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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI V. DURGA RAO, HON’BLE & SHRI MANJUNATHA. G, HON’BLE
आदेश /O R D E R
PER MANJUNATHA. G, ACCOUNTANT MEMBER:
This appeal filed by the assessee is directed against the order passed by the learned Commissioner of Income Tax (Appeals)-18, Chennai, dated 04.01.2023 and pertains to assessment year 2017-18.
The assessee has raised the following grounds of appeal: “1. The order of the learned Commissioner of Income Tax (Appeals)-18, is wrong, illegal and opposed to facts of the instant case.
:-2-: ITA. No: 154/Chny/2023 2. The learned Commissioner of Income Tax (Appeals)- 18 ought to have seen that it is undisputed the Assessing Officer has passed order under section 254 r.w.s 143(3) of the Income Tax Act by giving effect to the orders of Hon'ble Tribunal and that while giving effect to the orders of the Hon'ble tribunal the assessing officer ought to have confined himself to the order of the Hon'ble Tribunal, nothing more nothing less.
3. The learned Commissioner of Income Tax (Appeals)- 18 ought to have seen that the orders of the assessing officer exceed his jurisdiction while giving effect to the orders of the Hon'ble Tribunal and since the said mistake and patent apparent from record the same is rectifiable under section 154 of the Income Tax Act.
The learned CIT(A) ought to have seen that the orders passed under section 254 rws 143(3) is neither analogous to proceedings under section 14 7 or revision order of administrative CIT mandating scope for fresh assessment. The said order is only to give effect to the appellate authorities order and is required to be passed within 3 months form the date of receipt of the said order by CIT or PCIT and the case may be.
5. The learned CIT(A) ought to have seen that the assessing officer while giving effect to the orders of the Hon'ble Tribunal has made an addition of Rs.3,68,74,080/- under section 69A despite the fact that the Hon'ble tribunal vide its order dated 4.11.2020 has clearly observed in para 12.8 page 42 of its order that the aforesaid amounts tallied with the regular books of accounts maintained by the assessee along with group companies. Therefore, the said addition would tantamount to rectification order passed by the AO against the orders of the final fact finding authority which would tantamount to judicial indiscipline.
6. The learned CIT(A) while sustaining the addition made by the LD AO under section 69A erred in observing that the appellant has not raised any grounds either before the first appellate authority or tribunal with regard to addition of Rs.3,68,74,080/- in its original proceedings. While making the aforesaid observation the learned CIT(A) failed to see that no :-3-: ITA. No: 154/Chny/2023 addition was made by the AO originally for Rs.3,68,74,080/warranting the appellant to prefer a ground. For these and other grounds that may be adduced at the time of hearing , it is most humbly prayed that the Hon'ble ITAT may be pleased delete the addition of Rs.3,68,74,080/- under section 69A of the Act is an giving effect to proceedings and thus render justice.”
The brief facts of the case are that, a search and seizure action u/s. 132 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) was carried out in the case of the assessee on 09.05.2016. During the course of search, cash of Rs. 3,93,57,669/- was found and compared with cash balance as per book as on the date of search and found excess cash balance of Rs. 3,68,74,080/-. In the assessment order issued u/s. 143(3) dated 21.12.2018, the seized cash of Rs. 3,68,74,080/- was not separately added because addition of Rs. 3.79 crores was made towards cash receipts as evident by the scribbling pad vide annexure ANN/VJ/SNJ/B&D/S-1. On appeal before the Tribunal, the ITAT Chennai Benches vide order dated 04.11.2020, in to 2705/Chny/2019 and ITA No. 2194, 2195 & 2993/Chny/2019, deleted additions made by the AO towards addition on account of cash receipts for assessment year 2017-18, for the reasons stated in their order at Para 12.8, where it has been specifically addressed :-4-: ITA. No: 154/Chny/2023 the issue of cash found and seized during the course of search. The AO passed order u/s. 254 r.w.s. 143(3) of the Act dated 12.01.2021, and has made additions towards unexplained seized cash of Rs. 3,68,74,080/-, by observing that since additions made by the AO towards cash receipts has been deleted by the ITAT, the source for the cash found and seized amounting to Rs. 3,68,74,080/- remains unexplained and needs to be added u/s. 69A of the Act. The assessee filed a petition u/s. 154 of the Act and requested the AO to rectify the mistake by stating that there is a mistake apparent on record in as much as the additions made by the AO towards cash receipts has been deleted by the ITAT and further, the ITAT has discussed the issue of cash found and seized during the course of search and observed that cash seized during the course of search is tallied with books of accounts maintained by the assessee as on the date of search. Since, not following the directions of the Tribunal and making additions towards very same cash found and seized during the course of search under different head is a mistake apparent on record which needs to be rectified u/s. 154 of the Act. The Assessing Officer was not satisfied with explanation of the assessee and according to the AO, as per the provisions of section 154 of :-5-: ITA. No: 154/Chny/2023 the Act, only mistake which are obvious, patent and on the face of the order can be rectified and the issue on which debate can be made cannot be rectified u/s. 154 of the Act and thus, rejected petition filed by the assessee u/s. 154 of the Act.
4. The assessee carried the matter in appeal before the first appellate authority. Before the CIT(A), the assessee has filed detailed written submission on the issue which has been extracted at Para 6 of Page 4 to 7 of ld. CIT(A) order. The ld. CIT(A), called the report from the AO vide letter dated 09.09.2022. The AO, submitted the report vide letter dated 21.11.2022, which has been reproduced at Para 7 of page 8 to 15 of ld. CIT(A) order. The above report of the AO was sent to the assessee for rejoinder and the assessee replied vide letter dated 13.12.2022 and relevant contents of rejoinder filed by the assessee was extracted at Para 8 of page 15 to 18 of ld. CIT(A) order. The sum and substance of arguments of the assessee are that, not following the directions of the appellate Tribunal in assessee’s own case while giving effect order passed u/s. 254 r.w.s. 143(3) of the Act, is a mistake apparent on record and needs to be rectified u/s. 154 of the Act. The :-6-: ITA. No: 154/Chny/2023 ld. CIT(A), after considering relevant submissions of the assessee and also taken note of remand report and rejoinder filed by the assessee observed that, the issue of additions made towards cash found and seized during the course of search is a debatable issue which can be resolved only after long drawn process of reasoning and therefore, it cannot be the subject matter of rectification u/s. 154 of the Act and thus, rejected arguments of the assessee and upheld the reasons given by the AO for rejecting rectification petition filed by the assessee u/s. 154 of the Act. Aggrieved by the ld. CIT(A) order, the assessee is in appeal before us.
The ld. Counsel for the assessee, referring to the order of the Tribunal dated 04.11.2020, more particularly para 12.8 of page 42 submitted that, the Tribunal has considered the issue of cash found and seized at Rs. 3,68,74,080/- and observed that the same was tallied with regular books of accounts maintained by the assessee along with other group companies and individuals for which the assessee has filed necessary evidences in the form of cash books along with the copies of wealth tax returns filed for the assessment year 2015-16 before the DVIT, Investigation. From the above findings, it is :-7-: ITA. No: 154/Chny/2023 very clear that the additions made by the AO towards cash receipts of Rs. 3.79 crores has been thoroughly discussed and after considering relevant facts has directed the AO to delete additions made by the AO. Further, in the assessment order passed by the AO u/s. 143(3), the AO has taken a view not to make any further addition towards cash found and seized during the course of search. Further, in the order giving effect to appellate order passed u/s. 254 r.w.s. 143(3) of the Act, the AO cannot travel beyond the direction given by the appellate authorities. In case the AO is not following the directions of the Tribunal, it constitutes a mistake apparent on record which needs to be rectified u/s. 154 of the Act.
The ld. DR, Shri. AR V Sreenivasan, Addl. CIT, submitted that, right or wrong, the AO has taken a view and made additions towards cash found and seized during the course of search. The additions made by the AO towards cash found and seized during the course of search is a debatable issue which can be resolved only after long drawn process of reasoning and therefore, it cannot be the subject matter for rectification u/s. 154 of the Act. Further, under section 154 of the Act, only mistakes apparent on record can be rectified.
:-8-: ITA. No: 154/Chny/2023 Since, the AO has taken a view, it is not a subject matter of section 154 of the Act and thus, the AO and CIT(A), has rightly rejected arguments of the assessee and their order should be upheld.
We have heard both the parties, perused materials available on record and gone through orders of the authorities below. The sole dispute arising for our consideration is, whether is there any mistake apparent on record from the order passed by the AO u/s. 254 r.w.s. 143(3) dated 12.01.2021, which can be rectified u/s. 154 of the Act or not. The provisions of section 154 deals with rectification and as per said provisions, mistake which can be rectified is one which is patent, which is obvious and is not debatable. Therefore, in order to invoke provisions of section 154 of the Act, there must be some mistake which is patent or obvious, for which there is no discussion or deliberation. In the present case, the assessee has filed petition u/s. 154 of the Act, to rectify order passed by the Assessing Officer u/s. 254 r.w.s 143(3) of the Act dated 12.01.2021. The Assessing Officer, in the order giving effect dated 12.01.2021 has made additions of Rs. 3,68,74,080/- towards unexplained seized cash, on the :-9-: ITA. No: 154/Chny/2023 ground that source for the cash found and seized was not explained because additions made towards accounted cash receipts as per the scribbling paid has been deleted by the ITAT and it is the source for telescoping cash found during the course of search. It was the argument of the assessee before the Assessing Officer that, not following specific directions of the appellate authority in assessee’s own case is a mistake apparent on record which needs to be rectified u/s. 154 of the Act.
We have given our thoughtful consideration to the reasons given by the AO to reject rectification petition filed by the assessee u/s. 154 of the Act, and we ourselves do not subscribe to the reasons given by the AO for simple reason that, in the order to give effect to the appellate order, the scope and power of the AO is limited to the extent of findings or directions given by any appellate authorities. In other words, the AO cannot travel beyond the directions or findings given by the appellate authorities. In the present case, if you go through the additions made by the AO towards cash found and seized during the course of search with reasons given by the AO for making said additions, in our considered view, the :-10-: ITA. No: 154/Chny/2023 AO has not followed specific directions or findings given by the Tribunal in their order dated 04.11.2020, on the issue of cash found and seized during the course of search. No doubt, the issue before the Tribunal was addition made by the AO towards cash receipts as per scribbling pad u/s. 68 of the Act. The AO, while making additions has allowed the benefit of telescoping towards cash found and seized during the course of search and not made any separate additions, even though the assessee has explained cash found during the course of search with books of accounts maintained for relevant financial year. The Tribunal while dealing with the issue has discussed the cash found and seized during the course of search and recorded its findings in Para 12.8 of Page 42 and observed that, cash found and seized during the course of search was tallied with regular books of accounts maintained by the assessee and other group companies for which necessary evidences in the form of cash book along with copies of wealth tax returns filed for assessment year 2015-16 and observed that, just because cash found and seized, it cannot be concluded that the assessee has received unaccounted cash from various authorities. Since, there is specific directions from the Tribunal on the issue of addition made towards cash :-11-: ITA. No: 154/Chny/2023 receipts and consequent cash seized during the course of search, in our considered view, there is no other option to the AO but to follow the directions or findings of the Tribunal while passing order u/s. 254 r.w.s. 143(3) of the Act. In the present case, the AO trying indirectly to do what he cannot do directly. In our considered view, once the main gate is closed, then the AO cannot take back door entry and further he cannot do indirectly what he cannot do directly. In our considered view, there is other provisions provided to deal with the situation where the AO can take other remedies available in the Act and consider the issue appropriately in accordance with law, but he cannot overlook the directions or findings of the appellate authorities and take a different view. Since, the Assessing Officer has not followed the directions or findings of the Tribunal in assesse’s own case on a issue, in our consider view the reasons given by the AO is a mistake apparent on record which needs to be rectified u/s. 154 of the Act, because said mistake is patent and obvious and it does not require any discussion or deliberation. Therefore, we are of the considered view that the AO has completely erred in making additions towards cash found and seized during the course of search, in order giving effect to Tribunal order u/s. 143(3) r.w.s. 254 of :-12-: ITA. No: 154/Chny/2023 the Act. The CIT(A), without appreciating relevant facts simply sustained the additions made by the Assessing Officer. Thus, we set aside the order passed by the CIT(A) and direct the Assessing Officer to delete additions made towards cash found and seized amounting to Rs. 3,79,00,000/- u/s. 69A of the Act in the order giving effect to ITAT order u/s. 143(3) r.w.s 254 of the Act dated 12.01.2021.