Return of income filed by me for the assessment year 2008-09 was processed under section 143(1) and I got refund also. The AO issued a notice under section 143(2) in May 2009 and when the scrutiny assessment was pending, he passed an order of rectification in July 2009 to deny depreciation in respect of some assets. Is the AO justified in passing an order of rectification under section 154 after a notice under section 143(2) has been issued and the scrutiny assessment was pending?
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After issuing notice under section 143(2) for detailed examination of the books of account and other claims of the assessee, the AO is not justified in interfering with the intimation issued under section 143(1) by resorting to section 154. It was held so in CIT v. Coventry Spring & Co Ltd (2002) 257 ITR 632 (Cal).
ReplyDeleteSimilar such decision could be found in Gujarat Poly-Avx Electronics Ltd v. Dy. CIT (1996) 222 ITR 140 (Guj) and CIT v. Gujarat Electricity Board (2003) 260 ITR 84 (SC).
This is a glaring instance where substance is left to winds and form is strictly adhered to. Regard(or rather mind)less of whether such adherence is keeping in with the spirit of the legislation or not. In the process, the casualties are enormous time waste, needless paper work etc. The time spent on erroneous rectification under section 154 even while scruitiny is not yet completed could well have been justifiably spent on productive work. Like refunding in time to those tax payers who have paid excess tax/or in whose case tax deducted is in excess of the tax liability. Thus saving, for the nation, on cost of interest u/s.244A.
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