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Income Tax Appellate Tribunal, DELHI BENCH, ‘B’: NEW DELHI
Before: SHRI SHAMIM YAHYA & SHRI YOGESH KUMAR US
ORDER PER SHAMIM YAHYA, AM, This appeal by the assessee is directed against the order of the Ld. CIT(A)-34, New Delhi, dated 22.03.2019 pertaining to Assessment Year 2014-15.
The only issue raised in this appeal is that the Assessing Officer was not justified in exercising the jurisdiction u/s 154 of the Act as there was no mistake apparent from the record.
Brief facts of the case are that in this case following order u/s 154 was passed by the Assessing Officer, wherein on the issue of set off of loss finding mistakes, the Assessing Officer has done correction. The same reads as under:-
Assessment us 143(3) of the I.T. Act, 1961 was completed on 16.12.2016 at nil income.
2. On perusal of assessment records, it was observed that assessee was allowed to set off of B/F business loss to the tune of Rs.11,28,83,857/- pertaining to A.Y. 2009-10 and 2010-11 against the income of the current year. However, assessee was assessed at a loss of Rs.81,69,490/- in A.Y. 2009-10 and Rs.88,56,843/- in A.Y. 2010-11, which had already been set off of in computation of A.Y. 2013-14. Therefore, excess set off of business loss of Rs.11,28,83,857/- should be added back to the income of the assessee. Accordingly, a notice u/s 154 dated 05.05.2017 was sent to the assessee requiring it to appear in person or through an Authorized Representative in the office of the undersigned on 12.05.2017. The assessee sent a written submission explaining the facts leading to this set off. Assessee’s reply has been duly considered. Assessee in its submission dated 15.05.2017, submitted that appeals of the assessee company for the A.Y. 2009-10 before the Hon’ble ITAT and in A.Y. 2010-11, there was an ALP adjustment of Rs.10,28,16,686/- to the income of the assessee, out of which CIT(A) has allowed a relief of Rs.3,98,24,995/- and Revenue has not challenged the decision of Ld. CIT(A) before Hon’ble ITAT. Hence, loss to the extent of Rs.3,98,04,995/- of A.Y. 2010-11 is available with the assessee for setting off the same against the income of the current year. In the light of the above stated facts, it has been inferred that assessee has nothing to say in the matter of extra set off of business loss of Rs.7,30,78,862/- (Rs.11,28,83,857/- -Rs.3,98,04,995/-) pertaining to A.Y. 2009-10 and 2010-11 against the income of the current year.
3. As the mistake is apparent from record, necessary rectification u/s 154 is needed to be done. In the light of these facts, income of the assessee is recomputed as under:- Income as per return : Nil Add:- Disallowance of B/F losses : 7,30,78,862/- pertaining to A.Y. 2009-10 & 2010-11 Total income : 7,30,78,862/ Rounded off : 7,30,78,860/
Against the above, order, the assessee appealed before the Ld. CIT(A).
The Ld. CIT(A) summarized the issue as under:-
2. The brief facts of the case are that the appellant is engaged in the business of manufacturing and trading of ignition coils for motor vehicles and their engines. Return declaring income NIL filed on 30.11.2014. The case was selected for regular scrutiny and assessment was completed by the AO at income NIL, AO has passed the rectification order u/s 154 on 18.05.2017 after disallowing the excess set off of business loss pertaining to AY 2009-10 & 2011-12 against the income of current year allowed u/s 143(3) at Rs.11,28,83,857/-. CIT(A) has allowed relief to the appellant at Rs.3,98,04,995/- for the AY 2010-11, considering the fact, the AO has disallowed excess loss of Rs. 7,30,78,862/- against the current year income and total income recomputed at Rs.7,30,78,860/-. Against the order, appellant has filed the appeal. During the course of appellate proceedings, Mr. Kunal Aggarwal, CA has attended the proceedings, filed written submission and made oral arguments.
The Ld. CIT(A) noted that during the course of appellate proceedings, appellant has submitted that Hon'ble ITAT decided the appeal in the favour of the appellant for AY 2009-10 and addition of Rs.3,42,02,046/- was deleted vide order dated 13.06.2017. It is submitted by the appellant that section 154 of the act is meant for the rectification of a mistake apparent from the record and it has no application where the view of the Assessing Officer on a particular points turns out to be erroneous. The Ld. CIT(A) gave following directions considering the above:-
“4.3. I have considered the facts of the case, finding of the AO and submission of the appellant. The AO has done the rectification u/s 154 as he has allowed excess set off of brought forward losses pertaining to AY 2009- 10 and 2010-11 during the completion of assessment u/s 143(3). Since the mistake is apparent from the record therefore AO has rectified the mistake after giving an opportunity to the appellant as per the provisions of section 154. The AO has correctly disallowed the_ brought forwarded losses as per the computation of the income of the appellant as per act. It is submitted by the AR of the appellant that Hon'ble ITAT has decided the issue in the favour of the appellant in the AY 2009-10 and in support of its contention he has enclosed the copy of the order of the ITAT. AO is hereby directed to give the effect of the Hon'ble ITAT order and allow to the loss to be carried forward as per the provisions of the law.
Against the above order, the assessee is in appeal before us.
The Ld. Counsel for the assessee submitted that the assessee is raising legal issue just after the passing of the order u/s 154 of the Act in May by the AO, ITAT in June, granted substantial relief to the assessee for AY 2009-10 and 2010-11 both. Hence, he claimed that in the ITAT was seized of the matter, the issue was debatable and the AO could not have assumed jurisdiction u/s 154 of the Act.
Per contra, the Ld. DR submitted that the assessee has already been granted relief by the Ld. CIT(A) and the subject matter dealt with by the AO is set off of losses and that the issue of set off of loss was not before the ITAT. Hence, it cannot be said that the same issue was pending before the ITAT.
Upon careful consideration, we find that subsequent to the passing of this order u/s 154, the ITAT has already passed the order and granted relief to the assessee on the addition made for those years. The same will be naturally given effect by the AO and similar direction has also been given by the Ld. CIT(A). In this view of the matter, there won’t be any grievance to the assessee as the assessee will get the necessary relief when the giving effect order of the ITAT passed by the AO. Claiming that in this background, there was debatable issue before the AO is not legally sustainable. Hence, it cannot be held that there was any debatable issue before the AO and hence this ground is not legally sustainable. The assessee is at liberty to seek remedy if the AO does not give effect order of the ITAT order, in which the necessary relief has been given to the assessee, as submitted by the Ld. Counsel of the assessee.
In the result, this appeal by the assessee is dismissed as in- fructuous.
Order pronounced in the open court on 31/08/2022.