Khadi Grammodhyog Prathisthan Vs Asst. Director of Income CPC (ITAT Jodhpur)
The case of Khadi Grammodhyog Prathisthan Vs Asst. Director of Income CPC (ITAT Jodhpur) revolves around the denial of current year losses by treating a revised tax return as an original return. This appeal arises from an order dated 14.02.2023, issued by the National Faceless Appeal Centre (NFAC), Delhi, for the assessment year 2019-20. The initial assessment order was passed under section 143(1) of the Income Tax Act by the Assistant Director of Income Tax (ADIT), CPC.
Original vs. Revised Return: The crux of this appeal lies in the classification of the taxpayer’s return. The assessee filed its original return on 30.10.2019, within the extended due date. Subsequently, on 15.01.2020, the taxpayer filed a revised return. However, the CPC considered the revised return as the original one, leading to the denial of the current year loss amounting to Rs. 3,51,811/-. It is essential to note that the due date for filing the return had been extended by a relevant notification.
Incorrect Classification: Upon a careful review of the records, it becomes evident that the intimation in question failed to acknowledge that the return filed on 15.01.2020 was a revised return, not the original one. Consequently, the denial of the loss is found to be unjustified based on the facts and evidence available. Therefore, the grounds raised by the assessee, i.e., Grounds 1, 2, 3, and 5, are allowed.
Awarding Costs: Under Ground 4, the assessee seeks the tribunal’s intervention in awarding costs, including appeal fees, traveling expenses, and advocate fees. These costs were incurred due to the negligence of the CIT(A) in failing to comprehend the facts correctly.
Arguments for Costs: The Assessee’s representative argues that the taxpayer endured mental pressure and additional expenses due to the revenue’s failure to recognize that the return filed on 15.01.2020 was a revised one. To support this claim, reference is made to a decision of the Rajasthan High Court in the case of Chiranji Lal Tak v. Union of India [2001] 252 ITR 333/[2002] 120 Taxman 602, which emphasizes the importance of awarding costs as a deterrent against illegal and non-speaking orders that cause losses to taxpayers.
Opposition to Costs: The Departmental representative, on the other hand, strongly opposes the request for costs. They argue that both lower authorities made their decisions based on the facts presented. Additionally, they assert that the matter is quasi-judicial and has not reached a final resolution, making it premature to label the order as arbitrary or perverse.
After considering the arguments from both sides, the tribunal finds that the Commissioner of Income Tax passed an order based on the facts available to her. In the faceless regime, where personal contact is avoided, holding the officer responsible is not feasible. While the action may have caused some hardship to the assessee due to a judgment error, it does not warrant the imposition of costs on the Department.
The tribunal cites a previous Supreme Court decision (Pooran Mal v. Director of Inspection [1974] 93 ITR 505) to support the notion that certain inconveniences to innocent individuals may occur in the context of tax-related actions. However, in this case, there is no serious invasion of privacy, and there is no evidence of malice on the part of the Commissioner of Income Tax.
FULL TEXT OF THE ORDER OF ITAT JODHPUR
This appeal is filed by assessee and is arising out of the order of the National Faceless Appeal Centre, Delhi dated 14.02.2023 [here in after (NFAC)] for assessment year 2019-20 which in turn arise from the order dated 01.05.2020 passed under section 143(1) of the Income Tax Act, by the ADIT, CPC.
2. The assessee has marched this appeal on the following grounds:-
“1. That the order passed by the assessing officer is illegal against the law and judicial decorum.
2. The assessing officer should have accepted the revised return submitted by the assessee which was in accordance with the law and CIT(A) should have accepted the ground and should not rejected without reading the ground.
3. That the order passed by the CIT(A) is not reasoned order and disallowance made by the assessing officer is confirm arbitrary and against the law and against the natural justice therefore liable for quash.
4. That cost (appeal fees + travelling expenses + advocate fees) may kindly be granted in respect of dragging the assessee in appeal due to negligence and carelessness of the CIT(A) in view of judgment of Rajasthan High Court delivered in case of Chiranji Lal by treating the assessee and department at par.
5. That addition of Rs. 3,51,811/- is illegal and against the law is only account of negligence.
6. Without prejudice when the income is exempt in that case no tax should be charged.”
3. The fact as culled out and recorded in the orders of the lower authorities is that the assessee has filed its original return of income belatedly u/s 139(4) of the Act for the assessment year 2019-20 on 15.01.2020. The due date for filing return of income for the said assessment year u/s 139(1) of the Act was extended to 31.10.2019. The return of income filed by the appellant u/s 139(4) of the Act was processed by the CPC, Bengaluru u/s 143(1) of the Act disallowing current year losses of Rs. 3,51,811/- (Bonus of Rs. 3,20,000 and Interest of Rs. 31,811/-).
4. Aggrieved from the order of the Assessing Officer, assessee preferred an appeal before the ld. CIT(A)/NFAC. A propose to the grounds so raised the relevant finding of the ld. CIT(A)/NFAC is reiterated here in below:
“5. Decision-: There are five grounds of appeal but they are condensed to a single issue which is assessee’s grievance against CPC disallowing a sum of Rs. 3,51,811/- on account of current year’s losses. After looking into the entire factual matrix of the case, I find that assessee’s plea is untenable because losses can only be allowed when the return of income is filed within the stipulated time prescribed by the Act. It is noted from the order u/s 143(1) of the Act that the returns were filed on 15.01.2020 whereas the due date u/s 139(1) of the Act was 30.03.2019. Hence there is no infirmity in the order passed by the AO (CPC).
The appeal is therefore dismissed.”
5. The ld. AR appearing on behalf of the assessee has placed their written submission which is extracted in below;
“With reference to the above, it is submitted that the order passed by the assessing officer and sustained by the CIT (A) in a manner that is illegal against the law and against the judicial decorum from all corners.
I want to submit that CIT (A) is also having a duty to correct the errors in the proceeding. I have categorically pointed out the factual/legal mistake committed by the CPC authority. All the act leads to the concussion that the CIT A did not take the pain to read the submission at all. There are the following judicial pronouncements of the Supreme Court and High Court in respect of correcting the error.
The apex Court while dealing with the scope and powers of the appellate authority in the case of Kapurchand Shrimal vs. CIT (1981) 24 CTR (SC) 345: (1981) 131 TTR 451 (SC) has held as Follows:
“It is well known that an appellate authority has the jurisdiction as well as THE DUTY TO CORRECT ALL ERRORS IN THE PROCEEDINGS UNDER APPEAL AND TO ISSUE, if necessary, appropriate directions to the authority against whose decision the appeal is preferred to dispose of the whole or any part of the matter afresh unless forbidden from doing so by the statute.”
As per section 250(6) of the Act, it is the duty of the Commissioner (Appeals) to state a point in dispute, record the reasons and pass a speaking order. The Hon’ble Supreme Court in the case of Kranti Associates Pvt. Ltd. v. Masood Ahmed Khan (2010) 9 SCC 49% and Canara Bank v. V. K. Awasthy (2005) SC 2090 has held that nonspeaking orders by Tribunal, as well as Commissioner (Appeals), is violating the principle of natural justice and liable to be set aside.
Accordingly, under the faceless appeal scheme, the Authorities are bound to pass the speaking order.
The CIT (A) fails to pass the speaking order and passed the order in ten lines AND THE TAXPAYER HAS BEEN DELIBERATELY PUSHED INTO THE PIT OF LITIGATION. YOU ARE REQUESTED TO DECLARE THE SAME AS ILLEGAL.
In view of the above submission, you will observe that the addition made by the assessing officer is illegal and against the law without following the order of the tribunal.
CONVERSATION OF PROOF INTO NO PROOF BY THE CIT (A)
Respected sir, we fail to understand how the CIT (A) disbelieved the explanation/statements given by the assessee when both documents are the documents of CPC and converted good proof into no proof. Hon’ble Justice Hidayatullah of the Supreme Court in the case of Sreelekha Banerjee Vs CIT [19631 49 ITR 112 (SC); 120 observed that the Income Tax Department cannot by merely rejecting unreasonably a good explanation, convert good “proof into no proof”. Hon’ble Supreme Court in the case of Uma Charan Shaw & Bros Co Vs CIT 37 ITR 271 has held that the surmises and conjectures, and the conclusion are the result of suspicion which cannot take the place of proof. Hon’ble Punjab & Haryana High Court in the case of CIT Vs Anupam Kapoor (2008) 299 ITR 179 (P&H) also held that suspicion, howsoever strong cannot take the place of legal proof.
Honorable, please also look into the working style of the Income Tax Commissioner Appeal.
The assessing officer should have accepted the revised return submitted by the assessee which was in accordance with the law and CIT (A) should have accepted the ground and should not be rejected without reading the ground.
The return in the question of income filed on 15th January 2020 Income Tax Act was in fact revised return. The original return was filed on 30th September 2019. Hence you have observed that there is no infirmity in the order passed by the CPC, which is not correct. In this respect, I want to submit that the document already submitted before your good self was not considered by the CIT (A). The original return of income was submitted Vide acknowledgment number 235538551301019 dated 30 October 2019. Subsequently, the original return submitted by the assessee was revised vide its acknowledgment number 291917561150120 dated 15th January 2020.
I want to make it clear that the original return of the institution was submitted well within the tank but due to some oversight, CIT (A) has failed to appreciate the correct position as per the record. After considering the actual date there is no delay and on the basis of your theory the original return was well within the time and the same was revised which the assessee already considered the same. For your ready reference, I am again attaching the acknowledgment as well as the computation of income in the paper book.
That the order passed by the CIT (A) is not reasoned order and disallowance made by the assessing officer is confirmed arbitrary and against the law and against the natural justice therefore liable for quash.
The assessee took following grounds: –
i) That the order passed by the Assessing Officer is illegal and against the law
ii) The Assessing Officer should have accepted the revised return submitted by the assessee which was in accordance with the law
iii) That the order passed by the Assessing Officer is not reasoned order and disallowance made by the Assessing Officer is arbitrary and against the law and against the natural justice
iv) That the assesse was prevented by reasonable cause from furnishing the appeal within the stipulated time
v) That the claim of Rs.3,51,811 is in accordance with law.
Respected sir just see the CIT (A) have decided the appeal in ten lines which is being reproduce here under: –
Decision-: There are five grounds of appeal but they are condensed to a single issue which is assessee’s grievance against CPC disallowing a sum of Rs.3,51,811 on account of current year’s losses. After looking into the entire factual matrix of the case, I find that assessee’s plea is untenable because losses can only be allowed when the return of income is filed within the stipulated time prescribed by the Act. It is noted from the order u/s 143 (1) of the Act that the returns were filed on 15.01.2020 whereas the due date u/s 139 (1) of the Act was 30.09.2019. Hence there is no infirmity in the order passed by the AO (CPC). The appeal is therefore dismissed.
In this respect, judge yourself whether it is a proper manner to decide the appeal by the CIT (A). It is a way of pushing in the litigation. I want to submit that at the time of deciding on the appeal the CIT (A) have not even consider the argument as well as the fact and the document already submitted before your good self.
COST MAY KINDLY BE AWARDED TO ASSESSEE BY THE DEPARTMENT
That cost (appeal fees+ travelling expenses+ advocate fees) may kindly be granted in respect of dragging the assessee in appeal due to negligence and carelessness of the CITA) in view of judgment of Rajasthan High Court delivered in case of Chiranji Lal by treating the assessee and department at par.
Accordingly, under the faceless appeal scheme, the authorities are bound to pass the speaking order and have to pass the order following the judicial procure after considering the documents and submission. But the CIT (A) passed the order by keeping his eye closed and by ignoring the judicial decorum and disciple.
It is therefore humbly submitted that that cost may kindly be awarded in respect of negligence putting the assessee in unnecessary litigation in view of the judgment of the Rajasthan High Court.
I want to draw your attention to this submission of mine that the department is wasting the precious time of the court and the tax payer’s money as well as time. THIS IS A RATHER A NATIONAL LOSS AND AT LEAST A RESPONSIBLE OFFICER LIKE COMMISSIONER SHOULD HAVE AVOIDED BUT EVEN IF THEY ARE NOT BOTHERING THEREFORE THEY SHOULD BE TAUGHT A LESSON AND THE ONLY WAY IS IN THE HAND OF THE APPELLATE AUTHORITY LIKE YOU. The only way to bring the officer to the limit is by way of imposing cost so that appropriate action may be taken against the said officers by their higher authority who has taken the action of this missing the appeal without following the procedure.
Both the department and the appellant are equal before you. The financial loss of the appellant can be easily estimated and assessed and no other officer is responsible for it except the Commissioner of Income Tax Appeals. This is an offense that is not condoned in the Service Conduct Rules. Many decisions are available to post on the concerned authorities, some of them are written below.
I want to draw your attention to the following cases.-
In view of the judgment
CHARANJILAL TAK SHYAM PARWANI & PARTY vs. UNION OF INDIA & ORS
reported at 252 ITR 333 (Raj),
The assessee is entitled to cost.
Observation is as under:-
“Litigation is not a luxury and/or amusement or entertainment. It is not pleasure or pleasant to come to the courts. Only when the Union or a State or its officers make it unavoidable, do the litigants come up before the court for redressal of their grievances or for enforcement of their legal or fundamental rights? The litigation is heavily cost (sic-costs heavily) and in the matter of awarding the cost, the court should have to keep in mind this aspect in such matters. It is no use or desirable that on the success of the litigant, he has been given only the token cost or the cost for the sake of the cost of the litigation. The litigants spent a huge amount in filing litigations.”
Supreme Court of India
State Of Maharashtra vs Narayan Vyankatesh Deshpande on 31 March, 1976 Equivalent citations: 1976 AIR 1204, 1976 SCR (3) 980
The State Governments should not adopt a litigious approach and waste public revenues on fruitless and futile litigation where there are no chances of success. It is unfortunately a fact that it costs quite a large sum of money to come to this Court and this Court has become untouchable and unapproachable by many litigants who cannot afford the large expense involved in fighting litigation in this Court. It is, therefore, all the more necessary that State Governments, which have public accountability in respect of their actions, should not lightly rush to this Court to challenge a judgment of the High Court which is plainly and manifestly correct and drag the opposite party in unnecessary expense, part of which would, in any event, not be compensated by an award of cost. We accordingly dismiss the appeal with costs. S.R. Appeal dismissed.
THE PRESENT APPEAL IS AN INSTANCE OF THE KIND OF UNNECESSARY AND FUTILE LITIGATION WHICH CAN BE AVOIDED IF THE CIT (A) COULD HAVE TAKEN THE PAIN TO VERIFY THE ONLY DATE OF THE ORDER.
That addition of Rs. 3, 51,811/- is illegal and against the law and is the only account of negligence.
In this regard, I would like to submit that whatever was submitted by the taxpayer, the return was revised by showing the disputed amount in the revised return. If the Commissioner of Income Tax had seen the revised return, then the issue of dispute could have ended there itself. But the Commissioner of Income Tax Appeal did not dare to at least see the attached documents. The accretion under these circumstances is illegal. In the revised return amount has been increased in the interest income and bonus.
Without prejudice when the income is exempt in that case no tax should be charged. In the end, you would also like to say that the income of the taxpayer is included in the category of exemption in section 10, so the government does not intend to impose any kind of tax on the taxpayer, therefore the amount demanded from the taxpayer is illegal and the income tax officer who Tax assessment should be done considering the increase in income in the category of exemption.
In these facts and circumstances, it is requested that the order passed u/s 250 of the IT Act may kindly be annulled the same, declared illegal, and against the judicial decorum and discipline.”
5.1 The ld. AR of the assessee also filed a paper book of the documents relied upon the same is also reproduced here in below:
