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Income Tax Appellate Tribunal, ‘C’ BENCH, CHENNAI
Before: SHRI A.MOHAN ALANKAMONY & SHRI DUVVURU RL REDDY
आदेश / O R D E R
Per A. Mohan Alankamony, AM:-
This appeal by the assessee is directed against the order passed by the learned Commissioner of Income Tax (Appeals)-8,
Chennai dated 21.01.2016 in for the assessment year 2006-07 passed U/s.250(6) r.w.s. 154 of the Act.
The assessee has several grounds in its appeal, however the crux of the issue is that the Ld.CIT(A) has erred in upholding the order passed by the Ld.AO U/s. 154 of the Act, wherein the sales tax expenditure of Rs.12,37,934/- was disallowed invoking Section 43B of the Act.
The brief facts of the case is that the assessee is a private limited company, who had filed its return of income and the assessment was completed U/s.143(3) of the Act r.w.s. 263 of the Act on 31.03.2013. Thereafter, it was noticed by the Ld.AO that the assessee had not paid the sales tax expenditure of Rs.12,37,934/- claimed in the return of income as deduction within the time limit specified under the Act and thereby violating the provisions of Section 43B of the Act. Therefore Ld.AO opined that disallowance of the sales tax not remitted in the government treasury with in the due date of filing of the return of income as deduction is an omission on the part of the Ld.A.O while completing the assessment proceedings U/s.143(3) of the Act pursuant to correction U/s.263 of the Act and therefore issued notice U/s.154 of the Act for rectifying the apparent mistake.
Thereafter the Ld.AO reworked the tax payable by disallowing the amount of Rs.12,37,934/- U/s.43B of the Act and pass orders U/s.154 of the Act.
On appeal, the Ld.CIT(A) confirmed the order of the Ld.AO because he was of the view that the Ld.AO had only rectified the mistake apparent on record U/s.154 of the Act based on the audit report. The relevant portion of the order is extracted herein below for reference:-
“The Assessing Officer rectified the assessment based on the comments given in Audit Report submitted by the appellant at the time of filing of the return of income. The relevant part of the Audit Report is as follows: ----------------------------------------- ----------------------------------------- ----------------------------------------- ------------------------------------------
The Auditor clearly mentions that Sales Tax amount of Rs.12,37,934/- was a provision for sales tax demand and thereby meaning that this amount was still payable at the time of filing of the return of income by the appellant. In the appellant's own case for the A.Y. 2001-02 a rectification order dated 15.02.2005 was passed by the Assessing Officer and the relevant part of that order is as under:
As regards, the disallowance made u/ s. 43B, the disallowance of Rs. 83,07,613/ - was made in the assessment order for the reason of non payment of outstanding sale tax liability. The assessee has now furnished the details of payment made with evidences for the same to the extent of Rs. 79, 1 7,666/ - and details of sales tax - TDS made upto 31.03.2001 to the extent of Rs. 7,62,370/ -. The assessee's claim is verified and the disallowance made u/ s. 43B is withdrawn.
Thus, the Assessing Officer allowed the tax payment u/s. 43B after the appellant produced details of payments made with evidences. In the present case, the appellant has not furnished any such evidence moreover the passing of the order u/s. 154 is being objected to in the grounds of appeal. The appellant's objection to the order u/s. 154, under consideration in this appeal, has no basis since it has been a mistake apparent from record and in a similar instance the appellant had accepted the rectification order for the A.Y. 2001-02 when the issue was decided in its favour. The appellant cannot approbate and reprobate depending upon whether an issue is decided in its favour or not. Secondly, the appellant contention that no opportunity of being heard was given before passing of the order u/s. 154 is also baseless since the Assessing Officer clearly mentions that a notice u/s. 154 dated 26.04.2013 was served on the appellant providing an opportunity of being heard and in response the appellant filed a reply dated 07.05.2013 before the Assessing Officer.
In View of the above, the grounds taken by the appellant challenging the jurisdiction of the Assessing Officer in rectifying the assessment made u/s. 143(3) r.w.s. 263 have no basis and are therefore dismissed.”
Before us the Ld.AR submitted that the Ld.AO had virtually reopened the assessment and after scrutinizing the issue once again which was already considered at the time of assessment earlier, recalculated the disallowance on the pretext of rectifying the mistake apparent on record. However, the act committed by the Ld.AO was not rectifying the mistake apparent on record, but reexamining the issue once again and thereby modifying the assessment made earlier. He further argued stating that the entire issue was debatable and it cannot be termed as mistake apparent on record which is required to be rectifiable U/s.154 of the Act. The Ld.DR on the other hand relied on the orders of the Revenue authorities and requested for sustaining the same.
We have heard the rival submissions and carefully perused the materials available on record. From the facts of the case, it is apparent that in an issue which was considered and decided by the Ld.AO at the time of assessment, the audit team found certain defects and the same was pointed out. When such defects are pointed out, the Ld.AO ought to have reopened the assessment and examined the income that had escaped tax by invoking the provisions of Section 147 & 148 of the Act. Instead, he had taken shelter U/s.154 of the Act, and in the guise of rectifying the mistake apparent on record recomputed and made disallowance by invoking Section 43B of the Act. This act of the Ld.AO does lack jurisdiction and it is against the provision of the Act. Therefore, we hereby annul the order made by the Ld.AO and accordingly the order of the Ld.CIT(A) will also not survive.
In the result, appeal of the assessee is allowed.
Order pronounced on the 19th June, 2017 at Chennai.