AN INTERESTING CASE IN FAVOR OF TAXPAYER:

AN INTERESTING CASE IN FAVOR OF TAXPAYER:

Bombay HC to Income-tax Deptt. can't take advantage of assessee's mistakes in not claiming exemption in IT return not and deny him exemption

The entire object of administration of tax is to secure the revenue for the development of the Country and not to charge assessee more tax than that which is due and payable by the assessee

FACTS

• Assessee-company had claimed exemption under section 10(34) and 10(38) in respect of dividends and long-term capital gains from listed equity shares by showing these incomes in Schedule EI on page 24 of the return. However, he had erroneously shown these incomes in Page 11 under Item 3(b) Long-term capital gains instead of showing 'Nil' there.

• The above error was due to mistake on part of assessee's CA in filling up the return while electronically filing it. As a result intimation based on this return was sent to assessee-company resulting in demand of Rs. 2.44 lacs.

• Assessee filed revised return, However, the revised return of income was not taken cognizance of/processed by the respondent's electronic system, as the same was filed beyond the period of limitation as provided under section 139(5) of the Act.

• Assessee-company filed rectification application under section 154 to AO .

• On getting no response from AO , assessee filed revision application to CIT under section 264.

• CIT dismissed assessee's revision application under section 264 against the intimation under section 143(1) by order dated 7-4-2011 on the ground that assessee cannot complain as intimation was based on assessee's return wherein he claimed no exemption.

• Hence, this instant writ petition against CIT's order dated 7-4-2011.

HELD

• In any civilized system, the assessee is bound to pay the tax which he is liable under the law to the Government.

• The Government on the other hand is obliged to collect only that amount of tax which is legally payable by an assessee.

• The entire object of administration of tax is to secure the revenue for the development of the Country and not to charge assessee more tax than that which is due and payable by the assessee.

• As far back as in 11/04/1955 the Central Board of Direct Tax had issued a circular directing Assessing Officer not to take advantage of assessee's ignorance and/or mistake.

• The said Circular says that it is the duty of AO to draw taxpayer's attention to any refunds or reliefs to which they appear to be clearly entitled but which they have omitted to claim for some reason or other.

• The impugned order of CIT was erroneous as it states that assessee had not claimed exemptions in return whereas assessee had done so in page 24 in Schedule EI. CIT directed to consider the matter fresh keeping all the contentions open on both sides, including the maintainability of a revision application.

• The AO is directed to consider the rectification application filed by the petitioner on its own merits, without being influenced by the impugned order or awaiting the result of the revisional proceedings before the Commissioner of Income- tax on remand.

EDITOR'S NOTE

Refer Article 265 of the Constitution.

RELATED CASES

Dy. CIT v. Rajlaksmi Sone Crusher (P.) Ltd. [2012] 21 taxmann.com. 475 (Delhi - Trib.). - [2012] 25 taxmann.com 123 (Bombay)

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