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Income Tax Appellate Tribunal, ‘’ SMC” BENCH, AHMEDABAD
Before: SHRI WASEEM AHMED
आदेश/O R D E R
PER WASEEM AHMED, ACCOUNTANT MEMBER:
The captioned appeal has been filed at the instance of the Assessee against the order of the Learned Commissioner of Income Tax (Appeals)-8, Ahmedabad, dated 18/09/2019 arising in the matter of assessment order passed under s. 154 of the Income Tax Act, 1961 (here-in-after referred to as "the Act") relevant to the Assessment Year 2011-12.
The only issue raised by the assesse is that the Ld. CIT(A), erred in confirming the order of the AO by rejecting the application filed by the assessee u/s 154 of the Act for the rectification of the order.
The facts in brief are that the assesse in the present case is a private limited company and engaged in the business of restaurant, investment and franchise of restaurant business. The assessee in the year under consideration filed its return of income declaring an income of Rs. 1,34,53,180/- which was subsequently revised at Rs. 1,50,09,800 only. Subsequently the case of the assessee was selected under scrutiny and the assessment was framed by the AO at Rs. 39,18,148/- vide order dated 20/03/2014. As per the AO, the income declared by the assessee cannot be assessed at lower amount in pursuance to the CBDT Circular No. 549 dated 31/10/1981. Thus, the AO finally assessed the income at Rs. 1,50,09,800.00 only i.e. the income declared in the revised return of income.
Aggrieved by the order of the AO, the assessee filed a rectification application wherein it was contended that the Board Circular issued by the CBDT bearing no. 549 dated 31/10/1981 is ultra-virus in pursuance to the judgment of Jurisdictional High Court in the case of Gujarat Gas Limited vs. CIT reported in 245 ITR 84. Thus, it was submitted that the income should be assessed at an income of Rs. 39,18,148/- only. However, the AO rejected the contention of the assessee by observing that there is no apparent mistake in the Assessment Order which can be rectified under the provision of section 154 of the Act.
5. Being aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before us who confirmed the order of the AO.
6. Being aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before us.
The Ld. AR before us filed a paper book running from pages 1 to 38 and contended that the there is an apparent mistake in the order passed by the AO u/s 154 of the Act, as the AO has not followed Jurisdictional High Court order in the case of Gujarat Gas (Supra). The Ld. AR relied upon the judgment of Hon’ble High Court of Gujarat in the case of CIT v/s Milton Laminates Ltd. reported in 37 taxmann.com 249
On the other hand, the Ld. DR vehemently supported the order of the authorities below.
We have heard the rival contentions of both the parties and perused the materials available on record. From the preceding discussion, we note that the AO in his assessment order has clearly determined the income at 39,18,148/- only, but it was assessed at Rs. 1,50,09,800/- after making reference to the CBDT Circular as discussed above. At the outset, we note that the Hon’ble Gujarat High Court in the case of Gujarat Gas Limited Vs. JCIT reported in 245 ITR 84 wherein it was held as under:
It was not a case where the facts were to be appreciated and, therefore, the assessment order as it was to be considered. In the instant case, the decision was not of the Assessing Officer but of the CBDT in view of circular and the fact referred in the order that in view of the circular assessed income shall not be less than the returned income made it clear that the decision was not of the Assessing Officer. Thus, the Assessing Officer's order was vitiated on account of instructions. This could not be cured even by the appellate authority. As the Assessing Officer himself had not exercised the jurisdiction vested in him, the order was vitiated and was required to be quashed and set aside and if the Court was not entertaining the petition, it would fail in discharge of its duties.
In view of the above, we hold that the assessee cannot be denied the benefit of its claim in pursuance to the Principle laid down by the Hon’ble Gujarat High Court in the case cited as above.
It is also pertinent to note that non-adherence of the Jurisdictional High Court Judgment is a mistake apparent from the record in view of the judgment of Hon’ble Gujarat High Court in the case of CIT Vs Milton Laminates Limited reported in 37 taxmnn.com 249 wherein it was held as under.
Had this been the only basis of the Tribunal's order, we would have considered the matter further. However, in the present case, the central issue is whether the assessee having filed a return of income and disclosed certain income in such return, while giving effect to the Commissioner of Income-tax (Appeals) order in favour of the assessee, computation of assessed income can go below the returned income or not. In this regard, the decision of our court in the case of Gujarat Gas Co. Ltd. (supra) is amply clear. A Division Bench of this court was of the opinion that the Central Board of Direct Taxes's Circular which provided that the assessed income of an assessee should not be below the returned income, was invalid.
In the case of National Thermal Power Co. Ltd. v. CIT [1998] 229 ITR 383 also, the apex court considering the powers of the Appellate Commissioner as well as the Tribunal to permit additional grounds observed as under (page 386) : "In the case of Jute Corporation of India Ltd. v. CIT [1991] 187 ITR 688, this court, while dealing with the powers of the Appellate Assistant Commissioner, observed that an appellate authority has all the powers which the original authority may have in deciding the question before it subject to the restrictions or limitations, if any, prescribed by the statutory provisions. In the absence of any statutory provision, the appellate authority is vested with all the plenary powers which the subordinate authority may have in the matter. There is no good reason to justify curtailment of the power of the Appellate Assistant Commissioner in entertaining an additional ground raised
by the assessee in seeking modification of the order of the assessment passed by the Income-tax Officer. This court further observed that there may be several factors justifying the raising of a new plea in an appeal and each case has to be considered on its own facts. The Appellate Assistant Commissioner must be satisfied that the ground raised was bona fide and the same could not have been raised earlier for goods reasons. The Appellate Assistant Commissioner should exercise his discretion in permitting or not permitting the assessee to raise an additional ground in accordance with law and reason. The same observations would apply to appeals before the Tribunal also."
7. In view of the above, we do not find any reason to interfere with the Tribunal's ultimate conclusion in allowing the assessee's appeal. Though some of the observations may not appeal to us, nevertheless, for the reasons somewhat different from those recorded by the Tribunal we come to the same conclusion.
From the above, there remain no ambiguity that there was a mistake apparent from the record which could have been rectified under section 154 of the Act. Hence, the ground of the appeal of the assessee is allowed.
In the result, the appeal of the assessee is allowed.
Order pronounced in the Court on 21/10/2022 at Ahmedabad.