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Facts
The assessee's claim for deduction under Section 80P(2)(d) was disallowed in a reassessment order. A subsequent rectification order was passed due to a computation error. The assessee appealed the rectification order, but the CIT(A) adjudicated on the original disallowance, going beyond the scope of the rectification.
Held
The Tribunal held that the CIT(A) exceeded the scope of the appeal by adjudicating on the original disallowance, which was not part of the rectification order. The appeal proceedings were confined to issues arising from the rectification.
Key Issues
Whether the CIT(A) exceeded the scope of appeal by adjudicating issues beyond the rectification order and not appealed by the assessee.
Sections Cited
80P(2)(d), 154, 143(3), 147
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Income Tax Appellate Tribunal, MUMBAI BENCH “SMC” MUMBAI
Before: SHRI OM PRAKASH KANT & SHRI RAJ KUMAR CHAUHAN
ORDER PER OM PRAKASH KANT, AM
This appeal is directed against order dated 31.12.2021 passed by the ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2014-15, raising following grounds:
The Learned CIT (A) erred in facts and circumstances of the case and in law by denying deduction claimed u/s 80P2(d) on interest earned from investments made with Co-operative Banks .
We have heard the rival submissions of both parties and We have heard the rival submissions of both parties and We have heard the rival submissions of both parties and carefully perused the material available on record. The Ld. carefully perused the material available on record. The Ld. carefully perused the material available on record. The Ld. Departmental Departmental Representative Representative (DR) (DR) contended contended that the Ld. Commissioner of Income Commissioner of Income–tax (Appeals) [CIT(A)] has travelled beyond tax (Appeals) [CIT(A)] has travelled beyond the scope of the appeal arising from the order passed under Section the scope of the appeal arising from the order passed under Section the scope of the appeal arising from the order passed under Section 154 of the Income–tax Act, 1961 (hereinafter referred to as “the tax Act, 1961 (hereinafter referred to as “the tax Act, 1961 (hereinafter referred to as “the Act”). It was submitted that, in the prese Act”). It was submitted that, in the present case, reassessment nt case, reassessment proceedings under Section 143(3) read with Section 147 of the Act proceedings under Section 143(3) read with Section 147 of the Act proceedings under Section 143(3) read with Section 147 of the Act were concluded on 26.11.2019, wherein the Assessing Officer were concluded on 26.11.2019, wherein the Assessing Officer were concluded on 26.11.2019, wherein the Assessing Officer disallowed the assessee’s claim for deduction under Section disallowed the assessee’s claim for deduction under Section disallowed the assessee’s claim for deduction under Section 80P(2)(d) of the Act. Subsequently, owing to an 80P(2)(d) of the Act. Subsequently, owing to an error in computation error in computation of the quantum of addition, the Assessing Officer passed a of the quantum of addition, the Assessing Officer passed a of the quantum of addition, the Assessing Officer passed a rectification order under Section 154 of the Act on 22.01.2020. rectification order under Section 154 of the Act on 22.01.2020. rectification order under Section 154 of the Act on 22.01.2020.
2.1 Against the said rectification order, the assessee preferred an Against the said rectification order, the assessee preferred an Against the said rectification order, the assessee preferred an appeal before the Ld. CIT(A). The Ld. DR submitted that the scope appeal before the Ld. CIT(A). The Ld. DR submitted that the scope appeal before the Ld. CIT(A). The Ld. DR submitted that the scope of such appeal was necessarily confined to issues arising from the of such appeal was necessarily confined to issues arising from the of such appeal was necessarily confined to issues arising from the rectification, and did not extend to adjudication on the substantive rectification, and did not extend to adjudication on the su rectification, and did not extend to adjudication on the su validity of the disallowance under Section 80P(2)(d) made in the validity of the disallowance under Section 80P(2)(d) made in the validity of the disallowance under Section 80P(2)(d) made in the original reassessment order. As no appeal was filed by the assessee original reassessment order. As no appeal was filed by the assessee original reassessment order. As no appeal was filed by the assessee against the reassessment order dated 26.11.2019, it was argued against the reassessment order dated 26.11.2019, it was argued against the reassessment order dated 26.11.2019, it was argued that the Ld. CIT(A) had no jurisdiction to examine that the Ld. CIT(A) had no jurisdiction to examine the allowability of the allowability of deduction under Section 80P(2)(d) in the impugned proceedings. It deduction under Section 80P(2)(d) in the impugned proceedings. It deduction under Section 80P(2)(d) in the impugned proceedings. It was, therefore, urged that the impugned order be set aside and the was, therefore, urged that the impugned order be set aside and the was, therefore, urged that the impugned order be set aside and the matter remanded to the Ld. CIT(A) for fresh adjudication confined matter remanded to the Ld. CIT(A) for fresh adjudication confined matter remanded to the Ld. CIT(A) for fresh adjudication confined strictly to the issues emanating fro strictly to the issues emanating from the rectification order. m the rectification order.
2.2 The Ld. Counsel for the assessee fairly conceded that the issue The Ld. Counsel for the assessee fairly conceded that the issue The Ld. Counsel for the assessee fairly conceded that the issue of allowability under Section 80P(2)(d) does not arise from the of allowability under Section 80P(2)(d) does not arise from the of allowability under Section 80P(2)(d) does not arise from the rectification order passed under Section 154. However, he prayed rectification order passed under Section 154. However, he prayed rectification order passed under Section 154. However, he prayed that liberty be reserved to enab that liberty be reserved to enable the assessee to file an appeal, if so le the assessee to file an appeal, if so advised, against the reassessment order under Section 143(3) read advised, against the reassessment order under Section 143(3) read advised, against the reassessment order under Section 143(3) read with Section 147 of the Act. with Section 147 of the Act.
2.3 Having considered the submissions, we are of the opinion that Having considered the submissions, we are of the opinion that Having considered the submissions, we are of the opinion that the controversy decided by the Ld. CIT(A) in the impugned order the controversy decided by the Ld. CIT(A) in the impu the controversy decided by the Ld. CIT(A) in the impu does not emanate from the rectification order dated 22.01.2020 does not emanate from the rectification order dated 22.01.2020 does not emanate from the rectification order dated 22.01.2020 passed under Section 154 of the Act. The scope of the present passed under Section 154 of the Act. The scope of the present passed under Section 154 of the Act. The scope of the present appellate proceedings is confined solely to the subject–matter of appellate proceedings is confined solely to the subject appellate proceedings is confined solely to the subject rectification and cannot extend to matters concluded in the original rectification and cannot extend to matters concluded i rectification and cannot extend to matters concluded i reassessment order, which attained finality in the absence of a reassessment order, which attained finality in the absence of a reassessment order, which attained finality in the absence of a statutory appeal. Accordingly, the impugned order of the Ld. CIT(A) statutory appeal. Accordingly, the impugned order of the Ld. CIT(A) statutory appeal. Accordingly, the impugned order of the Ld. CIT(A) is set aside, and the matter is remanded to his file with the is set aside, and the matter is remanded to his file with the is set aside, and the matter is remanded to his file with the direction to confine his adjudication strictly direction to confine his adjudication strictly to the issues arising to the issues arising from the order passed under Section 154 of the Act. from the order passed under Section 154 of the Act.
2.4 Insofar as the reassessment order dated 26.11.2019 passed Insofar as the reassessment order dated 26.11.2019 passed Insofar as the reassessment order dated 26.11.2019 passed under Section 143(3) read with Section 147 of the Act is concerned, under Section 143(3) read with Section 147 of the Act is concerned, under Section 143(3) read with Section 147 of the Act is concerned, it is clarified that the assessee shall be at libert it is clarified that the assessee shall be at liberty to avail such y to avail such remedies as may be available to it in law, including the filing of an remedies as may be available to it in law, including the filing of an remedies as may be available to it in law, including the filing of an appeal before the Ld. CIT(A), if so advised. appeal before the Ld. CIT(A), if so advised.
In the result, the appeal of the assessee is allowed for In the result, the appeal of the assessee is allowed for In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 14 nounced in the open Court on 14/08/2025. 08/2025.