It is open to assessee to show that it was over assessed under erroneous impression of law even if it was the mistake of assessee – ITAT
In a recent judgment, ITAT has set aside the issue of taxability of excise duty subsidy wrongly offered as taxable income. The Tribunal observed that it is open to assessee to show that it was over assessed under erroneous impression of law or facts even if it is attributable to the mistake of assessee.
ABCAUS Case Law Citation:
ABCAUS 3974 (2024) (04) ITAT
Important Case Laws relied upon:
CIT vs. Shelly Products (2003) 261 ITR 367 (SC)
S. R. Koshti vs. CIT (2005) 276 ITR 165 (Guj)
Ester Industries vs. CIT (2009) 185 TAXMAN 266 (Delhi)
CIT vs. Pruthvi Brokers & Shareholders (P.) Ltd. [2012] 349 ITR 336 (Bom)
In the instant case, the assessee had challenged the order passed by the CIT(A) in rejecting the claim of Excise duty refund as non-taxable under the provisions of the Income Tax Act, 1961 (the Act)
The appellant assessee, in return of income had wrongly declared Excise duty subsidy received as revenue income and incorrectly offered to taxation as chargeable income.
The case of the assessee was that said Excise Duty subsidy was essentially capital in nature and thus not liable to taxation although wrongly offered as taxable income while filing the return of income. The assessee had raised such claim before the CIT(A).
However, the CIT(A) rejected the contention of the assessee towards non taxability of Excise Duty subsidy solely on the ground that no claim was made before the AO at any stage that such Excise Duty subsidy is capital in nature and thus not taxable in the absence of any claim before AO, the CIT(A) held that the grievance of the assessee was not maintainable before him.
Before the Tribunal the assessee referred to the several judgments to submit that the tax can be collected only in accordance with law and mere inclusion of such Excise Duty subsidy as taxable income under misconception of law, by itself, will not render such incorrect classification of income as taxable event.
The Tribunal observed that the CIT(A) had shunned the claim of the assessee without examining factual matrix in discord with the sublime principles emanating from plethora of judicial precedents.
The Tribunal observed that it is trite that the authorities under the Act are under sacrosanct obligation to act in accordance with law. Tax can be collected only as provided under the Act. If an assessee, under a mistake, misconception or not being properly instructed, is over assessed, the authorities under the Act are required to ensure that only legitimate tax dues are collected. This is the view which flows from innumerable judgments.
The essence of all the decisions is that mere admission on the part of the assessee with respect to an addition/disallowance in its original return or in revised return would not ipso facto bar an assessee from claiming an expense or disputing an income, if it is otherwise permissible under law.
It is thus well settled that if a particular income is not taxable under the Act, it cannot be taxed on the basis of estoppel or any other equitable doctrine. The Revenue authorities cannot enforce untenable actions of the assessee against it which led to declaration of income of higher amount incorrectly. It is thus open to assessee to show that it was over assessed under erroneous impression of law or facts even if it is attributable to the mistake of assessee.
The Tribunal opined that the assessee cannot be prevented from raising such additional claim before the CIT(A) merely because the ROI could not be revised or claim was not put before Assessing Officer.
The Tribunal set aside the appellate order and remitted the issue to the file of the AO for fresh determination of correctness of claim that such subsidy is to be regarded as capital in nature in the context of the case.
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