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Alok Kumar Mohapatra v. Income Tax Officer,Khurda

Income Tax – Rectification under section 154, Income Tax Act, 1961

Orissa HC6 Nov 2024WP(C)/4470/2023

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Case brief

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What is this about?

Keywords: section 154 rectification; sub-section (7) section 154 time bar; Income Tax Act 1961; intimation u/s 143(1); date of service 05/04/2012; dispatch register entry not primary evidence; file untraceable ITO to DCIT 12.02.2021; refund adjustment AY 2017-2018; exemption proviso section 5(1)(c); demand dated 01.02.2023 quashed; Orissa High Court WP(C) 4470/2023; Arindam Sinha; M.S. Sahoo.

What did the court decide?

Writ petition disposed of with relief to petitioner: communications dated 27th March, 2019 (rejection of rectification application) and 1st February, 2023 (subsequent demand) set aside and quashed; concerned authority directed to consider and deal with the rectification application in accordance with law. ¶35

Alok Kumar Mohapatra Vs Income Tax Officer,Khurda — Income Tax | Orissa HC (2024)

What the court decided

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Outcome

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Issue for consideration

Whether revenue could rely on an entry in its system/dispatch register showing service of the intimation on 5 April 2012 to deny the petitioner the remedy of rectification under section 154 of the Income Tax Act, 1961 on the ground of time bar, particularly when the departmental file was untraceable. +1 more

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Court's answer

Entry made in the dispatch register is not primary evidence; revenue cannot rely upon it to deny the petitioner the remedy of rectification on the ground of time bar.

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Ratio / Principle

Since the system entry is not primary evidence, the petitioner is entitled to relief: the communication dated 27th March, 2019 refusing to act on the rectification application and the subsequent demand dated 1st February, 2023 are set aside and quashed, and the concerned authority will consider and deal with the rectification application in accordance with law.

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Detailed headnote1 paragraphs

Income Tax – Rectification under section 154, Income Tax Act, 1961 – Application rejected as time-barred on reliance of sub-section (7) in section 154, based solely on system-generated processing order details showing date of service of intimation (return processed u/s 143(1)) as 05/04/2012 – Original return and physical acknowledgement of intimation not traceable; departmental file untraceable – Held: entry made in dispatch register is not primary evidence of service; revenue cannot rely upon it to deny the remedy of rectification on ground of time bar – Communications dated 27.03.2019 (rejection) and 01.02.2023 (demand) set aside and quashed – Concerned authority to consider and deal with rectification application (exemption claim under proviso to clause (c), sub-section (1) of section 5) in accordance with law (Orissa HC, Division Bench of Arindam Sinha and M.S. Sahoo, JJ., 06.11.2024).

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IN THE HIGH COURT OF ORISSA AT CUTTACK WP(C) No.4470 of 2023

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Alok Kumar Mohapatra

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…. Petitioner

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Represented by Advocate(s) –

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Mr. S. Ray, Senior Advocate

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-Versus-

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Income Tax Officer, Khurda and others

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…. Opposite Parties

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Represented by Advocate(s) –

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Mr. A. Kedia, Advocate (Junior Standing Counsel)

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CORAM:

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THE HON’BLE MR. JUSTICE ARINDAM SINHA AND THE HON’BLE MR. JUSTICE M.S. SAHOO

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ORDER

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06.11.2024

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Order No. 07. 1. The writ petition is up for hearing. Mr. Ray, learned

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senior advocate appears on behalf of petitioner-assessee and Mr.

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Kedia, learned advocate, Junior Standing Counsel, for revenue.

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2. We reproduce below paragraphs 1 to 4 from earlier

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order dated 2^nd September, 2023.

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“1. Mr. Ray, learned senior advocate appears on behalf of petitioner and submits, impugned are communications dated 27^th March, 2019 and 1^st

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Page 1 of 4

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February, 2023. First is, rejection of his client’s application for rectification made under section 154 in Income Tax Act, 1961 of having been erroneously assessed in spite of being entitled to exemption of charge of income tax under the proviso to clause (c) under sub-section (1) of section 5 in Income Tax Act, 1961.

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2. On query from Court Mr. Ray submits, information regarding discovery of the erroneous assessment was made upon intimation on adjustment of refund for subsequent assessment pertaining to assessment year 2017-2018. Hence, the application was made immediately on the discovery but rejected on reliance of sub-section (7) in section 154. He draws attention to internal communication dated 12^th February, 2021 from the ITO to the DCIT to submit, the file is untraceable in the department. He seeks interference.

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3. Mr. Chimanka, learned advocate, Senior Standing Counsel appears on behalf of revenue and relies on annexure-1 in the counter. He submits, the system clearly says date of service to have been on 5^th April, 2012. There should not be interference. However, adjournment be granted to obtain instructions.

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4. There was intimation of adjustment of refund pertaining to assessment year 2017-2018. Considering that and the file not traceable in the

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Page 2 of 4

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department, revenue must substantiate entry made in their system to demonstrate there was service on 5^th April, 2012. Entry made in the system is not primary evidence. It has to be based on something to show that the assessment order denying the exemption claim was informed to petitioner. Adjournment is granted to revenue to produce the evidence.”

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3. Counter has been filed. From it, we reproduce the

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passage dealing with paragraph 3.7 in the petition.

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“ Para No.3.7

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That the rejection of application for rectification is totally unsustainable and arbitrary because of the fact that the said intimation never saw the light of the day as claimed by the Petitioner is not correct. The return filed by the assessee was processed u/s 143(1) and the demand was uploaded in the system. As per the processing order details generated from the system, the date of service was shown as 05/04/2012. The same is enclosed herewith as Annexure-1. However, the original return filed by the Petitioner and physical acknowledgement of intimation served on the Petitioner are not traceable .”

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(emphasis supplied)

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4. Entry made in dispatch register is not primary evidence for revenue to rely upon and deny petitioner remedy of

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Page 3 of 4

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rectification on ground of time bar. As such, petitioner is entitled to relief. Communication dated 27^th March, 2019 saying petitioner’s rectification application cannot be acted upon and subsequent demand dated 1^st February, 2023 are set aside and quashed. Concerned authority will consider and deal with the rectification application in accordance with law.

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5. The writ petition is disposed of.

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(Arindam Sinha) Judge

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(M.S. Sahoo) Judge

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Prasant

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Signature Not Verified

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Digitally Signed Signed by: PRASANT KUMAR SAHOO Reason: Authentication Location: Orissa High Court Date: 07-Nov-2024 10:06:56