In an assessee-friendly ruling, the Karnataka High Court has held that the Assessing Officer cannot take advantage of the ignorance on the part of the assessee to collect more tax amount than is legitimately due relying on a circular issued by the Central Board of Direct Taxes (CBDT).
Justice Sunil S.Yadav, while condoning a delay of 6 years in filing revised Income Tax Return (ITR) held that the intention of Circular No.014 (XL-35) dated 11.04.1955 was not that tax due should not be charged or that any favor should be shown to anybody in the matter of assessment, or where investigations are called for, they should not be made.
Whatever the legitimate tax it must be assessed and must be collected. The purpose of the circular is merely to emphasize that the tax officer should not take advantage of an assessee’s ignorance to collect more tax out of him than is legitimately due from him, the Court opined.
The petitioner/assessee, a retired ICICI Bank employee had availed of the Reserve Bank’s Optional Early Retirement Scheme and was paid a superannuation benefit of Rs.5,00,000/-. The petitioner/assessee submitted that return of income for the assessment year 2004- 2005 was filed and in the return filed, the petitioner did not claim the benefit of exemption as was available under Section 10(10C) of the Income Tax Act, 1961. The Assessing Officer issued an intimation under Section 143(1) of the Act accepting the return filed by the petitioner.
Subsequently, the petitioner has sought to file a revised return. The respondent/ department has rejected the application for condonation of delay as time-barred as the return of income could not be condoned after 6 years from the end of the assessment year and thereby foreclosing the processing of the revised return.
The Court observed that the entitlement of exemption under Section 10(10C) of the Act was noticed by the Assessing Officer. In fact, the petitioner had also sought relief of rectification by way of a letter. As no order appears to have been passed on the letter, the petitioner decided to seek for condonation of delay to file a revised return by an application under Section 119(2)(b) of the Act. If an order had been passed as regards the rectification application, the assessee may have got relief at that end itself. As no order was passed, the assessee then decided to explore the possibility of filing a revised return.
Sri. Devendra Pai VS The Assistant Commissioner of Income Tax, Circle 1(2)
CITATION: 2022 TAXSCAN (HC) 127
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