The Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) observed that ratification application under section 154 of the Income Tax Act,1961 cannot be termed as time-barred if the taxpayer responded to notice issued under section 143 of the act.
Shree Jay Limbach Co. Op. Credit Society Ltd, the assessee is a Co-operative Society engaged in the business of providing short-term loans to its members. The assessee had filed returns claiming a deduction of its entire income under section 80P(2), thus filing a Nil return of income.
An intimation under section 143(1) was made denying the grant of deduction under section 80P(2) and treating the income as income from other sources subjecting the same to tax. Subsequently, demand notices were raised on the assessee, to which the assessee objected repeatedly stating that it had been wrongly denied deduction under section 80P(2). Finally, the assessee filed a rectification application under section 154 of the Act which was rejected by the Assessing Officer stating that it was time barred.
It was evident that as per the provisions of Section 154(7) of the Act, a rectification application is to be filed within four years from the end of the financial year in which the order sought to be rectified is passed.
The assessee has sought rectification in the intimation made under section 143 (1) of the Act and he contends that the intimation is never served on him, though it was passed in 2010.
The department admitted that it has no details of service of intimation to the assessee under section 143(1) of the Act for all the impugned assessment years, added the Bench.
The two-member Bench of Annapurna Gupta (Accountant Member) observed that since the assessee had duly responded to the demand notices that were issued to it in consequence of the intimation made under section 143(1) of the Act challenging it constantly and well within four years of the intimation made on the assessee. It was only finally, when the Assessing Officer did not do the needful with respect to the demand raised, that it ultimately moved an application in the year 2022 again seeking rectification in the intimation made under section 143(1) of the act.
The Bench observed that the entire profits of the assessee did not comprise only interest earned from nationalised banks and it included even profits earned from its activity of providing credit facilities to members, and therefore, the intimation made under section143(1) of the Act contained mistake apparent from the record which needed rectification.
While allowing the appeal, the ITAT restored the issue to the Assessing Officer to consider the application of the assessee filed under section 154 of the Act afresh.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
