Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, MUMBAI BENCHES “D”, MUMBAI
Before: Shri Shamim Yahya & Shri Amarjit Singhand
आदेश / O R D E R Per Shamim Yahya (Accountant Member) This appeal by assessee is directed against order of the Ld. CIT(A)-47, Mumbai, dated 08/02/2018 and pertains to Assessment Year 2005-06. The ground of appeal raised by the assessee is as under:-
2. The grounds of appeal read as under:-
ITA No.2125Mum/2018 2 M/s Rolta Ltd.
The Ld. CIT(Appeals) has erred in law and on the facts of the case in sustaining the order of the assessing officer rejecting the application made by the assessee u/s. 154 of the Income Tax Act.
The Ld. CIT(Appeals) has erred in law and on the facts of the case in sustaining the order of the assessing officer disallowing expenses u/s 14A r.w. Rule 8D under normal provisions and u/s 115JB. 3. The brief, facts of the case are as under:-
The appellant company is engaged in the business of providing information technology related services to various companies. The appellant vide letter dated 29.04.2015 submitted the copy of petition for rectification filed by them in its case for AY 2005-06. The appellant vide this letter stated that the order passed by the Assessing Officer is bad in law since the year for which the assessment order passed is already before the Income Tax Settlement Commission (ITSC) and ITSC has passed the order for AYs 1999-2000 to 200506, vide order dated 19.02.2008. The appellant vide its above rectification order has prayed to cancel the assessment order passed u/s. 143(3) r.w.s. 153A of the Act. The AO during the course of rectification proceedings found that the section 154 does empower Assessing Officer to rectify the mistake which is apparent from the records and cancellation of order is not a mistake apparent from the records. The Assessing Officer thus rejected the application for rectifications filed by the appellant vide his order u/s. 154 of the I T Act, 11.05.2015.
Against above order, assessee appealed before the Ld.
CIT(A). Ld. CIT(A) noted the assessee’s submissions as under:-
The facts of the case are that the assessee has filed original return of income on 03-05-2005. Subsequently, pursuant to the action u/s. 132, the ITA No.2125Mum/2018 3 M/s Rolta Ltd. assessee made a fresh compliance in accordance with proceedings u/s. 153A. The assessing officer has completed the assessment on Nil income (copy enclosed) (Page 10 to 15) During the course of the assessment the assessing officer has disallowed Rs. 38,076191- u/s. 14A of the Act being proportionate disallowance of interest and 0.5% of the average investments. The assessee did not file an appeal against the order. Subsequently, the assessee moved applications dated 09-042013, 16-07-2013 u/s. 154 for rectification of order u/s. 143(3) r.w.s. 153A to cancel the assessment since the same was bad in law. The contention of the assessee was an order u/s. 2451)(4) dated 19-02-2008 was passed 'by the Hon'ble Income Tax Settlement Commission, Additional Bench, Mumbai for the assessment year 1999-2000 to 2005-2006, (Page No. 16 to 29) the said order was conclusive and final u/s.245-I and any proceedings in respect of the impugned years was statutorily prohibited to be reopened under the Income Tax Act or under any other law. The assessing officer has rejected the application against which the assessee has filed an appeal. We have to submit that the order passed by the assessing officer is bad in law and requires to be reversed. Section 245-1 reads as under:
"Every order of settlement passed under sub-section (4) of section 245D shall be conclusive as to the matters stated therein and no matter covered by such order shall, save as otherwise provided in this Chapter, be reopened in any proceeding under this Act or under, Act or under any other law for the time being in force." Thus, as per the plain reading of the above section any matter before the Settlement Commission cannot be reopened under any proceedings under this Act.
The issue regarding disallowance u/s. 14A was before the Settlement Commission. In para 7.1 of the order of the Settlement Commission (Page 18). Further, the ITA No.2125Mum/2018 4 M/s Rolta Ltd.
Hon'ble Settlement Commission had decided the issue in favour of the assessee in para 14.4 of their order (Page26). The same is reproduced as under: "Regarding Rolta Ltd, the department has raised several issues in Rule-9 report which have been explained by the AR in detail. Regarding the treatment of income, disallowances of expenses claimed u/s. 14A including interest u/s. 57 (iii) and expenses of manpower cost, travelling, legal & professional fees etc., we find no substance in the contention of the department that these should be disallowed as major income is from dividend on shares as it is quite evident that the Company is carrying on the business of development of software and providing IT related services and is thus primarily engaged in business activities."
Further, we wish to draw your attention to the decision of the Allahabad High Court in the case of Smt. Neeru Agarwal vs. Union of India and others quoted in 330 ITR 422 wherein it has held as under: Para 29 "In view of the above, we are of the considered opinion that after passing of the order dated March 31, 2008 by the Settlement Commission, no power vests in the assessing authority or any other authority to issue the impugned notice in respect of the period and income covered under the order of the Settlement Commission. In case of fraud or misrepresentation of facts, the remedy is to approach the Settlement Commission. The Settlement Commission, by paragraph 7 of its order, has not and could not have empowered the income-tax authorities top frame another assessment order, while settling the undisclosed income of the petitioner for the period covered by its order, in respect of investment in bond etc". In view of the above Allahabad High Court decision,
ITA No.2125Mum/2018 5 M/s Rolta Ltd. the assessing officer had no power to make a fresh assessment. Further your goodself's attention is drawn to the decision of the Hon'ble Supreme Court in the case of Karam Chand Thappar vs. State of U.P.(1976) 4 SCC 257 wherein the Supreme Court observed "apparent error" means "patent mistake, error which one can point out without elaborate argument." Error means a mistake in judgement /assessment in a process or proceedings; some wrong decision taken inadvertently; unintentional mistake; something incorrectly done through ignorance or inadvertence; mistake occurred from an accidental slip, deviation from standard or course of right or accuracy, unintentionally; to be wrong about; to think or understand wrongly; an omission made not be design, but by mistake. (See Cauvery Traders vs. Hornor Resources (International) Co. Ltd., (2011) 10SCC 420.) An apparent error of fact or law can be rectified by an officer. If the mistake of law has to be established by construing the words of a section to find its proper meaning, then such an error cannot normally be a rectifiable error under Section 36. If two views are possible, then obviously the error will not be an error apparent from the record. However, if the Supreme Court has construed the meaning of a section, then any decision to the contrary given by any other authority must be held to be erroneous and such error must be treated as an error apparent on the record. (See Poothundu Plantations (P) Ltd. Vs. Agricultural Income Tax Officer, (1996) 9SCC 499) Error means that must be such as would be apparent on mere looking of the record without requiring any long-drawn process of reasoning. An error apparent on the face of record must be such an error which must strike one on mere looking at the record and would not require any long-drawn process of reasoning on points where there may conceivably be ITA No.2125Mum/2018 6 M/s Rolta Ltd. two opinions. (See MeeraBhanja vs. Nirmala Kumar Choudhury, (1955) 1 SCC 170)
The expression "any mistake apparent from the record" occurring in section 154(1) of the Act has a wider content than the expression "error apparent on the face of the record" occurring in Order XL VII, rule I of the Code of Civil Procedure. In ITO vs. Bombay Dyeing & Mfg. Co. Ltd. (1958) 34 ITR 143 (SC) the Hon'ble Supreme Court observed that the former covers all mistakes discoverable from a perusal of the whole evidence in the case, or from an omission to apply certain provision of the Act to the case, or mistake due to an overlooking of certain aspects of the case, or a mistake arising on account of a wrong construction of any provisions of the Act. Reference is invited to the decision of the Hon'ble Bombay High Court in the case of Grasim Industries Ltd. vs. CIT 317 ITR 241 "Rectification of mistakes-Only obvious mistake can be rectified- Calculation of benefits under section 15C- Computaiton of debts on basis of balance sheet- Computation was a debatable question- Computation could not be made under section 154-Indian Income Tax (Computation of capital of industrial undertakings) Rules, 1949,r. 3- Indian Income Tax Act, 1922, s. 15C-Income Tax Act, 1961, s.154." We have to further submit that a similar issue came up before your goodself in the case of M/s. Aditya Investment & Finance Corporation for the A. Y. 2005- 06 (Page No.30-34) and your goodself has held that A.
Was not justified in rejecting the application".
ITA No.2125Mum/2018 7 M/s Rolta Ltd.
Thereafter the Ld. CIT(A) referred to several case laws. He proceeded to hold that issue was debatable and hence concluded as under:-
“A decision on a debatable point of law is not a mistake apparent from record. The power of rectification u/s 154 of the Act cannot be understood to review, revise or re-consider the substantial decisions, taken after due consideration of law and facts. In a nut-shell, mistake apparent from record, u/s 154 of the Act must be self evident, obvious and patent mistake of facts or law, which is floating on the surface of the record and not the mistake which can be discovered or discerned or established by way of discussions, debate and investigation into the issue.”
Against the above order, assessee is in appeal before us.
We have carefully considered submission perused the records. Upon careful consideration, we note that the assessment in this case was reopened under 153A of the Act.
It is also undisputed fact that earlier the settlement commission has passed an order for Assessment Year 2005-
6. In the said order, it was held that there would be no disallowance u/s 14A of the Act. The said order was conclusive & final. Section 245-I, which clearly states as under:-
“Every order of settlement passed under sub-section (4) of section 245D shall be conclusive as to the matters stated therein and no matter covered by such order shall, save as otherwise provided in this Chapter, be reopened in any proceeding under this Act or under any other law for the time being in force.”
ITA No.2125Mum/2018 8 M/s Rolta Ltd.
Section 153A which has a non-obstante clause doesn’t mention section 245-I. The section states as under:- “153A. (1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall— (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years 96[and for the relevant assessment year or years] referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139; (b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made 96[and for the relevant assessment year or years] : Thus, reopening u/s 153A in case of assessee covered u/s 245-I is not provided in the Act. In these circumstances, we fail to understand as to what it debatable in coming to conclusion that Assessing Officer’s action in reopening u/s 153A is illegal and not in accordance law. The Assessing Officer initiates a palpable illegal action and if the assessee doesn’t dispute it by way of an appeal the same can by no stretch of imagination be said to be taking the order of Assessing Officer out of the ambit of a mistake apparent from record being an ex-facie illegal order.
Hence, in our considered opinion, as per the mandate of ITA No.2125Mum/2018 9 M/s Rolta Ltd.
the Act, once when the issue has been decided by the settlement commission, it is not open to the Assessing Officer to reopen the assessment and consider the issue again. The Assessing Officer’s action is not even justified by the exception in the non-obstante clause as mentioned in section 153A of the Act. Hence, in our considered opinion, the mistake in the order of the Assessing Officer is apparent and palpable which leads to a conclusion that the Assessing Officer’s order is ex- facie legal. Hence in our considered opinion, Ld. CIT(A) has clearly erred in dismissing the assessee’s appeal by holding that it is upon a debatable issue. Accordingly, since, the Assessing Officer was not fortified to make an addition, qua section 14A as the matter stood already concluded by IT Settlement Commission order, this assessment order deserved to be cancelled/quashed. Accordingly, we set-aside the order of Ld. CIT(A) & decide the issue in favour of the assessee.