrected while exer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther with regard to the issue being controversial, it is submitted that the approach adopted by the ld. CIT(A) is erroneous both in law and in equity. The appellate authority, being a quasi-judicial forum, is expected to discharge its functions judiciously by applying mind to the facts of the case and rendering a reasoned decision. In the present matter, however, the ld. CIT(A) failed to exercise this quasi-judicial function in its true spirit. Instead of examining the grounds of appeal along with statement of facts on merits and making necessary factual or legal enquiries, the ld. CIT(A) chose to summarily reject the appellant's appeal by terming the issue as "controversial." It is respectfully submitted that merely branding a matter as controversial does not absolve the appellate authority from its statutory duty of adjudication. In fact, where a controversy exists, it becomes all the more incumbent upon the appellate authority to examine the facts thoroughly, apply settled legal principles, and provide clarity by delivering a well-reasoned order. Avoiding such adjudication and passing a non-speaking, mechanical order amounts to abdication of appellate responsibility. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;s processing. However, CPC rejected the application on the ground that there was no mistake apparent from the record. A subsequent rectification application was filed on 29.02.2024 (Request No. 139133340290224), specifically pointing out the incorrect selection recorded by CPC in the field "Taxation Option u/s 115BAA". However, even this second rectification was summarily rejected via order dated 08.04.2024. It is further submitted that an intern working at the previous counsel of the assessee company had inadvertently filed Form 10IC on 15.01.2021 for AY 2020-21 and onwards. According to the provisions of law, once the Form 10IC is filed by any domestic companies, provisions of section 115BBA of the Act starts applying and tax is paid at lower rate of 22%. The provisions of section 115BAA of the Act are herein below: Tax on income of certain domestic companies. 115BAA.(1) Notwithstanding anything contained in this Act but subject to the provisions of this Chapter, other than those mentioned under section 115BA and section 115BAB, the income-tax payable in respect of the total income of a person, being a domestic company, for any previous year relevant to the assessment yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uent assessment year. AY 2020-21 In the case in hands, Form 10IC was filed inadvertently on 15.01.2021 for AY 2020-21 and later on assessee company filed its return on income on the same date (APB 1) after claiming deduction to the tune of Rs. 40,39,494/- u/s 10AA after paying tax on balance income at the rate of 25%. Furthermore, it stood processed u/s 143(1) of the Act by CPC wherein the deduction claimed u/s 10AA was allowed by CPC and return was accepted (APB 2-7). AY 2021-22 Similarly for AY 2021-22, assessee company filed its return of income on 28.02.2022 (APB 8) after claiming deduction to the tune of Rs. 8,34,457/- u/s 10AA after paying tax on balance income at the rate of 25%. Again the return was processed by CPC u/s 143(1) and deduction claimed u/s 10AA was allowed and return filed was accepted (APB 9-11). Thus, since assessee company had claimed deduction u/s 10AA and paid tax at rate of 25% in AY 2020-21 itself, the provision of sub-section 2 to the section 115BAA was violated and the 1st proviso to the section came into applicability. Therefore, the provisions of section 115BAA ought not to have applied from AY 2020-21 itself and other provisions of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.Y. 2022-23 13-18 7. Copy of Assessment order passed u/s 143(3) of the Act dated 14.02.2024 for A.Y. 2022-23 19-27 8. Copy of Rectification order passed u/s 154 r.w.s.143(3) of the Act dated 12.02.2025 along with demand notice for A.Y. 2022-23 28-31 9. Copy of Acknowledgement of return of Income along with computation of total income filed u/s 139 of the Act for A.Y. 2023-24. 32-37 10. Copy of Intimation order passed u/s 143(1) of the Act for A.Y. 2023-24 38-47 11. Copy of Acknowledgement of Rectification request filed for A.Y. 2023-24 on 22.01.2024. 48 12. Copy of Acknowledgement of Rectification request filed for A.Y. 2023-24 on 29.02.2024. 49 13. Copy of Form 56F filed on 27.11.2023 for A.Y. 2023-24. 50-52 11. The ld. AR of the assessee in addition to the above written submission so filed vehemently argued that Form 10IC was filed on 15.01.2021 so as to avail the lower tax benefit for A. Y. 2020-21. The assessee subsequent to that choose not to avail that benefit as provided in section 115BBA of the Act being the lower tax benefit as in the subsequent year by clamming the deduction and as such the assessee has preferred to violate the proviso to section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led the benefit of section 115BAA of the Act while filling the ITR. Even though while processing the ITR CPC can change that option from "No" to "Yes" or not?. Since that adjustment was made as per the provision of section 143(1)(a) of the Act it would be appropriate to deal with that provision of the Act, which reads as under: Assessment. 143. (1) Where a return has been made under section 139, or in response to a notice under sub-section (1) of section 142, such return shall be processed in the following manner, namely:- (a) the total income or loss shall be computed after making the following adjustments, namely:- (i) any arithmetical error in the return; (ii) an incorrect claim, if such incorrect claim is apparent from any information in the return; (iii) disallowance of loss claimed, if return of the previous year for which set off of loss is claimed was furnished beyond the due date specified under sub-section (1) of section 139; (iv) disallowance of expenditure or increase in income indicated in the audit report but not taken into account in computing the total income in the return; (v) disallowance of deduction claimed under section 10AA or under any of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontemplates that power could be exercised only (a)( i) in respect of loss carried forward, (a)( ii) deduction or (a)( iii) allowance, and (a)(iv ) relief claimed; (b) the power in respect of the above four items should be on the basis of information available in the return, accounts or documents; (c) that these items are prima facie inadmissible. 7. The ITO appears to have exercised his power under this clause. The question arose as to whether the application of rate of tax could be covered by the term 'relief claimed in the return' because application of a different rate of tax will not fall under the category of loss carried forward, deduction, allowance. There is another provision in clause (i) regarding arithmetical errors in the return. There may be a case where the rate of tax is not disputed but while calculating the tax there is an error which could be corrected under this clause, i.e., while calculating the tax on the normal rate or maximum marginal rate there is a mistake which could be corrected and will fall in the category of arithmetical mistake, but whether maximum marginal rate is to be applied or the normal rate is applicable is not covered by any of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ghts of the ITO are not fettered and he can proceed to finalise the assessment after giving an opportunity to the assessee in respect of any arguable point only under section 143(2). Thus, on the proper interpretation of this section, the rights of the ITO are restricted with regard to the disallowances which are prima facie inadmissible. Whether the provisions of a particular section are applicable or not, will not be covered under this section. If the provisions are applied by the assessee himself of a particular section and while computing deduction, etc., under that section, there is a mistake, it could be corrected like in the case of a salaried person in computing the income from salary if the standard deduction as prescribed under section 16 of the Act is claimed at a lesser figure or higher figure then that mistake could be corrected as it would fall within the category of arithmetical error in the calculation of standard deduction. The second clause of the proviso casts a duty in respect of the deduction, allowance, etc., which have not been claimed in the return, but are prima facie admissible on the basis of information available in the return. A problem may arise in suc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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