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Before: Shri V. Durga Rao & Shri Manoj Kumar Aggarwal
O R D E R
PER V. DURGA RAO, JUDICIAL MEMBER:
This appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals)-1, Madurai dated 19.02.2019 relevant to the assessment year 2014-15.
Brief facts of the case are the assessee filed its return of income for the assessment year 2014-15 on 25.11.2014 admitting an income of ₹.72,321,810/-. The case was selected for limited scrutiny. After considering the submissions of the assessee and verifications of books of account, etc., the Assessing Officer has completed the assessment order under section 143(3) of the Income Tax Act, 1961 [“Act” in short] on 24.12.2016.
2.1 The return filed by the assessee was picked up for limited scrutiny to verify a number of issues including high interest expenditure against new capital added in work in progress or addition to fixed assets. The Assessing Officer Smt. A Soranam, Assistant Commissioner of Income Tax, Non Corporate Circle-3, Madurai completed the assessment after examination books of account disallowing a small sum on account of marine insurance/transport expenses of ₹.33,929/-. However, in the said assessment order the Assessing Officer has not discussed the allowability or otherwise the high interest expenditure claimed against the addition to the fixed assets. The assessee did not dispute the assessment order before the first appellate forum, however, the assessee filed a petition under section 154 of the Act requesting rectification of the order passed under section 143(3) on 24.12.2016. The application under section 154 of the Act was rejected by the same Assessing Officer Smt. A.
Soranam, Assistant Commissioner of Income Tax, Non Corporate Circle-3, Madurai through an order dated 05.05.2017 wherein the Assessing Officer held that: “You are hereby informed that any rectification u/s 154 of the assessment order passed u/s 143(3) on 24.12.2016 based on the lines as requested by you in your petition dated 11.02.2017 would only amount to review/revision by the Assessing Officer himself of the assessment already made by him. Please note that, the provisions of Section 154 of the Income Tax Act, 1961 do not empower an Assessing Officer to review/revise an assessment made by him and to pass an order u/s 154. The provisions of section 154 only stipulate that any order passed under the provisions of Income tax Act may be amended by an income-tax authority with a view to rectify the mistake apparent from the record. Accordingly your petition for rectification u/s 154 is disposed off."
The assessee carried the matter in appeal before the ld. CIT(A) by raising following grounds of appeal: 1) The learned Assistant Commissioner of Income Tax while stating that Section 154 of the IT Act does not empower an Assessing Authority to review and revise an assessment made by him and to pass order u/s 154 did not deny in the impugned proceedings that Section 154 stipulates that an Assessing Authority shall make such amendment in the order passed by the Assessing Authority rectifying any such mistake which has been brought to its notice by an assessee and that such amendment of an order would not amount to review or revision of such an order. 2) The learned Assessing Authority did not deny the correctness of the plea of the appellant submitted under para 3 of the petition filed u/s 154 that at the time of hearing, the appellant had furnished the details to prove that interest portion amounting to Rs.8,96,649/- related to bank loan availed for the purchase of machinery, that the said sum of Rs.8,96,649/- was included in the total figure of Rs.41,08,908/- being interest on bank loan availed for the purchase of machineries and the Oragadam Lease Rental Loan as stated under para 2 of the petition filed u/s 154 filed before the learned Assistant Commissioner of Income Tax and that th assessee, by mistake, had added the above figure of Rs.41,08,908/-, instead of Rs.32,12,259/- being the proportionate interest for Lease rental loan as inadmissible in the statement of computation of income filed by the assessee as submitted under para 2 of the petition filed by the assessee.
3) The learned Assessing Authority ought to have disclosed the reasons for her conclusion that the rectification requested by the assessee in the petition filed for rectification would amount to review or revision of the order of assessment, the absence of which has rendered a more effective representation in this regard on this issue. 4) The learned Assessing Authority ought to have considered the legal position that the omission to include the particulars filed by the appellant and scrutinised by the learned Assessing Officer in regard to the admissible claim for deduction of Rs.8,96,649/- above referred to at the lime of hearing in the assessment order constituted a mistake apparent on the face of the disputed order passed u/s 143(3) of the I.T. Act and allowed the petition filed by the appellant u/s 154 of the I. T. Act. 5) It is, therefore, prayed that the mistake apparent on the face of the assessment order be ordered to be amended and the claim for deduction of Bank interest amounting to Rs.8,96,649/- be ordered to be allowed from the total income determined by the learned Assessing Officer. 3.1 After considering the submissions of the assessee, the ld. CIT(A) has observed as under: “8. I have considered the order passed u/s 154 and the submission made by the Authorised representative. Admittedly, in this case the same person who was Assessing Officer, passing order u/s 143(3) and rejecting application u/s 154, had come to the conclusion that the claim of deduction of proportionate interest of Rs.8, 96,649/- cannot be treated a mistake apparent from record possibly due to the fact that the calculation of proportionate interest itself required some amount of analysis, investigation, bifurcation, proportioning etc. which the Assessing Officer felt was not a mistake apparent from record. In my considered opinion, the action of the Assessing Officer appears to be based on a sound legal footing. Besides, the appellant had the proper recourse to appeal against the order u/s 143(3) itself wherein the complex issue of proportionate interest would have been adjudicated. Under the facts of the case, I do not find any merit in the grounds of appeal filed by the appellant in this case. Accordingly, the order u/s 154 passed by the Assessing Officer rejecting the application of the appellant stands confirmed.
4. On being aggrieved, the assessee is in appeal before the Tribunal. The only point at issue before the Tribunal is whether, the rejection of application filed under section 154 of the Act before the Assessing Officer and confirmed by the ld. CIT(A) is correct or not?
4.1 The assessee has not claimed in the return of income in respect interest expenditure. Subsequently, the assessee filed a letter before the Assessing Officer. The Assessing Officer has not considered the letter filed by the assessee with regard to the interest expenditure and concluded the assessment order under section 143(3) of the Act.
4.2 Subsequently, the assessee has filed a petition under section 154 of the Act to rectify the assessment order passed under section 143(3) of the Act dated 24.12.2016 and the same was rejected by the Assessing Officer on the ground that the assessee has not claimed interest expenditure in the original return of income filed by the assessee. On appeal, the ld. CIT(A) confirmed the rejection of petition filed by the assessee under section 154 of the Act.
4.3 Since the Assessing Officer has no power to adjudicate a claim, which was not made in the original return of income filed by the assessee or filed any revised return of income before conclusion of assessment, we find no infirmity in the order passed by the ld. CIT(A) on this issue and accordingly, the appeal filed by the assessee is dismissed.
In the result, the appeal filed by the assessee is dismissed.
Order pronounced on 06th May, 2022 at Chennai.