PUNEET MALIK,DELHI V. ACIT CIRCLE 70(1) DELHI, DELHI

ITA 1125/DEL/2024

AI Insights

The case revolves around an appeal by Punit Malik against the order of the Commissioner of Income-tax (Appeals) [CIT(A)], which directed the Assessing Officer (AO) to pass a speaking order after rectifying the income assessment. The AO had initially passed a rectification order under section 154 read with section 143(1) of the Income Tax Act, which was contested by Malik. The CIT(A) acknowledged the non-speaking nature of the AO's rectification order but still directed the AO to pass a speaking order. Malik's appeal to the Tribunal argued that the CIT(A)'s direction was unnecessary given the findings of errors and the legal provisions that did not support rectifying an intimation under section 143(1) after a scrutiny assessment under section 143(3) had been completed.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 26201 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2017-2018
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HARPREET KAUR HANSRA
• Keywords: Condonation of delay; Set aside; Revised return; Reasonable cause; Salary income; Rectification of order; Earning of tax free income
• Section: 143(3); 154; 143(1); 22

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCHES “F”, NEW DELHI BEFORE : SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA No. 1125/Del/2024 Assessment Year: 2017-18 Punit Malik, D-61, Preet Vihar, Nirman Vihar, East Delhi, Delhi- 110092. Vs. ACIT, Circle 70(1), Delhi PAN : AJGPM8728G (Appellant) (Respondent) ORDER Per Annapurna Gupta, Accountant Member: The present appeal has been filed by the assessee against the order passed by the learned Commissioner of Income-tax (Appeals) [in short “CIT(A)”] u/s. 250(6) of the Income-tax Act, 1961 (hereinafter referred to as “the Act”). 2. The grounds raised by the assessee read as under : “1. On the facts and in the circumstances of the case and in law the appellant was unable to file the appeal in the prescribed time resulting in a delay of about 19 days. The appellant states and submits that due to change in employment and place of work from Delhi to Bangalore the coordination and filing of the appeal was delayed as also he was under a bona fide impression that the Order had granted the relief prayed for. Assessee by None Department by Ms. Harpreet Kaur Hansra, Sr. DR Date of hearing 24.03.2025 Date of pronouncement 28-03-2025 ITA No.1125/Del/2024 2 | P a g e The appellant prays that in the interest of justice the appeal be admitted for adjudication and taken on record. 2. On the facts and in the circumstances of the case and in law the learned CIT (A) erred in directing the AO to pass a speaking order. The learned CIT (A) having stated in conclusion 'In result, appeal of the appellant is allowed. the direction so given was thus infructuous and redundant. 3. On the facts and in the circumstances of the case and in law the learned CIT(A) having returned a finding that the order passed by AO was non-speaking and erroneous it was not open to restore it to AO for any further action. The direction to the AO was thus misconceived and unwarranted. 4. On the facts and in the circumstances of the case and in law the learned CIT (A) having doubted and questioned the basis of rectification order wrt 143(1) when Order u/s143(3) was on record it was clear that the ostensible rectification was untenable in law. The learned CIT (A) ought to have declared it so. 5. All the above grounds are independent and without prejudice to each another. 6. The appellant craves leave to add, amend, alter, substitute modify any or all grounds of appeal at the time of hearing\". 3. As is evident from a bare perusal of the grounds raised by the assessee, the solitary grievance of the assessee is with respect to the direction of the ld. CIT(A) to the Assessing Officer to pass a speaking order in the present case after giving opportunity of hearing to the assessee despite returning a finding that the assessment order was non- speaking and erroneous and having doubted and questioned the basis of passing the rectification order by the Assessing Officer in the present case. ITA No.1125/Del/2024 3 | P a g e 4. At the outset, it may be stated that the appeal is barred by limitation by 22 days. The assessee has filed an application before us seeking condonation of delay giving reasons for the delay as the fact that the order of the ld. CIT(A), though received on his email address, had escaped his attention on account of his relocation from Delhi to Bangalore and due to which he was unable to communicate and discuss with his tax professional. The assessee had also stated thathe was under the initial impression on reading the order that his appeal had been decided in his favour but it was only when his tax consultant brought to his notice the fact that the matter had been restored back to the Assessing Officer, that steps were immediately taken to file appeal and the assessee not being conversant with the electronic filing of appeal, it took sometime to understand and uploaded the appeal.As a consequence, the appeal was filed delayed by 22 days. The assessee accordingly sought condonation of delay stating that there were reasonable circumstances leading to the delay in filing of the appeal. Averments of the assessee in this regard are contained in his application seeking condonation of delay, which are reproduced as under : “1. Shri Puneet Malik, s/o NARENDER KUMAR MALIK aged about 44 years having residence at D-61 PREET VIHAR, DELHI, 110092 an Individual and a Software Engineer by profession, presently resident of Bengaluru, do hereby state that the Order w/s250 passed by the learned CIT-(A) under faceless scheme was received by us through e- mail [e-mail] on portal. I state that the said order ITA No.1125/Del/2024 4 | P a g e was received on the e-mail but had skipped the attention and in view of my relocation from Delhi to Bengaluru was unable to communicate and discuss with the tax professional. It is also stated and submitted that the reading of the Order gave an impression about the relief being granted and hence no further appeal was needed. I state that the matter was brought to the notice of the tax consultant and sought his advice on the same. Steps were taken immediately to file the appeal once it was realized that the last day for filing had passed by. I further state that due to the electronic filing of appeal being new in application 1-2 days were also lost in understanding and uploading. I state and submit that the appellant company intends to and is interested in prosecuting the case. I state and submit that the delay in filing the appeal was due to unavoidable circumstances beyond our control. I state and submit that I was under a bona fide impression that the Order passed has no challenge being in favour. I therefore pray your Honour that the delay in filing of the appeal by around 22 days is for the circumstances beyond our control. I state and submit that I was prevented in filing of timely appeal due to related circumstances mentioned above. I pray your Honour's to condone the delay and take the appeal on record. I pray that the appeal be admitted in the interest of justice.” 5. Having gone through the contents of the application filed by the assessee and considering that the delay is of mere 22 days, we are inclined to believe the reasonable cause cited by the assessee for the delay and noting satisfactory cause for the delay in filing the appeal, we hereby condone the delay of 22 days in filing of the present appeal and admit the appeal for adjudication. 6. Having stated so, the facts of the case before us are that the Assessing Officer had passed a rectification order u/s. 154 r.w.s. 143(1) of the Act, noting in the same the fact that in the scrutiny assessment done on the assessee in order passed u/s. 143(3) of the Act, the returned income of the assessee of Rs.40,83,950/- had been incorrectly ITA No.1125/Del/2024 5 | P a g e accepted since the income declared in the return of income, which was accepted in the assessment order, did not match with the declared income. The Assessing Officer in his order further goes on to note that the salary income of the assessee is determined at Rs.67,19,671/- and after providing one opportunity of hearing, to which he notes no response received from the assessee, he goes on to record that the salary income is recomputed and rectification order was passed u/s. 154 of the Act. 7. The assessee carried the matter in appeal before learned CIT(A) who after going through the contents of the assessment order noted that while rectification order was passed to modify the order passed u/s. 143(1) of the Act in the case of the assessee, the assessment u/s. 143(3) had been framed. The ld. CIT(A) noted that once a scrutiny assessment order u/s. 143(3) is passed, the AO could not modify the intimation u/s. 143(1) of the Act. He noted that the AO ought to have rectified the order passed u/s. 143(3) of the Act. Learned CIT(A) further noted that the AO had failed to mention the mistake or omissions, which he had identified in the processed income and which according to him needed to be corrected. He noted that 154 order was not speaking order and the AO had not determined the revised total income. He noted the assessment order to be non-speaking and erroneous one and went on to direct the ITA No.1125/Del/2024 6 | P a g e Assessing Officer to pass speaking order u/s. 154 of the Act. His findings given in para-5 read as under : “I have considered the grounds of appeal, statement of fact and the order of the AO passed u/s 154 r.w.s. 143(1) dated 30.05.2023. In the grounds of appeal appellant raised the issue that in the rectification order AO failed to mention the assessed Income determined after rectification. That AO also failed to appreciate the details filed by the appellant and therefore, rectification order to be considered as perverse and need to be cancelled. That, the order u/s 154 was passed beyond the scope and amid of provisions of section 154 of the IT Act, as there is no mistake apparent from record, and so order be considered as bad in law. Appellant in the statement of fact mentioned that he filed his original return of income for the year on 05.08.2017 on a total income of Rs. 49,98,862/-, Said return was revised on 14.08.2017 on a reduced revised income of Rs. 40,83,950/-. Appellant states that income was reduced due to claim of exempt income included in the return of income. It is further submitted that, his revised income was accepted in assessment on limited scrutiny at an assessed income of Rs. 40,83,950/- However, subsequently on 30.05.2023 the AO passed a rectification order u/s 154 r.w.s: 143(1) where in the body of the order AO mentioned that earlier order was passed u/s 143(3) on a assessed income of Rs. 40,83,950/-. In the body of the order AO discussed certain issues but at the end has not determined any revised total income u/s 154 r.w.s. 143(1). On going through the submission of the appellant and order u/s 154, it is apparent that AO passed order u/s 143(3) r.w.s. 143(3A) & 143(38) on 30.12.2019 accepting the revised returned income of the appellant Rs. 40,83,950/-, But it is seen that AO passed this order u/s 154 r.w.s. 143(1), and not with reference to last order passed u/s 143(3) dated 30.12.2019. Once an order is passed u/s 143(3), it is not clear how the AO is required to modify the order passed u/s 143(1) u/s 154 of the IT Act subsequently on 30.05.2023. ITA No.1125/Del/2024 7 | P a g e As per my understanding, the 154 order should have been passed to modify the assessed income made by AO u/s 143(3) on 30.12.2019 and not with reference to the processed income of the appellant. In the order, AO has not mentioned what are the mistakes/omissions he had identified in computation of assessed/processed income and the amount needs to add to such income to correct any mistake/omission apparent from record. The order of the AO passed u/s 154 is not a speaking order and in that order AO has not determined the revised total income. In view of the above, order passed by the AO u/s 154 r.w.s. 143(1) is found to be non-speaking and erroneous order. So, AO is directed to pass a speaking order u/s 154 after providing the appellant an opportunity of hearing. Appellant is at liberty to furnish his submission before the AO.” 8. The assessee before us is aggrieved by this direction of the ld. CIT(A) restoring the issue back to the Assessing Officer for passing a speaking order, more particularly when the ld. CIT(A) himself had noted several infirmities and illegalities in the order passed by the AO. The contention of the ld. Counsel for the assessee was that the ld. CIT(A), having noted that once the order u/s. 143(3) of the Act had been passed in the case of the assessee, the Assessing Officer could not have rectified the intimation made u/s. 143(1) of the Act and having further noted that no mistakes were mentioned by the AO in his order. The contention of the ld. Counsel for the assessee was that in the light of this finding of the ld. CIT(A), there was no case at all for having restored the issue back to the AO for passing a speaking order. ITA No.1125/Del/2024 8 | P a g e We are in agreement with the contentions made by the learned counsel for the assessee. Undisputedly, the impugned rectification order seeks to modify the intimation made u/s. 143(1) of the Act. It is also an undisputed fact that in the case of the assessee a scrutiny assessment order u/s. 143(3) of the Act had been passed subsequently accepting the returned income of the assessee. Learned CIT(A), we hold, has rightly appreciated these facts and held that consequent to assessment order passed u/s. 143(3) of the Act in the case of the assessee, the intimation u/s. 143(1) no longer survived having merged in the order passed u/s. 143(3) of the Act and that therefore, there was no occasion to rectify the intimation u/s. 143(1) at all. The findings of ld. CIT(A) in this regard, we hold, are correct. Having held so, we are completely in agreement with the ld. Counsel for the assessee that there was no occasion to restore the issue back to the AO for reconsideration. We may add that the ld. CIT(A) has also recorded correctly the fact that the rectification order passed by the Assessing Officer u/s. 154 does not clearly bring out the mistakes in the processed income and that it is a non-speaking order and in the light of the same, there is no occasion for giving the Assessing Officer a second chance to pass a speaking order as done by the ld. CIT(A). In view of the same, we hold that the ld. CIT(A) has wrongly directed the AO to reconsider the issue and pass speaking order in the ITA No.1125/Del/2024 9 | P a g e present case. This direction of the ld. CIT(A) is set aside. The order passed in the present case u/s. 154 is held to be not sustainable in law on account of the fact that it had sought rectification of an intimation, which already stood merged in the assessment order subsequently made in the case of the assessee u/s. 143(3) of the Act. 9. In view of the above, appeal of the assessee stands allowed. Order pronounced in the open court on 28.03.2025. Sd/- Sd/- (SATBEER SINGH GODARA) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 28.03.2025 *aks/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, Delhi "