Income assessed by CPC cannot be taken as Returned income while passing assessment order u/s 143(3)

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Income assessed by CPC cannot be taken as Returned income while passing assessment order u/s 143(3)

Here was an interesting case before ITAT Ahmedabad in the case of Ranuj Nagrik Sahakari Bank Ltd. Vs ITO wherein it has been held that Income assessed by CPC cannot be taken as returned income while passing assessment order u/s 143(3). In this case, Assessee has filed return of income declaring total income at Rs.32,01,050/-whereas CPC, Bangalore processed the return under section 143(1)(a) and assessed it at Rs.37,66,259/-. During the course of scrutiny assessment u/s 143(3), the ld.AO has taken the income of Rs.37,66,259/- assessed under section 143(1) by the CPC as returned income, instead of considering the returned income of Rs.32,01,050/- which was declared in original return.
It was held that the ld.AO ought to have taken the figure of income declared by the assessee in the original return of income as “returned income” while computing the income under section 143(3) of the Act instead of “assessed income” under section 143(1) as “returned income”. Though a detailed submissions has been made by the assessee before the first appellate authority, but ld.CIT(A) without going into the merit of the contentions raised by the assessee, summarily and in a cryptic way rejected the same and confirmed order of the ld.AO. The ld.CIT(A) ought to have considered the pleadings of the assessee before him and should have passed an order on merit. According to me the mistake is self-evident, and apparent from the record. For rectifying the mistake, the assessee filed a rectification application under section 154, which was rejected by the AO on the ground that the same is barred by limitation. This foundational fact was not inquired into by both the authorities below in the course of rectification proceedings under section 154 of the Act, and simply dismissed the application on the ground of limitation.
The assessee submitted before the ld.CIT(A) that the assessee has filed application under section 154 on 20.1.2017 against the order passed under section 143(3) on 13.11.2012. Rectification of an order can be made within 4 years from the end of the financial year in which the order sought to be amended was passed, therefore, in the present case period for filing the application expires only on 31.3.2017, and therefore, application of the assessee under section 154 is within the limitation period. With regard to  the mistake pointed out by the ld.counsel for the assessee in the impugned assessment order is concerned, as stated above, is self-evident and apparent on face of the record, and thus, the lower authorities are not justified in rejecting the application under section 154 of the Act of the assessee. Hence, I allow appeal of the assessee and direct the ld.AO to consider the income declared by the assessee in its return of income, while computing assessed income under section 143(3) of the Act.
The copy of the order is as under:
ITAT Ahmedabad
Ranuj Nagrik Sahakari Bank Ltd. Vs ITO
ITA No.1885/Ahd/2018
Order Dated  08/06/2021
Assessee is in appeal before the Tribunal against order of the ld.CIT(A), Gandhinagar passed for the Asstt.Year 2010-11.
  1. Only one ground is raised in the appeal, which also contains sub-grounds. The sole issue raised by the assessee is that while framing assessment under section 143(3) of the Income Tax Act, 1961 for determining assessed income, the both the authorities below have erred in taking figure of income computed under section 143(1) as returned income by the CPC, instead of income declared by the assessee in the return filed on 29thSeptember, 2020. In other words, for framing assessment under section 143(3) of the Act, the ld.AO has taken income of Rs.37,66,259/- assessed by the CPC under section 143(1) as returned income, instead of Rs.32,01,150/- returned by the assessee as per return of income filed for the A.Y.2010-11.
  2. Brief facts of the case are that the assessee is a cooperative bank. It filed its return of income on 29.9.2010 declaring total income at Rs.32,01,050/-. The return was processed under section 143(1) on 6.5.2011 by CPC, Bangalore determined total income at Rs.37,66,260 and raised the demand of Rs.2,10,030/-. Thereafter, the case of the assessee was taken up for scrutiny and assessment order under section 143(3) was passed on 30.11.2012 in which returned income was taken at Rs.37,66,260/- and determined assessed income at Rs.40,20,286/-by making addition/disallowance of Rs.2,54,026/-. After going through the assessment order passed under section 143(3), the assessee noticed that there was apparent error in considering the figure of returned income while computing assessed income as per section 143(3). The assessee filed rectification application under section 154 of the Act with a request to consider the income returned by the assessee as per the return of income of Rs.32,01,050/- instead of income assessed by the CPC under section 143(1) of the Act at Rs.37,66,259/- for computation of income under section 143(3). The ld.AO vide order dated 27.10.2017 under section 154 rejected the application of the application of the assessee on the ground that the application of the assessee is barred by limitation. This order has been challenged before the ld.CIT(A). Assessee filed a detailed submissions before the ld.CIT(A). In the impugned order, the ld.CIT(A) recorded submissions of the assessee for rectification of the order, but the contentions of the assessee rejected and he confirmed the action of the AO. Aggrieved by the action of the Revenue authorities, assessee is now before the Tribunal.
  3. Before me, the ld.counsel for the assessee reiterated the submissions made before both the authorities. He further submitted that error in the impugned order is apparent, and very much obvious and patent on the record. Both the authorities have passed the impugned orders without appreciating the case of the assessee on merit, and therefore, the same requires to be rectified. He further submitted that the order of ld.CIT(A) is very cryptic, and simply confirmed order of the AO without dealing with merit of the issue raised by the assessee in the submissions. The application filed by the assessee under section 154 was within the statutory time limit, because the assessee has filed application on 20.1.2017 and the time limit as per the provisions of section 154 of the Act was upto 31.3.2017. On the other hand, the ld.DR supported the orders of the Revenue authorities.
  4. I have considered rival submissions and gone through the impugned orders of both the authorities below. I find that assessee has filed return of income declaring total income at Rs.32,01,050/-which was processed by the CPC, Bangalore under section 143(1) and assessed at Rs.37,66,259/-. In the scrutiny assessment under section 143(3), the ld.AO has taken the income of Rs.37,66,259/- assessed under section 143(1) by the CPC as returned income, instead of returned income of Rs.32,01,050/- declared by the assessee in its original return. The ld.AO ought to have taken the figure of income declared by the assessee in the original return of income as “returned income” while computing the income under section 143(3) of the Act instead of “assessed income” under section 143(1) as “returned income”. Though a detailed submissions has been made by the assessee before the first appellate authority, but ld.CIT(A) without going into the merit of the contentions raised by the assessee, summarily and in a cryptic way rejected the same and confirmed order of the ld.AO. The ld.CIT(A) ought to have considered the pleadings of the assessee before him and should have passed an order on merit. According to me the mistake is self-evident, and apparent from the record. For rectifying the mistake, the assessee filed rectification application under section 154, which was rejected by the AO on the ground that the same is barred by limitation. This foundational fact was not inquired into by both the authorities below in the course of rectification proceedings under section 154 of the Act, and simply dismissed the application on the ground of limitation. The assessee submitted before the ld.CIT(A) that the assessee has filed application under section 154 on 20.1.2017 against the order passed under section 143(3) on 13.11.2012. Rectification of an order can be made within 4 years from the end of the financial year in which the order sought to be amended was passed, therefore, in the present case period for filing the application expires only on 31.3.2017, and therefore, application of the assessee under section 154 is within the limitation period. As regards, the mistake pointed out by the ld.counsel for the assessee in the impugned assessment order is concerned, as stated above, is self-evident and apparent on face of the record, and thus, the lower authorities are not justified in rejecting the application under section 154 of the Act of the assessee. Hence, I allow appeal of the assessee and direct the ld.AO to consider the income declared by the assessee in its return of income, while computing assessed income under section 143(3) of the Act.
  5. In the result, appeal of the assessee is allowed.
Order pronounced in the Court on 8th June, 2021 at Ahmedabad.
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