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Facts
The assessee failed to claim an interest deduction of Rs. 31,17,879/- under section 24(b) for construction of a warehouse in the original return, which was processed under section 143(1). Subsequently, the assessee filed a rectification application under section 154 to claim this deduction. The AO rejected the application, asserting that it was an error on the assessee's part and not a mistake apparent from the record, a decision upheld by the CIT(A).
Held
The Tribunal affirmed the decisions of the lower authorities, holding that since no details or evidence regarding the interest payment were available in the original return, the AO was not obligated to pass a rectification order under section 154. It concluded that the failure to claim the deduction initially did not constitute a 'mistake apparent from record'.
Key Issues
Whether the omission to claim an interest deduction in the original income tax return can be rectified as a 'mistake apparent from record' under Section 154 of the Income Tax Act.
Sections Cited
Section 24(b), Section 143(1), Section 154
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Income Tax Appellate Tribunal, DELHI BENCH “B”, NEW DELHI
Before: SHRI SHAMIM YAHYA, & SHRI VIMAL KUMAR
ORDER
PER SHAMIM YAHYA, AM :
The Assessee has filed the instant Appeal against the Order of the Ld. CIT(Appeal)/NFAC, Delhi dated 21.12.2021, relating to assessment year 2014-15 on the following grounds:- 1. That ld. CIT(A) has erred in confirming the action of AO in not allowing the claim with respect to interest on construction of house property amounting to Rs. 31,17,879/- without considering the submissions of assessee and wrongly observing that it was an inadvertent mistake on the part of appellant and not mistake apparent from records and without observing the fact that all the details w.r.t. said claim were made available before the AO.
2. That Ld. CIT(A) ought to have allowed the appellant’s petition filed u/s. 154 as the mistake was in the nature of apparent and glaring and the claim made by the assessee is allowable as per law and further CIT(A) has the co-terminus powers as that of AO as envisaged under the law and if the claim is allowable to the assessee in law, the same should have been allowed.
2. The brief facts of the case are that the assessee filed his return of income on 30.9.2014 showing a total income of Rs. 73,39,220/-. In his return, he omitted to claim the benefit of interest paid u/s. 24(b) of Rs. 31,17,879/- on account of repayment of loan received for construction of warehouse while computing his income under the head “Income from House Property”. This return of income was processed u/s. 143(1) of the Act. The assessee filed rectification application to rectify the order u/s. 143(1) for allowing his claim of interest paid u/s 24(b) of the Act amounting to Rs. 31,17,879/-. However, the AO held that it is not a mistake apparent from record but it is a mistake on the part of the assessee and reject the said rectification application u/s. 154 of the Act vide order dated 17.12.2018. Against the aforesaid action of the AO, Assessee appeal before the Ld. CIT(A).
3. Upon assessee’s appeal, Ld. CIT(A) noted the submissions of the assessee and held as under:- “…The submissions as well as the contentions of the appellant have been duly considered. It is noted that for carrying out rectification u/s 154, there has to be a mistake apparent from record. In other words, a look at the record must show that there has been an error which needs to be rectified. Reference to documents outside the record is impermissible. This view is as per the decision of the Hon’ble Supreme Court in the case of Keshri 2 | P a g e Metal (P) Ltd. (237 ITR 165). In the instant case, there was no information/details available in the original return filed which suggested that the appellant has made Interest payment of Rs. 31,17,879/- on the loan received from Union Bank of India for construction of warehouse on which he received lease rental income. There is no denying that the appellant furnished the necessary evidence in support of the said interest payment in course of the rectification proceedings before the AO. However, the fact remains that when the return was processed by the AO, no details/evidence in respect of said interest payment were available from the return filed. The Hon’ble Supreme Court in the case of Anchor Pressings (P) Ltd. (161 ITR 159) has held that if clear data is not available, it is not obligatory on the part of the AO to pass rectification order u/s.
154. Therefore, the action of the AO of rejecting the request of the appellant for rectification, cannot be faulted…”
4. Against the order of the Ld. CIT(A), assessee is in appeal before us.
We have heard both the parties and perused the records. At the time of hearing, Ld. AR for the assessee submitted that though assessee has not raised any ground of appeal before lower authorities, but the Appellate Tribunal can entertain the ground. To support his contention, he relied upon the decision of the Hon’ble Delhi High Court in the case of CIT vs. Jai Parabolic Springs ltd. in of 2007 dated 7.4.2008 [2008] 172 Taxman 258 (Delhi). Per contra, Ld. DR submitted that this decision is not in context of section 154 of the Act and there is no mistake apparent from record in the instant case, which can be cured u/s. 154 of the Act. Hence, he submitted that orders of the authorities below be affirmed.
6. Upon careful consideration, we find ourselves in agreement with the contention of the Ld. DR that failure to raise the ground cannot said to be a mistake apparent from record. There is no doubt that the assessee furnished the necessary evidence in support of the said interest payment in course of the rectification proceedings before the AO. However, the fact remains that when
3 | P a g e the return was processed by the AO, no details/evidence in respect of said interest payment were available from the return filed. We further find that it is a settled law that if clear data is not available, it is not obligatory on the part of the AO to pass rectification order u/s.
Therefore, the action of the AO of rejecting the request of the assessee for rectification, cannot be faulted, hence, Ld. CIT(A) rightly affirmed the aforesaid action of the AO, which in our considered view, need not be interfered. Therefore, we affirm the action of the lower authorities below and not adjudicating the grounds of appeal
of the assessee, in view of the aforesaid factual matrix of the instant case we thus, dismiss the appeal of the assessee.
7. In the result, the Assessee’s appeal is dismissed. Order pronounced on 04/12/2024. Sd/- Sd/- (VIMAL KUMAR) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER SRBHATNAGAR Copy forwarded to:-
1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR, ITAT Assistant Registrar 4 | P a g e