Avtar Singh Construction Co. P. Ltd., Chandigarh V. ITO, Ward 3(3), Chandigarh

ITA 59/CHANDI/2023

• Counselvise Citation: [2023] 100 COUNSELVISE.COM (IT) 5270 (ITAT-CHANDIGARH)
• Duration Of Justice: 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 24-09-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 12-02-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard
• Section: 143(1); 250; 246A; 44AB

Judgement Text

आयकर अपील य अ धकरण,च डीगढ़ यायपीठ , च डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH ‘A’ CHANDIGARH BEFORE: SHRI A.D.JAIN, VICE PRESIDENT AND SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER आयकर अपील सं./ ITA No. 59/CHD/2023 नधा रण वष / Assessment Year : 2018-19 Avtar Singh Construction Co.P.Ltd., SCO 1004-1005, Sector 22-B, Chandigarh. बनाम VS The ITO, Ward 3(3), Chandigarh. थायी लेखा सं./PAN /TAN No: AABCA9381L अपीलाथ /Appellant यथ /Respondent नधा रती क ओर से/Assessee by : Shri Parikshit Aggarwal, C.A. राज व क ओर से/ Revenue by : Smt. Amanpreet Kaur, Sr.DR तार"ख/Date of Hearing : 25.09.2023 उदघोषणा क तार"ख/Date of Pronouncement : 17.11.2023 VIRTUAL HEARING आदेश/ORDER PER A.D.JAIN, VICE PRESIDENT This is assessee's appeal for assessment year 2018-19 against the order dated 15.12.2022 passed by the ld. CIT(A) NFAC, Delhi. 2. The assessee has raised the following grounds of appeal : 1 . That on the facts, circumstances and legal position of the case, the Worthy Appeal No. CIT (A), Chandigarh- 1/10646/2019-20 dated 15.12.2022 has erred in passing that order in contravention of provisions of s. 250 of the Income Tax Act, 1961. ITA 59/CHD/2023 A.Y.2018-19 Page 2 of 7 2. That on law, facts and circumstances of the case, the Worthy CIT(A) has erred in dismissing the appeal of the appellant in limine as not maintainable even when the appellant had rightly filed the appeal before him since being aggrieved against denial of refund u/s 237 by the Ld. AO (CPC) and such denial is appealable u/s 246A. 3. That on law, facts and circumstances of the case, the Worthy CIT(A) has erred in confirming the action of Ld. AO of rejecting the valid ITR filed by the appellant due to alleged non filing of Tax Audit Report even when the said allegation did not exist and, furthermore, even in existence of the said allegation, the ITR could not have been rejected and declared invalid by the Ld. AO(CPC) in exercise of powers u/s 143(1). 4. That on law, facts and circumstances of the case, the impugned orders passed by Worthy CIT(A) as well as by the Ld. AO (CPC) deserves to be quashed since the same have been passed in extreme haste and without affording reasonable opportunity of being heard to the appellant. 3. The AO (CPC), vide communication dated 22.11.2019, intimated to the assessee that the return of income filed for assessment year 2018-19, vide acknowledgement dated 30.10.2018, was defective, since the taxpayer (assessee) had shown gross receipts of income under the head “Profits & Gains of Business or Profession”, of more than Rs.1 Cr; that however, the books of account had not been audited; that accordingly, a notice dated 19.02.2019, u/s 139(9) of the Income Tax Act had been served on the assessee; that the reply dated 01.03.2019 had been considered, but it was not being accepted, since on verification of the return, it was found that the gross receipt or income under the head “Profits & Gains of Business or Profession” was of more than Rs.1 Cr but the books of account had not been audited; that unless the audit report was furnished by way of filing a corrected return u/s 139(9), the return could ITA 59/CHD/2023 A.Y.2018-19 Page 3 of 7 not be treated as valid and it was liable to be treated as defective. 4. The assessee filed appeal before the ld. CIT(A), which appeal has been dismissed in limine by the ld. CIT(A), holding that “In Form 35, the appellant has claimed to have filed an appeal against the intimation order u/s 143(1) of the Income Tax Act, 1961 for the assessment year 2018-19, however, no such order was passed by the CPC u/s 143(1) of the Income Tax Act, 1961, as the return filed by the appellant was treated as defective u/s 139(9) of the Act. Since the order against which the appeal is filed, has never been passed, the appeal filed by the appellant is dismissed in limine”. 5. Challenging the impugned order, the ld. Counsel for the assessee has contended that the ld. CIT(A) has erred in dismissing the appeal of the appellant in limine, as not maintainable, even when the appellant had rightly filed the appeal before the ld. CIT(A), being aggrieved against denial of refund u/s 237 of the Act by the AO (CPC) and such denial is appealable under the provisions of Section 246A of the Act; that the ld. CIT(A) has erred in confirming the action of rejection of the valid Income Tax Return filed by the assessee-appellant due to alleged non filing of Tax Audit Report, even when the said allegation did not exist and, further more, even in the face of the existence of the said allegation, the Income Tax Return could not ITA 59/CHD/2023 A.Y.2018-19 Page 4 of 7 have been rejected and declared invalid by the AO(CPC), in exercise of powers u/s 143(1) of the Act. 6. The ld. DR, on the other hand, has placed strong reliance on the impugned order. 7. Heard. The question is as to whether the CIT(A) is right in observing that it was only that the return of income filed by the assessee was treated as defective u/s 139(9) of the Act, and no order u/s 143(1) of the Act stood passed by the AO (CPC), which order u/s 143(1) of the Act had been claimed by the assessee to have been appealed against. 8. It is true that the order/communication dated 22.11.2019, passed by the AO(CPC), does not mention it to be an order u/s 143(1) of the Act. However, it, inter-alia, states that “the response uploaded through e-filing facility dated 01.03.2019 has been considered and it is not accepted.............”. Thus, the assessee's response to the notice u/s 139(9) has been rejected, thereby refusing to accept the assessee's contention and declaring the return filed by the assessee, to be invalid due to non filing of Tax Audit Report. In the return of income filed, the assessee claimed a refund of Rs.8,17,810/-. 9. We find that as correctly contended, as per the provisions of Section 246A of the Act, inter-alia, an intimation u/s 143(1), where the assessee objects to the making of adjustments, is an appealable order. Further, Section 246A(1)(i) states an order ITA 59/CHD/2023 A.Y.2018-19 Page 5 of 7 made u/s 237 to be appealable before the CIT(A). An order u/s 237 is an order for rejection of any refund claimed by an assessee. That being so, as correctly contended, the order passed by the AO(CPC) is equivalent to an order passed u/s 237. In this regard, reliance has rightly been placed on behalf of the assessee on the decision of the Pune Bench of the Tribunal in the case of “Deere & Co. Vs DCIT (IT)”, passed on 05.11.2021, in ITA No. 178/Pun/2021 (copy placed on record). Therein, it has been held that the word “order” in the expression, “ an order against the assessee where the assessee denies his liability” in Section 246A(1)(a) is not preceded or succeeded by the word “assessment”; that thus, any order passed under the Act against the assessee, impliedly including an order u/s 139(9), having the effect of creating a liability under the Act which the assessee denies, or jeopardizing refund, gets covered within the ambit of Section 246A(1)(a); that Section 246A(1)(i) deals with the filing of an appeal before the CIT(A) against an order u/s 237 of the Act; that Section 237 of the Act provides that if any person satisfies the AO that the amount of tax paid by him for any assessment year exceeds the amount with which he is properly chargeable, he shall be entitled to a refund of the excess; that technically, the AO had not passed an order u/s 236, but only one u/s 139(9); and that however, considering the intent of Section 237, the order passed by the AO was akin to an order refusing refund u/s 237,making it appealable u/s 246A(1)(i). ITA 59/CHD/2023 A.Y.2018-19 Page 6 of 7 10. Though it may be argued that in that case, there was a mismatch between the figure of income shown in the return and that in Form 26AS, which facts are absent in the present case, we find that “Deere & Co.” (supra) is clearly applicable to the facts of the present case, wherein the return filed, claiming a refund, was treated as an invalid return, though, as, again, rightly contended on behalf of the assessee, it could not have been so done, in the face of Rule 12 of the IT Rules, which provides clarification on the documents which are not required to be filed alongwith the Income Tax Return. A perusal of Rule 12(2) of the IT Rules, which has been framed consequent to the power granted by the provisions of Sections 139C & D of the Act, makes it clear that furnishing of Audit Report u/s 44AB of the Act alongwith the return of income is not mandatory, and the same can be filed electronically. 11. No decision contrary to “Deere & Co.” (supra) has been cited before us. 12. In view of the above discussion, we hold that the CIT(A) was not justified in holding the order passed by the AO (CPC) not to be an order u/s 143(1) of the Act and, thereby, confirming the action of the AO (CPC) in depriving the assessee of any legal recourse to claim the refund, by dismissing the appeal of the assessee in limine. ITA 59/CHD/2023 A.Y.2018-19 Page 7 of 7 13. The CIT(A)’s order is, therefore, reversed and the matter is remanded to the file of the AO, to be decided afresh in accordance with law on merit, on affording due and adequate opportunity of hearing to the assessee. The assessee, no doubt, shall cooperate in the fresh proceedings before the AO. All pleas available under the law shall remain so available to the assessee. Ordered accordingly. 14. In the result, for statistical purposes, the appeal of the assessee is treated as allowed. Order pronounced in the Open Court on 17 th November,2023. Sd/- Sd/- (VIKRAM SINGH YADAV) (A.D.JAIN ) ACCOUNTANT MEMBER VICE PRESIDENT “Poonam” आदेश क琉 灹ितिलिप अ灡ेिषत/ Copy of the order forwarded to : 1. अपीलाथ牸/ The Appellant 2. 灹瀄यथ牸/ The Respondent 3. आयकर आयु猴/ CIT 4. िवभागीय 灹ितिनिध, आयकर अपीलीय आिधकरण, च瀃डीगढ़/ DR, ITAT, CHANDIGARH 5. गाड榁 फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar