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Facts
The assessee claimed Rs.2,03,16,492/- as provision for loss on assets awaiting disposal, which was added to book profit for AY 2009-10. Later, for AY 2012-13, this was treated as a deduction. The AO rectified the order under Section 154, considering this an apparent mistake and treating it as a mistake in AY 2009-10.
Held
The Tribunal held that the AO correctly passed the rectification order under Section 154 for AY 2012-13, as the assessee claimed the deduction in AY 2012-13, which was considered an apparent mistake. Therefore, no error was found in the AO's order.
Key Issues
Whether the AO was justified in rectifying the assessment order for AY 2012-13 under Section 154 for an issue pertaining to AY 2009-10, where the assessee claimed the deduction in AY 2012-13.
Sections Cited
154, 115JB, 115JB(2)
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Income Tax Appellate Tribunal, “E” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY, HON’BLE & SHRI NARENDRA KUMAR BILLAIYA, HON’BLE
O R D E R
PER NARENDRA KUMAR BILLAIYA, AM:
This appeal by the assessee is preferred against the order dated 08/11/2023 by NFAC, Delhi [hereinafter “the ld. CIT(A)”] pertaining to AY 2012-13.
The grievance of the assessee reads as under:- “On the facts and circumstances of the case, and in law, the learned CIT- Appeals NFAC Delhi erred in upholding the order under section 154 passed by the assessing officer. i. Although no mistake apparent from record for the said AY 2012-13 was pointed out in the show cause notice dated 18.03.2019. ii. Although there was no mistake apparent from record for the AY 2012-13 as the assessing officer had himself computed the book profit under section 115JB at Rs. 7,73,06,900/- after due discussion. iii. Without considering that the mistake apparent from record of not adding back Rs. 2,03,16,492/- u/s 115JB(2) Expl 1(i) pertained to the assessment order for AY 2009-10 and not for AY 2012-13. Tips Industries Ltd. 2 iv. Without considering that as the assessment order for AY 2009-10 was passed on 30.12.2011 the AO ought to have passed the order u/s 154 for AY 2009-10 by 31.3.2016. v. Without considering that as no rectification order u/s 154 was passed by 31.03.2016, any action taken thereafter was non est., invalid and bad in law. vi. The AO grossly erred in disallowing/adding back the said sum of Rs. 2,03,16,492/- in the subsequent AY 2012-13 on the ground that "Omission to disallow the same has resulted in under assessment of book profit of Rs. 2,03,16,492/", which was for AY 2009-10. vii. The AO grossly erred in seeking to recover the revenue lost due to underassessment in AY 2009-10 by making this compensatory adjustment of Rs. 2,03,16,492/- in the subsequent AY 2012-13, without there being any such provision in the income tax act. viii. As the AO issued notice under section 154 dated 18.03.2019 "regarding brought forward losses", but the order that was passed by him was regarding the total income of the assesse without a word about the brought forward losses. ix. As, without prejudice, the show cause notice dated 18.03.2019 was illusory and a mockery, as the AO gave only two days' time to the assessee to respond by 20.03.2019.”
Briefly stated the facts of the case are that the assessee filed its return of income under normal provisions and computed the MAT at Rs.7,73,06,900/-. The return was accepted as such. Subsequently, on examining the computation of book profit it was seen that the assessee claimed Rs.2,03,16,492/- as provision for loss on assets awaiting disposal which was added to the book profit while computing MAT u/s 115JB of the Act in AY 2009-10, now considered as deduction of disposal/sale of assets. The AO was of the opinion that the claim of the assessee was required to be disallowed during scrutiny assessment and omission to disallow the same has resulted in under assessment of book profit and accordingly rectified the mistake u/s 154 of the Act. Tips Industries Ltd. 3 3.1. Assessee carried the matter before the ld. CIT(A) but without any success.
Before us, the ld. Counsel strongly contended that the rectification should have been done in AY 2009-10 and not in the impugned assessment year. It is the say of the ld. Counsel that the alleged mistake apparent from record pertains to AY 2009-10 and the lower authorities have grossly erred in rectifying the same in AY 2012-13. Per contra, the ld. D/R strongly supported the findings of the AO. 5. We have carefully perused the orders of the authorities below. In AY 2009-10, the book profit u/s 115JB of the Act was computed as under:- “9. Computation of book profit u/s.115JB: 9.1. During the year under assessment, assessee has shown the book profit as per profit and loss at Rs. 13,50,24,346/-. However, in view of the amendment to the provision of section 115JB and insertion of clause (i) in subsection (1) of section 115JB by the Finance Act, 2009 w.e.f. 1.4.2001 the revised working of book profit and minimum alternative tax is worked out as under- Net Profit as per P&L account 43,50,24,346 Add: Provision for doubtful debts 83,83,370 14,34,08,216 Less: Provision for doubtful debts credited to P&L account 83,82,232 Book profit u/s 115JB : 13,50,25,984 6. In its computation of income for AY 2009-10, the assessee has computed MAT as under:- Tips Industries Ltd. 4 7. In the revised computation of income for the impugned AY 2012- 13, the assessee has computed MAT u/s 115JB of the Act as under:-