Case Law Details
Jay Limbach Co. Op. Credit Society Ltd Vs ITO (ITAT Ahmedabad)
The case of Jay Limbach Co. Op. Credit Society Ltd vs. Income Tax Officer (ITAT Ahmedabad) revolves around the rejection of rectification applications filed by the assessee under Section 154 of the Income Tax Act, 1961, concerning the Assessment Years (AY) 2010-11 to 2013-14. The key issue in contention was the rejection of the rectification applications by the Assessing Officer and subsequently upheld by the Commissioner of Income-tax (Appeals) [CIT(A)], primarily on the grounds of being time-barred.
The assessee, a cooperative society providing short-term loans to its members, filed returns of income for the aforementioned years, claiming deductions under Section 80P(2) of the Act. However, intimation under Section 143(1) of the Act was issued, denying the deduction and treating the income as income from other sources. Subsequently, demand notices were raised on the assessee, which led to repeated objections from the assessee and the eventual filing of rectification applications under Section 154 of the Act.
The crux of the matter lies in the timeline of the rectification applications. The Assessing Officer rejected the applications as time-barred, as they were seemingly filed beyond the prescribed period of four years from the end of the financial year in which the order sought to be rectified was passed. However, the assessee contended that the intimation under Section 143(1) was never served on them, and they became aware of it only when demand notices were issued. Therefore, they argued that the clock for the limitation period should begin upon the assessee’s receipt of the order.
The Income Tax Appellate Tribunal (ITAT) Ahmedabad, in its decision, agreed with the assessee’s contention. It held that the time limit for filing rectification applications starts only when the assessee is aware of the order passed, not from the date of the order itself. Since there was no proof of the intimation being served on the assessee, the time-barred argument by the tax authorities was dismissed.
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Author Bio
Time limit for disposal of rectification petition should be fixed at 30days and till that time automatic stay should be granted for collection of taxes. Likewise for filing appeals also the time should be extended i e 30 days from the date of rectification order.