ARUN CONSTRUCTION,BHAGALPUR vs. ACIT, CIR-1, BHAGALPUR

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ITA 330/PAT/2018Status: DisposedITAT Patna16 September 2020AY 2012-133 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the second round of Section 154 proceedings initiated by the AO to assess royalty income was impermissible as Section 154 jurisdiction cannot be used to address debatable issues. The AO's rectification exercise was therefore reversed.

What were the facts?

The Assessing Officer (AO) initially completed the assessment and later accepted a rectification under Section 154 for depreciation. Subsequently, the AO initiated a second Section 154 rectification to assess royalty income, which was contested by the assessee.

What were the issues?

Whether a second rectification under Section 154 is permissible to assess an issue that was not considered in the original assessment or a prior rectification, especially when it involves a debatable issue.

Which sections of the Income-tax Act were involved?

Section 154,Section 143(3),Section 153

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

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Income Tax Appellate Tribunal, PATNA ‘VIRTUAL COURT’AT KOLKATA

Before: Shri S.S. Godara, JM & Dr. A. L. Saini, AM

आदेश /O R D E R Per Bench(Oral): This assessee’s appeal for assessment year 2012-13 arises against the Commissioner of Income-tax (Appeals), Bhagalpur’s order dated 26.11.2015 involving proceedings u/s 153/143(3) of the Income Tax Act, 1961; (in short ‘the Act’). Heard both the parties. Case file/records persued. 2. We notice at the outset with the able assistance of both the learned representatives appearing on assessee’s and Revenue’s behest that the first and foremost question sought to be raised herein at the former’s behest seeks to reverse the lower authorities’ action invoking section 154 rectification qua royalty amount of Rs.7,70,538/-. It is not in dispute that the Assessing Officer had framed his regular assessment on 04.03.2015 qua the assessee’s gross receipts in civil construction business as well as hire charges to the tune of Rs.3,33,23,956/-. It then filed section 154 rectification on 20.03.2015 claiming depreciation relief which had not been considered during the course of assessment. The same stood accepted on 27.04.2015. It was thereafter on 26.11.2015 that the Assessing Officer once again invoked section 154 rectification; suo moto, seeking to assess the royalty income in question.. This factual backdrop makes it abundantly clear that the Assessing Officer has sought to rectify his alleged mistake which could not have been subjected to second round of section 154 proceedings as held in hon’ble apex court’s landmark decision in T.S. Balaram, ITO vs. Vokart Borthers and Others. [1971] 82 ITR 50(SC) as well as the tribunal’s coordinate bench’s decision in ITO vs. Sri Ram Janam singh dated 08.04.08. Their lordships hold in very clear terms that exercise of section 154 jurisdiction is not made to touch upon debatable issues. We therefore conclude that the Assessing Officer’s rectification exercise finalised on 26.11.2015 itself does not confirm to the above settled legal proposition. The same stands reversed. The CIT(A)’s lower appellate order also follow suit as a necessary corollary.

3.

This assessee’s appeal is allowed in above terms.

Order pronounced in open court on 16/09/2020 at the time of hearing.

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