YASHWANT KUMAR DAGA,KOLKATA vs. ACIT, CIR-30, KOLKATA

1. For that in view of facts and circumstances that Ld. CIT (A) has erred in not quashing / cancelling the order / part of order u/s 154 by AO for which AO even did not issue any notice to appellant and hence such action of CIT(A) is bad in law and it may be held accordingly.

For that in view of facts and circumstances and without prejudice to above such order u/s 154 is bad in law and is liable to be quashed / cancelled and Ld. CIT(A) erred is not adjudicating and hence it may be held accordingly.

Without prejudice to ground no. 1 & 2 above Ld. CIT (A) erred in merely directing A.O to "verify and adopt correct income” when the subject matter of “determination of income" was nowhere in such proceeding u/s 154 and in view of facts and circumstances it may be held accordingly. 4. Without prejudice to ground no. 1 to 3 above the AO erred in enhancing the income so assessed u/s 143(3) without any notice u/s 154 and CIT(A) erred is not adjudicating on the same and it may be held accordingly. 5. Without prejudice to ground no. 1 to 4 above the subject matter (i.e. enhancement of income) is not a mistake apparent from records nor it is rectifiable u/s 154 and in view of facts and circumstances it may be held accordingly. 6. For that and without prejudice appellant craves leave to put additional grounds and / or to alter / amend /modify the present grounds before or at the time of hearing.” 3. The brief facts of the case are that in the assessment proceedings framed by the Assessing Officer u/s 143(3) of the Act, the Assessing Officer did not give full credit of Tax Deducted at Source (TDS). The assessee, therefore, filed a rectification petition before the Assessing Officer u/s 154 of the Act. The Assessing Officer passed the rectification order u/s 154 of the Act on 18.09.2019 giving credit of TDS as claimed by the assessee. However, in the same order, he enhanced the income of the assessee from other sources at Rs.3,46,36,248/- as against Rs.17,50,350/- determined under the scrutiny assessment carried out by the Assessing Officer u/s 143(3) of the Act dated 21.12.2018.

Being aggrieved, the assessee preferred appeal before the CIT(A) contesting the enhancement of income of the assessee by Rs.3,28,85,900/- by the Assessing Officer without assigning any reason and even without giving opportunity to the assessee in this respect and Assessment year: 2016-17 Yashwant Kumar Daga that too in the rectification proceedings which was carried out only to examine the clerical error of non-giving credit of TDS. The ld. CIT(A) vide impugned order held that the TDS credit has been allowed as per claim of the assessee and observed that the Assessing Officer did not give any reason whatsoever for enhancing income from other sources. He, accordingly, directed to the Assessing Officer to verify the record and adopt correct amount of income from other sources.

Being aggrieved by the action of the CIT(A), the assessee has come in appeal before us.

We have heard rival contentions and gone through the record. After going through the impugned order of the CIT(A), we categorically asked the assessee as to what prejudice has been caused to the assessee from the above order of the CIT(A) as the ld. CIT(A) has directed the Assessing Officer only to verify the record and adopt correct amount of income from other sources. In response, the ld. Counsel for the assessee has submitted that apart from filing of appeal before the CIT(A), the assessee had also moved a rectification application u/s 154 of the Act to the Assessing Officer but the Assessing Officer has not taken any action. After considering the above submissions of the ld. Counsel for the assessee, the status report was called upon from the Assessing Officer. In response to which, the Assessing Officer furnished a letter dated 03.01.2023, whereby, it has been informed that though enhanced income was withdrawn, however, since the ld. CIT(A) has directed to verify and adopt correct income, therefore, further verifications were done, wherein, certain disallowances were made and the income of the Assessment year: 2016-17 Yashwant Kumar Daga assessee has been assessed at Rs.16089158/-. In nutshell, the Assessing Officer though, withdrew the addition of Rs.3,28,85,890/- which was made in the rectification order u/s 154 of the Act, but made another addition of Rs.92,46,208/- by disallowing interest expenses.

In our view, the ld. Assessing Officer has misinterpreted the order of the CIT(A). The ld. CIT(A) has only directed to verify the record and adopt correct amount. However, since the above directions of the CIT(A) was not clear, therefore, the Assessing Officer proceeded to make a fresh assessment which was neither justified nor within the jurisdiction of the Assessing Officer. Firstly, in the rectification petition, the Assessing Officer was supposed to rectify the error apparent on record. The Assessing Officer was not justified at all to enhance the income of the assessee from other sources without assigning any reason and without giving any opportunity to the assessee, that too in a rectification order. The ld. CIT(A) should have given a clear-cut direction of deleting the enhancement of income in the rectification order instead of directing the Assessing Officer to verify the record. The Assessing Officer after verification, though, deleted the enhanced income but again proceeded to make certain other disallowance which action of the Assessing Officer has resulted due to inappropriate directions of the CIT(A). In view of this, the impugned order of the CIT(A) is set aside and thereby the enhancement of income made by the Assessing Officer is also set aside. Any consequential order passed by the Assessing Officer, under the circumstances, of enhancement of income is also hereby set aside. In nutshell, the assessee will be given credit of the TDS as determined by the Assessing Officer in the rectification application u/s 154 of the Act and further enhancement of income, if any, is order to be deleted.

In the result, the appeal of the assessee stands allowed. Kolkata, the 16th January, 2023.