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Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI
Before: SHRI SAKTIJIT DEY & SHRI RAJESH KUMAR
Per Rajesh Kumar, Accountant Member:
The present appeal has been preferred by the Revenue against the order dated 14.06.2019 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2009-10.
At the time of hearing when the case was called for hearing, neither assessee nor his authorised representative was present to attend the hearing nor any application for adjournment was filed. Therefore, we are deciding the issue after hearing the Ld. D.R. on merits.
2 M/s. Bravia Interior Infrastructure Pvt. Ltd. 3. First we would like to decide the issue raised by the revenue in the ground no. 2. The issue in ground No.2 is against the order of Ld. CIT(A) quashing the order passed under section 154 of the Act as passed by the AO to rectify the mistake which has crept in the order framed under section 143(3) read with section 147 of the Act.
The facts in brief are that the assessment u/s.143(3) r.w.s. 147 of the IT Act was framed on 25.03.2015 determining the total income at Rs.29,00,555/- after making an addition of Rs. 6,70,531/- being @12.5% on alleged bogus purchases of Rs.53,64,255/-. The AO on perusal of the records observed that out of total alleged bogus purchases of Rs.53,64,255/-, an amount of Rs.43,09,110/- had been added by the assessee in the fixed assets and claimed depreciation @ 15% amounting to Rs.6,46,367/-. The AO accordingly issued notice u/s.154 of the Act to the assessee to rectify the mistake. In response to the notice, the AR of the assessee filed objections for proposed rectification on the ground that the assessee had filed an appeal before CIT(A) against the addition made @12.5% of bogus purchases and the matter is sub-judice. The submissions of the assessee was considered by the AO but was not found tenable as the mistake proposed to be rectified was a mistake apparent from record. Accordingly, the AO passed the rectification order u/s.154 of the IT Act, 1961 determining the total income of the assessee at Rs.30,08,280/- by making addition of Rs.1,31,893/- towards disallowances for bogus purchases and Rs, 6,46,367/- towards depreciation claimed. The assessee was aggrieved with the order passed u/s. 154 of the Act by the A.O. and went in appeal before the Ld. CIT(A).
3 M/s. Bravia Interior Infrastructure Pvt. Ltd.
In the appellate proceedings the Ld. CIT(A) allowed the appeal of the assessee by holding and observing as under: “4.1.1 Vide this ground the appellant has challenged the legality of passing the rectification order u/s.154 of the I.T. Act, 1961. During the course of appellate proceedings, the AR of the appellant company submitted that the appellant submitted a letter to the Id. Assessing Officer on 22/04/2014 along with copy of computation of income filed u/s. 139, Acknowledgement of filing Return of Income, Annual Accounts for year ended 31.03.2009 and Tax Audit Report for AY 09-10. The Assessing Officer was informed to treat the original return of income filed u/s. 139 as return filed in response to Notice u/s.148. The case was discussed and the Order u/s. 143(3) r.w.s 147 of the Act was issued on 25/03/2015 wherein following additions were made: Issue Amount (in Rs)
12.5% addition on alleged 6,70,531/- bogus purchases
Total 6,70,53V-
4.1.2 However, the assessee filed an appeal before the Hon'ble CIT(A) on 24.04.2015 against the order issued by the Assessing Officer in regards to 12.5% disallowance against the bogus purchases made by the assessee for the year under consideration. Further, before the assessee could represent before the appellate proceedings, the Id. Assessing officer passed a rectification order u/s 154 dated 6.04.2016. In aforesaid order issued u/s 154, the Id. Assessing Officer further substituted the addition of 12.50% to 15% disallowance in the nature of depreciation on the fixed assets. The provisions of section 154 of the Act applies only where there is a mistake apparent from record and in no way constitutes any change in the opinion of the Id. Assessing Officer at a later stage. In other words, once the basis/foundation of addition is made in the original assessment order then the same basis/foundation cannot be altered under the garb of provisions of section 154 of the Act. In the present case, the Id. Assessing Officer had earlier made an assessment of the profit element of 12.50% on the alleged fixed assets in the original assessment order whereas in the order passed u/s 154, the Id. Assessing Officer completely changed his stand to disallowance depending on such fixed assets which clearly indicates the change in opinion of the Id. Assessing Ofiicer in making the addition.
4.1.3 In view of the aforesaid, the order under Section 154 of the Income Tax Act, 1961, passed by the A. O. and which is in dispute under appeal does not survive for this issue. The appeal of the appellant is allowed.”
After hearing the Ld. D.R. and perusing the order of Ld. CIT(A), we find that Ld. CIT(A) has quashed the rectification order dated 6.4.2016 passed under section 154 of the Act by the 4 M/s. Bravia Interior Infrastructure Pvt. Ltd. AO on the ground that on the date of rectification the appeal of the assessee filed against the order of the AO u/s 143(3) r.w.s. 147 of the Act was pending wherein the addition of bogus purchases was challenged. Therefore the AO has exceeded his jurisdiction u/s 154 of the Act. The Ld. CIT(A) quashed this order by holding that the AO has no power to rectify the order which is sub-judice before the Ld. CIT(A). Therefore, we do not find any infirmity in the order of Ld. CIT(A) as the order passed under section 154 of the Act is without valid jurisdiction and AO has obviously exceeded the jurisdiction. Accordingly, ground No.2 raised by the Revenue is dismissed.
Since we have upheld the order of ld CIT(A) whereby the ld CIT(A) has quashed the rectification order passed by the AO under section 154 of the Act. Therefore other grounds need not be adjudicated.
In the result, the appeal of the Revenue is dismissed.
Order pronounced in the open court on 23.06.2021.