L H PATIL CONSTRUCTIONS PVT LTD,,JALGAON vs. DEPUTY COMMISSIONER OF INCOME TAX,, JALGAON

This appeal preferred by the assessee emanates from the order of the Ld. CIT(Appeal)-2, Nashik dated 17.02.2017 for the assessment year 2010-11 as per the following grounds of appeal on record:

Ld. CIT(A) erred in law and on facts in not appreciating that the total addition of Rs.48,40,203/- was arrived at after due consideration of returned income of the appellant and accepted by the assessing officer. Any change in the said offer by the appellant and acceptance by the Id AO would not be a mistake apparent from record and will be a matter of debate and discussion.

The facts on this issue are well enumerated at Para 6 of the order of Ld. CIT(Appeal) which is extracted herein below:

That during the course of appellate proceedings, the assessee contended that the specific amount of Rs.48,40,200/- was offered to tax as agreed addition to buy peace of mind and to co operate with the Department. The assessee further claimed that while agreeing for the assessed income at Rs.1,46,15,111/-, the amount of Rs.22,54,821/- was considered in the said amount. Therefore, the impugned amount could not be separately added u/s.154 of the Act. The CIT(Appeal) on this issue has observed as follows:

We have perused the relevant documents on records specifically assessment order, rectification order u/s.154 of the Act and the order of the Ld. CIT(Appeal) confirming the said rectification order wherein the addition of Rs.22,54,821/- was confirmed. It is noticed that the assessee filed return declaring total income of Rs.98,00,250/-. A copy of Computation of income is available at Page 1 of the paper book, which depicts Income from business at Rs.75,45,429/- and Income from other sources (FDR interest) at Rs.22,54,821/-. During the assessment proceeding, the AO pointed out certain infirmities in the Business income as recorded at para 5.2 of the order, such as, sub-contracts were not properly backed by evidence; no inventory maintained for Opening stock, WIP and Closing stock; and discrepancies in expenses vouchers. The assessee agreed with such shortcomings and agreed for Business income at Rs.146 crore and odd determined by taking profit rate of 14% on own contracts and 2.2% on sub- contracts. A copy of the assessee‟s letter agreeing with such amount of Business income has been reproduced at page 5 of the assessment order giving figure of Rs.1,46,15,111/-. Thereafter, the assessee reduced the declared income of Rs.98,00,250/- to work out additional income Rs.48,14,861/-. The Assessing Officer, at the time of computation of total income started with the figure of income declared as per return at Rs.98,00,250/- and thereafter, added Rs.48,14,861/-, being the additional income, thereby determining total income at Rs.1.46 Crore. It is pertinent to note that the assessee agreed for Business income from contract receipts at Rs.1.46 crores, which was independent of income from bank interest at Rs.22.54 lakhs that was declared by the assessee under the head Income of other sources. Thus, the Assessing Officer in the assessment order inadvertently adopted Business income of Rs.1.46 Crores as Total income, which had the effect of excluding Income from other sources at Rs.22.54 lakhs, which was independently offered by the assessee in its return of income and was not a subject matter of any dispute. It is this mistake which the Assessing Officer rectified in the current proceedings u/s.154 of the Act by also including Income from other sources amounting to Rs.22.54 lakhs in the total income, which was earlier omitted to be included in the original assessment order. In our considered opinion, it is a clear-cut case of the AO carrying out rectification of a glaring and patent mistake committed in the original assessment order. By no standard, it can be construed as a debatable point amenable to two views. We, therefore, uphold the impugned order.