AA Finlease Private Limited, New Delhi V. ITO WARD - 1(1), New Delhi

ITA 7254/DEL/2019

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 0953 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 03-10-2022
• Assessment Year: 2012-2013
• Appeal Filed On: 01-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PRATEEK BASITIA
• Keywords: Principle of natural justice; TDS
• Section: 154; 246A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH ‘A’ : NEW DELHI) SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER and SHRI NARENDER KUMAR CHOUDHRY, JUDICIAL MEMBER ITA No.7254/Del./2019 (ASSESSMENT YEAR : 2012-13) AA Finlease Private Limited, vs. ITO, Ward 1 (1), CSC 3/18, Sec-2 Rohini, New Delhi. New Delhi – 110 085. (PAN : AADCA5328F) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri Prateek Basitia, CA REVENUE BY : Shri Jitendra Chand, Senior DR Date of Hearing : 04.10.2022 Date of Order : 13.10.2022 ORDER PER SHAMIM YAHYA, ACCOUNTANT MEMBER : This appeal by the assessee is directed against the order of the ld. CIT (Appeals)-I, New Delhi dated 18.07.2019 for the Assessment Year 2012-13. 2. The grounds of appeal raised by the assessee read as under :- “(i) That the Ld. CIT (Appeal-I) has passed the impugned assessment order without taking into consideration all the facts before him which make it unreasonable , unjustified and bad in law and facts, therefore, liable to be quashed. ITA No.7254/Del./2019 2 (ii) The Income Tax Return is erroneously considered invalid u/s 139 (9). The objection were never communicated to assessee for reply. (iii) The rejection of refund claim is bad in law and not based on the facts of the case. (iv) The rejection is against the principal of natural justice. (v) The rejection also is not in conformity with the judicial pronouncements and CBDT Guidelines. (vi) The rejection is unreasonably penalizing for technical errors / omission. (vii) The Income Tax Department has unreasonably denied providing tax credit without considering the information on record. (viii) The assessee should not be punished for un-willfull default in filing a reply.” 3. Brief facts of the case are that The name of the Company was changed from MHVS Finlease Pvt. Ltd. to AA Finlease Pvt. Ltd. on 02.04.1998. The assessee company filed its ITR for A.Y. 2012-13 claiming refund of Rs.2,75.190/- but due to clerical error while filing ITR assessee incorrectly mentioned the earlier PAN of MHVS instead of new PAN allotted. Due to mismatch the AO disallowed refund of Rs.2,75,190/-. The appellant filed rectification application on 10.12.2018 and the same was rejected by the AO vide order dated 26.12.2018. Aggrieved with the said order assessee has filed appeal before the ld. CIT (A). ITA No.7254/Del./2019 3 3.1 In the rectification order observations of the AO are reproduced hereunder: "As per details provided by you, the ITR for AY 2012-13 filed by using the PAN AAACM6666R, which belong to MIs MHVS Fin/ease Pvt. Ltd. was found to be defective by the IT department, and intimated in you on 23.04.2013. The reason for treating the ITR defective appears to be for the reason that the name mentioned on the ITR does not match with the name on the PAN Card. The Income Tax return is termed defective, if it has not been filed with all the correct information as required under law. The department duly informed you on 23.04.2013 that the return was found defective and as per section 139(9) the assessee was required in rectify the mistake within 15 days time of receiving the notice. Further, there is no role of AO to communicate separately about the defective return as in your case the department already informed you on 23.04.2013 about the defective return for AY 2012-13. Since, you failed to respond within the allotted time, the return filed was treated is invalid. In other words, it will be as if you never filed your ITR for the year under consideration i.e. AY 2012- 13. In view of the above facts and also for the reason already communicated that the TDS was in the name of M/s MHVS Finlease Pvt. Ltd. the rectification application u/s 154 of the Act and claim of refund is hereby rejected.” 4. Upon assessee’s appeal, ld. CIT (A) noted the assessee’s contentions that the said notice about return being defective as claimed by the AO was not raised by the assessee. Assessee stated that the benefit of TDS has not been availed by assessee. The TDS certificate was in the earlier name of the assessee company i.e. M/s. MHVS Finlease Pvt. Ltd. ITA No.7254/Del./2019 4 The detailed submissions of the assessee has been reproduced by ld. CIT (A) as under :- “1. A return of income (or the A. Y. 2012-13 was filed on 27.09.2012 by the company vide Ack No. 496843531270912 and as per the computation of income TDS credit of Rs, 2,02,556.00 was claimed in the return. 2. A refund of Rs. 275190.00 was claimed as TDS Refund in Income Tax Return after adjusting for the current year tax i.e A. Y. 2012-13. 3. As the refund was nor received for quite some time, assessee started enquiry for the reasons for withholding the refund amount. The assessee was informed that, due to pending reply the return could not be processed and refund has been blocked. 4. However, it is clarified that, the assessee did not receive any communication from the department for any kind of clarification in this regard. 5. As the Ld A. O. refused to entertain verbal and written requests for the issue of refund, an application u/s 154 was filed on 10.12.2018 for the rectification of assessment and issue of refund. 6. The application of the refund dated 10.12.2018 was rejected by the Ld. A. O. Stating that, "The TDS was in the name of M/s MHVS Finlease Pvt. Ltd., the rectification application u/s 154 of the Act and claim of return is hereby rejected". 7. The assessee has clearly stated throughout the proceedings for its TDS claim of Rs.275190.00 that the benefit of such claim has not been availed by M/s. MHVS Finleese Pvt. Ltd. (further changed its name AA Finlease Pvt. Ltd.) and the respected income is shown by AA Finlease Pvt. Ltd. in its financial statement. Therefore, the revenue, having assessed M/s AA Finlease Pvt. Ltd's income in respect to such TDS claim and cannot now deny the assessee's claim of Refund ITA No.7254/Del./2019 5 merely on the technical ground that the TDS credit could not be given to Non Existent Company. 8. The income shown in the TDS certificate has either to be taxed in the hands of the MHVS Finlease Pvt. Lid or in the hands of the AA Finlease Pvt. Ltd. 9. MHVS Finlease Pvt. Ltd. has not filed return of income in its own name and has also not claimed credit for TDS. MHVS Finlease Pvt Ltd and AA Finlease Pvt. Ltd are the same person and relevant income is taxed in the hands of AA Finlease Pvt. Ltd, hence, credit of TDS should also be granted to tile AA Finlease Pvt. Ltd. 10. From time to time similar circumstances have also been discussed in judicial proceedings. These all judicial proceedings have decided the matter in favour of assessee. With all humbleness, some of the prominent judgments are listed herein below. 1. Delhi High Court - Commissioner of Income Tax-15 vs M/s Relcom, ITA 26/2015, Dated 16 January, 2015. 2. Gujarat High Court - Anish Infracon India Pvt. Ltd. vs DCIT at Ahmedabad R/Special Civil Application No. 3349 of 2018, Dated: 25.109.2018. 3. Allahabad High Court : Rakesh Kumar Gupta vs. UOI, W.P No. 657 of 2013, Dated: 6th May, 2004 4. ITAT Delhi – M/s Dayanand Contractor, Rohtak vs ITO, Rohtak ITA No. 2027/DEL/2016 [A.Y. 2012-13] dated 16 October, 2017 5. ITAT Mumbai-Citicorp Finance (India) Ltd vs. ACIT, ITA No. 8532/Mum/2011, Dated: 13th July, 2016 6. ITAT Kolkata - Parmanand Tiwari, vs. Income-tax Officer, Wd-54(1), I.T.A No.2417/Kol/2013, Dated: 02.09.2014 To provide better clarity CBDT has a/so issued instruction No.5/2013 [F. NO. 275/03/2013-IT(B)], DATED 8-7-2013. We ITA No.7254/Del./2019 6 are placing hereunder the copy of the instruction for your kind perusal. In view of the order of tile Hon'ble Delhi. High Court (reference: para 50 of the order); it has been decided by the Board that when an assessee approaches the Assessing officer with requisite details and particulars in tile form of TDS certificate as an evidence against any mismatched amount, the said Assessing Officer will verify whether or not the deductor has made payment of the TDS in the Government Account and if the payment has been made credit of the same should be given to the assessee. However, the Assessing Officer is at liberty to ascertain and verify the true and correct position about the TDS with tile relevant AO (TOS). The AO may also, if deemed necessary, issue notice to the deductor to compel him to file correction statement 8S per the procedure laid down. Prayer: In the facts and circumstance of the case, (1) In view of the facts explained above, legal pronouncements quoted and the instruction of the CBDT, it is most respectfully prayed that, the Hon'ble CIT (A) may please grant relief against the order of Ld. A. O. and issue needful direction for the issue of refund. (2) to pass such other order (s) as, it deems fit and proper." 5. After referring to the above, ld. CIT (A) referred to section 246A of the Income-tax Act, 1961 (for short 'the Act') and dismissed the appeal as not maintainable. The order of ld. CIT (A) reads as under :- “7.2 In the present case, the rectification petition u/s 154 has been rejected by the AO. While rejecting the rectification petition u/s 154, the AO has stated that the ITR for AY 2012-13 filed by using the PAN AAACM6666R, which belong to M/s MHVS Finlease Pvt. Ltd. was found to be defective by the IT department, and intimated to the appellant on 23.04.2013. The ITR has been treated as defective for the reason that the name mentioned on the ITR does not match with the name on the ITA No.7254/Del./2019 7 PAN Card. The AO has also noted that the Income Tax return is termed defective if it has not been filed with all the correct information as required under law. The Department duly informed the appellant on 23.04.2013 that the return was found to be defective and as per section 139(9) the assessee was required to rectify the mistake within the period of 15 days from the date of receipt of the notice. Since the appellant failed to respond within the allotted time, the return filed has been treated as invalid. The AO has also stated that in other words, it would be held as if the appellant had never filed the ITR for the year under consideration i.e. AY 2012-13. Section 246A of the Act specifically mentions the orders passed under various sections of the Income Tax Act, 1961 against which appeals can be filed before CIT (Appeals). However, the Section 246A does not provide for filing any appeal before CIT(Appeals) against treating the return of income as invalid u/s 139(9) of the Income Tax Act. 1961. Considering the facts of the case, I am of the considered view that the appeal in the instant case is not maintainable u/s 246A: Accordingly, the present appeal is dismissed as not maintainable u/s 246A of the Act. Ground No. 1 to 6 are decided against the appellant. 8. In the result, appeal of appellant bearing Appeal. No. 323/18-19 is dismissed as not maintainable u/s 246A of the Act.” 6. Against the above order, assessee is in appeal before us. We have heard both the parties and perused the record. 7. Ld. Counsel of the assessee prayed that assessee never received the notice that it is a defective return. He claimed that as the TDS certificates were in earlier name & PAN number, the assessee quoted the earlier PAN number in its return. He submitted that assessee’s claim is genuine. When Revenue authorities are assessing the income which relates to earlier name, they should not deny the refund if the certificates are in old name and PAN number. ITA No.7254/Del./2019 8 8. Per contra ld. DR for the Revenue supported the order of ld. CIT(A) but argued that the ld. CIT (A) has not answered in his order about the issue of rejection of 154 application. 9. Upon careful consideration, in our considered opinion, when interest of substantial justice is pitted against technicalities, it is the interest of substantial justice that prevails. Furthermore, the assessee’s plea that it has not received the defect notice has not been categorically rebutted. Moreover as fairly agreed by ld. DR for the Revenue that ld. CIT (A) has not answered the appeal on the issue of section 154 issue raised by the assessee before him. 10. Hence, in the interest of justice, we remit this issue to the file of ld. CIT (A) to decide the issue afresh keeping in mind the observation herein above. Needless to add, assessee should be granted adequate opportunity of being heard. 11. In the result, the assessee’s appeal is allowed for statistical purposes. Order pronounced in the open court on this 13 th day of October, 2022. Sd/- sd/- (NARENDER KUMAR CHOUDHRY) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated the 13 th day of October, 2022 TS ITA No.7254/Del./2019 9 Copy forwarded to: 1.Appellant 2.Respondent 3.CIT 4.CIT (A)-I, New Delhi. 5.CIT(ITAT), New Delhi. AR, ITAT NEW DELHI.