Ambala Central Cooperative Bank Ltd vs. ITO (ITAT Chandigarh)

Dept hauled up for CPC Fiasco & unnecessarily harassing assessee but spared of costs on the ground that AO & CIT(A) were “only doing their duty”

The assessee filed an e-return disclosing income of Rs. Nil which was arrived at after setting off against the current year’s income of 9.53 crores, the brought forward losses of Rs. 12.43 crores. In the electronic processing, the loss set off was shown at Zero and a demand of Rs. 3 crores was raised. The assessee filed a rectification application u/s 154. The AO rejected the application on the ground that the assessee had “not claimed any loss” while the CIT (A) rejected it on the ground that “set off of losses cannot be a matter of rectification”. The assessee filed an appeal before the Tribunal and demanded costs u/s 254(2B) for the hardship. HELD by the Tribunal:

(i) The AO & CIT (A) were not justified in rejecting the assessee’s claim because as the losses had already been determined in the earlier years, the same were required to be allowed as set off against current income of the assessee. The CPC itself later issued a rectification order setting off losses of Rs. 9.53 crores though it still did not mention carry forward of losses. The assessee’s plea for costs u/s 254(2B) for “unnecessary hardship” cannot be accepted because the lower authorities were only “doing their duty”.

(ii) As regards the CPC, observed:

We would like to take this opportunity to bring to the notice of CBDT that after the procedure of Central processing of returns, many issues have come before various forums where unnecessary demands have been raised due to non-grant of TDS, wrong computation of income, adjustment of the previous year demand which have already been deleted by the jurisdictional assessing officer. Therefore, we would like to urge the CBDT to take up this matter urgently and establish proper coordination between the assessing authority and Central Processing Authority so that these problems are immediately solved and unnecessary litigation can be avoided. Copy of this order should be forwarded to the Chief Commissioner of Income-tax, Chandigarh and Chairman of CBDT for necessary action.