Mukul Kr. Shrawat, Judicial Member - This is an appeal filed by the Assessee arising from the order of ld.CIT(Appeals)-I, Baroda dated 08/12/2009 passed for A.Y.1998-99. The substantive ground is as under:-
2. The learned Commissioner of Income Tax (Appeals-I) erred for addition/disallowance of not allowing TDS certificate on account of considering act of rectification application not made within four years from the end of the financial year in which the order sought to be amended was passed but without considering fact (factual position) of the matter that both the copies of the intimation u/s.143(1)(a) is found to be in the case records.
There was a demand of Block period 01.04.1986 to 18.12.1996. So assessee could not referred for the refund of various A.Y. but assessee referred vide letter LPFL/IT-SETL/2004-05 dtd 12.08.04 on account of demand from I T Department for such period 01.04.1986 to 18.12.1996 on the basis of order of settlement commission to adjust all refund of various assessment year which are also slightly delay of about 3 months and 12 days than expired on 31.03.04 but factual position that both the copies of the intimation u/s.143(1)(a) is found to be in the case records. Said TDS certificate is a kind of payment to Govt.
Your appellant submits that the addition/disallowance is not justified as remand report and our request itself confirming that intimation u/s.143(1)(a) is not served till date. So your appellant prays that the same be deleted.
2. Facts of the case in brief are that an order u/s.154 of the IT Act was passed by the AO dated 20/06/2006 for AY 1998-99 in the following manner:-
"Sub: Rectification u/s.154 for AY 1998-99
Ref : Your rectification application of dated 20.03.2006
Please refer to the above.
2. As per section 154(7) No amendment shall be made after expiry of four years from the end of the FY in which the order sought to be amended was passed.
3. You have filed the rectification application on 20.03.2006 for the AY 1998-99. Your IT return for the AY 1998-99 was processed u/s.143(1) on 30.06.1999. Therefore the Time limit u/s.154(7) of four years expired on 31.03.2004.
Hence your application for rectification is filed."
2.1. Being aggrieved, the assessee agitated before ld.CIT(A) that in a situation when both the copies of the impugned intimation was found with the Revenue Department's record, then the assessee's petition of rectification must not be dismissed on the ground of limitation. Ld.CIT(A) was not convinced and decided the issue against the assessee as follows:-
"5. I have considered the submissions of the ld. A.R. and the facts of the case. It is seen that from the report of the AO that intimation u/s.143(1)(a) had not been served on the assessee. However, as per sub-section (7) of sec. 154, the rectification can be made only before the expiry of four years from the end of the financial year in which the order sought to be amended was passed. In this case, the impugned order was passed on 30.6.1999. Hence the period of limitation expired on 31.3.2004. the application has been made on 20.3.2006. This is clearly out of time. The section does not speak of four years from the date of service of the order but four years from the end of the financial year in which such order was passed. Accordingly, it is held that the AO had rightly declined to rectify the order. The action of the AO is upheld and this ground of appeal thus fails."
3. From the side of the appellant, ld. AR Mr. Sunil H Talati has intimated that in the light of the provisions of section 143(1)(a) an intimation has to be sent to the assessee. Since the second copy was not sent to the assessee, therefore there was no service of the same. According to him, the period of four years is to be reckoned from the date of receipt of the intimation. For this legal proposition, he has placed reliance on M. L. John v. ITO [1983] 139 ITR 972 (All.) and Shubham Enterprises v. ITO [2004] 3 SOT 250 (All.).
4. From the side of the Revenue, ld. Sr. DR Mr. T. Shankar has supported the order of the AO by placing reliance on the provisions of section 154(7) of IT Act, reproduced hereinbelow:-
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"154. (1). to (6). ** |
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(7) Save as otherwise provided in section 155 or sub-section (4) of section 186 no amendment under this section shall be made after the expiry of four years from the end of the financial year in which the order sought to be amended was passed."
5. We have heard both the sides at some length. Records of the case have revealed that the assessee had moved a rectification application on 20/03/2006 for the A.Y. 1998-99. At this juncture, it is worth to mention that the provisions of section 154(7), as reproduced supra, prescribes that an amendment u/s.154 is required to be made within four years from the end of the financial year in which the order sought to be amended was passed. Therefore, the Revenue's stand was that the IT return for A.Y. 1998-99 was processed u/s.143(1) on 30/06/1999. The Financial Year was 1999-2000 of the order sought to be amended for which the four years from the end of the Financial Year had expired in 2004. Since the assessee had admittedly moved the rectification application in the year 2006, therefore according to the Revenue Department that application itself was barred by limitation, moreover the AO is also not empowered to pass an order u/s.154 after the expiry of four years from the end of the financial year in which the order sought to be amended was passed.
5.1. One of the admitted factual position is that the Income Tax Department in a Remand Report dated 10/09/2007, submitted to ld.CIT(A), has admitted that on verification of case record for AY 1998-99, it was found that the return was processed u/s.143(1) of IT Act on 30/06/1999, however both the copies of the intimation was found to be placed in the case records. It was also admitted that the said intimation u/s.143(1) remained to be served upon the assessee. If that was the admitted factual position that the intimation was not sent to the assessee, then in our considered opinion, the question of limitation as raised by the Revenue was against the natural justice as well as unjustifiable. Provisions of section 143(1)(a) as stood at the relevant time for AY 1998-99, placed before us by the assessee, are reproduced below:-
"Where a return has been made under section 139/142(1),
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If any tax or interest is found due on the basis of such return, after adjustment of any tax deducted at source, any advance tax deducted at source, any advance tax paid and any amount paid otherwise by way of tax or interest, then without prejudice to the provisions of sub-section (2), an intimation shall be sent to the assessee specifying the sum so payable, and such intimation shall be deemed to be a notice of demand issued under section 156 and all the provisions of this Act shall apply accordingly; and |
(ii) |
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If any refund is due on the basis of such return, it shall be granted to the assessee;" |
5.2. Since the law prescribes that an intimation has to be sent to the assessee specifying the sum so payable and that intimation shall be deemed to be a notice of demand u/s.156 of IT Act, therefore the issuance of such an intimation is absolutely necessary. The undisputed factual position is that the impugned intimation remained with the Revenue Department's record. Naturally, the assessee was not aware about the adjustments and the fate of its return; stated to be filed in the due course. When it was came to the notice of the assessee that the credit of the TDS was not properly given, then the assessee moved an application before the AO. Further, facts of the case have revealed, as intimated to us through written submission as under:-
"The Appellant was filed his return of income for A.Y. 1998-99 on 30/11/1998. the Ld.A.O. issued an Intimation u/s.143(1) of the act dated 30/6/1999 to the Appellant, in which the Assessee was given the credit of TDS paid for Rs.144856/- only out of total TDS claimed of Rs.192791/-. Such Intimation was not received by the Assessee till the period of February, 2006. In March, 2006, when the A.O. called upon the Assessee to make the payment of outstanding demand of Rs.47935/- for the year, the assessee came to know for the first time that the demand was outstanding. On inquiry from the Ld.A.O., your appellant came to know that the demand was raised only due to the TDS credit of Rs.47935/- was not being granted to the Appellant, which was also claimed in the return of income. It was nothing but the mistake apparent from the record on the part of the Assessing Officer."
5.3. Thereafter, the assessee had moved an application on 20th of March-2006 u/s.154 of IT Act. The said application was rejected on the ground that as per the provisions of section 154(7) a rectification can be made only before the expiry of four years from the end of the financial year in which the order sought to be amended was passed. Even the ld.CIT(A) was of the same view, although he has also acknowledged that both the copies of the intimation was found available in the case records for the year under consideration. He was also aware that the said intimation u/s.143(1) remained to be served upon the assessee being not issued by the AO. So, the argument before us is that an Authority must not be allowed to take advantage of his own default or failure. Naturally, in our humble understanding, an Authority has to act in accordance with law. Since the law is that an intimation was required to be sent to the assessee, hence the AO was duty bound to issue the same. Since the AO had failed to discharge its statutory duty, therefore we are of the view that the assessee is justified in raising this issue and the only recourse available to him was to move a petition u/s.154 of IT Act. The law is very well settled that if there is a breach of a statutory obligation, then a person committed such breach cannot be permitted to take advantage of such situation, so as to prejudice the interest of the effected person. Otherwise the Latin maxim is directly on the issue, quote "Commodum ex injuria sua nemo habere debet" unquote.
5.4. We have also been informed that a photocopy of the impugned intimation u/s.143(1)(a) was received by the assessee in the month of March-2006. Immediately, thereafter an application u/s.154 was moved on 20th March-2006. Rather, in the month of March-2006, the AO had called upon the assessee asking the payment of outstanding demand. Our attention has been drawn on a CBDT Circular No.73 dated 7th January-1972 which states as under:-
"CIRCULAR NO.73, DATED JANUARY 7, 1972
Subject : Section 154(2)(b) - Applications for rectification of Mistakes - Statutory time-limit - Waiver of.
In exercise of the powers conferred by clause (a) of sub0-section (2) of section 119 of the Income-tax Act, 1961, the Central Board of Direct Taxes hereby orders that in all the cases where a valid application under clause (b) of sub-section (2) of section 154 had been filed by the assessee within the statutory time-limit but was not disposed of by the authority concerned within the time specified under sub-section (7) of section 154, it may be disposed of by that authority even after the expiry of the statutory time-limit, on merits and in accordance with law."
5.5. Therefore, in the light of this Circular a rectification application can be disposed of by the AO even after the expiry of the statutory time limit on merits and in accordance with law. Our attention has also been drawn on an another Circular No.4 of 2012 dated 20/06/2012, wherein the CBDT being conscious about the limitation prescribed u/s.154(7) has authorized that in the cases of genuine hardship the AO is directed to make appropriate corrections in the figures of disputed arrear demands, naturally after due verification and reconciliation as also after examining the merits of the case, by way of rectification, irrespective of the fact that the period of limitation of four years as provided u/s.154(7) of the IT Act has elapsed. This Circular has further directed that apart from the rectification by CPC, in other cases, where the assessee disputes or requests for correction of figures of arrear, then also a suitable correction can be made. Relevant direction vide para-3(b) is reproduced below:-
"CIRCULAR NO.4 of 2012, DT. 20TH JUNE, 2012
3. In view of the above the following has been decided:-
(b) In other cases, where the assessee disputes and requests for correction of the figures of arrear demand, whether uploaded on CPC or not uploaded and still lying in the records of the Assessing Officer, the jurisdictional Assessing Officer shall verify the claim of the assessee on merits and after due verification of such claim, will make suitable correction in the figure of arrear demand in his records and upload the correct figure of arrear demand on CPC portal."
5.6. Considering the totality of the facts and circumstances of the case and the law involved, we are of the considered opinion that the grievance of the assessee is well-founded. We therefore direct the AO to entertain the said rectification application dated 20/03/2006 and dispose it off as per law after verification of record as also the eligibility of the claim. Resultantly, ground raised is hereby allowed.
6. In the result, the appeal of the Assessee is allowed with the directions protanto.