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Facts
The appellant's assessment for AY 2017-18 was initially completed. Subsequently, the AO issued a notice under Section 154 proposing to add Rs. 2,76,000/- as rent payable, which the appellant claimed was from inherited property and not a revenue receipt. Despite the appellant's objection, the AO proceeded to make the addition via an order under Section 154. The CIT(A) dismissed the appellant's appeal against this Section 154 order without proper consideration.
Held
The Tribunal held that the AO lacked jurisdiction to make the addition of rent payable under Section 154, as there was no material on record to suggest the amount called for addition, and it did not constitute a 'mistake apparent from record.' Therefore, the order passed by the AO under Section 154 was quashed.
Key Issues
Whether the Assessing Officer had the jurisdiction to make an addition of rent payable under Section 154 of the Income Tax Act, and whether such an addition qualified as a 'mistake apparent from record' for rectification.
Sections Cited
154
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Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM
O R D E R This appeal filed by the assessee is directed against the order of the National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 08.08.2024 for Assessment Year (AY) 2017-18.
Brief facts of the case are that the appellant is an individual engaged in the business of dealing in cement, iron & steel and roofing material in the name and style of M/s. Vijay Steels. The return of income for AY 2017-18 was filed on 27.10.2017 declaring total income Rs.7,13,040/0-. Against the said return of income, the assessment was completed by the Assessing Officer (AO) vide order dated 22.08.2019 at
Subsequently the AO issued notice u/s. 154 of the Act on 16.07.2021 proposing to make addition of rent payable at Rs. 2,76,000/- credited to the capital account of the appellant. In reply to the said notice, the appellant submitted that the said sum represents the rent payable to grandmother of the appellant as the properties were inherited by him and the rent was payable on account of inheritance of properties from grandmother under will and said sum does not represent revenue receipt. However, the AO disagreeing with the submission, proceeded with passing of the order u/s. 154 of the Act vide order dated 02.08.2021 making addition of Rs. 2,76,000/-.
Being aggrieved by the rectification order, appeal was filed before the CIT(A), who vide the impugned order dismissed the appeal by passing a cryptic order without adverting to the ground of appeal and the statement of facts and written submissions of the appellant which were extrcted by him from page Nos. 1 to 7 of the order.
Being aggrieved, the appellant is in appeal before the Tribunal in the present appeal.
When the appeal was called on nobody appeared on behalf of the assessee despite due service of notice of hearing. Therefore, I proceeded to dispose of the appeal after hearing the learned Sr. DR.
On perusal of the impugned order passed by the AO u/s. 154 of the Act, it would be clear that the AO sought to make addition of rent Sinuj Vijayan payable of Rs. 2,76,000/- credited to the capital account of the appellant in the proceedings u/s. 154 of the Act. There is no material on record to suggest that the amount of rent payable calls for addition. I do not find any mistake apparent from record which is being capable of being rectified u/s. 154 of the Act. Therefore, the AO ought not have exercised jurisdiction u/s. 154 of the Act. Accordingly the order passed u/s. 154 of the Act is hereby quashed.
In the result, the appeal filed by the assessee stands allowed.
Order pronounced in the open court on 9th April, 2025.