A Division Bench of the Bombay High Court has recently remanded an income tax matter to the Principal Commissioner, while the impugned order was quashed and set aside as the calculations were based on an FAQ from a Central Board of Direct Taxes (CBDT) Circular when specific provisions for determination of the same existed in the Income Tax Act, 1961.
The return of income was fled by the petitioner declaring a total income of Rs.93.92 Lakhs. Subsequently, the assessment was completed under section 143(3) of the Income Tax Act. Reassessment proceedings were initiated against the petitioner and the income was reassessed at Rs. 3.56 Crores after making an addition of 100% of alleged bogus purchases under section 68 of the Income Tax Act.
The is stated to have issued certificate in Form3 under the Ait, wherein the demand on account of disputed tax was reflected on Rs.91.18 Lakhs, as against the amount payable indicated by the petitioner in Form-1 at Rs. 22.04 Lakhs.
Rectification Application was filed by the petitioner claiming that the demand raised in Form No.3 was erroneous and unjustified and that the orders of the ITAT had been ignored for purposes of calculating the tax liability.
The rectification application of the petitioner was rejected vide order dated 1st September 2021. With a view to justify the figure of disputed tax in Form-3. Reliance was placed upon the question No.7 of the FAQ of Circular No.09/2020, dated 22nd April 2020, issued by the Central Board of Direct Taxes (CBDT).
Counsel for the respondents, Mr.Kumar, has reiterated the stand of the revenue, as is reflected in the affidavit filed wherein, the action of the authority in issuing Form No.3 based upon the FAQ dated 22nd April 2020 issued by the CBDT was sought to be supported.
The Division Bench of Justices Abhay Ahuja and Dhiraj Singh Thakur opined that, “FAQ No.7 issued by the CBDT would have no application in the present case for the reason that section 2(1)(j)(B) specifically and unambiguously provided for computation of the disputed tax”.
The impugned reassessment order was thus quashed and set aside, reverting the matter to the Principal Commissioner of Income Tax.
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