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Income Tax Appellate Tribunal, MUMBAI BENCH “B”, MUMBAI
Before: SHRI B.R.BASKARAN & SHRI PAWAN SINGH
O R D E R
PER PAWAN SINGH, JM:
The present appeal is filed by the assessee challenging the validity of order passed u/s. 154 dated 20.07.2007 passed by CIT(A)-32, Mumbai wherein the order passed by CIT(A) dated 31.03.2010 was rectified on the application of Assessing Officer (AO). In the application, the AO contended that assessment against the assessee was completed u/s 143(3) of the Act determining the income of the assessee at Rs. 1,87,87,420/- . The assessee along with his brother Shri Bharat R. Patel received amount from builder which was considered as income from other sources by the AO after looking into nature of the receipt treated the same as income from other sources. Against the order of AO, the assessee preferred an appeal and the CIT(A) in its order dated 31.03.2010 on the appeal by assessee, the CIT(A) granted relied to the assessee holding that the amount received by assessee against sale of TDR are not chargeable to capital gain tax.
On the application of AO for rectification of order, the CIT(A) issued a notice u/s. 154 dated 09.07.2010 along with the CIT(A) letter dated 14.07.2010 requiring the assessee to make his submission. In the application the AO made the submission that in the case of assessee, it was held that receipts are not to be charged as income from other sources, as the same is capital receipt and the amount received by the assessee against TDR/FSI right are not chargeable to tax. However, in the case of brother of assessee the same was treated as capital gain receipt.
The assessee objected about the rectification of order dated 31.03.2010 and argued that there was no error apparent from the record and argued that assessee objected to the initiation of rectification proceeding and submitted that there was no mistake in the order passed by the CIT(A) in the case of assessee and the mistake, if any, was in the order passed in the case of Mr. Bharat R. Patel (brother of assessee), the assessee’s representative further argued that relief claimed in the ground of appeal
in case of both the brothers were different. The relief claimed by assessee was that amount receipt cannot be taxed as income from other sources and further the same is a capital asset not chargeable to tax in view of the fact that there was no cost of acquisition of TDR entitlements whereas in case of Bharat R. Patel in his grounds of appeal claimed the relief to the extent that amount received cannot be taxed as income from other sources but should be charged to tax as capital gain, in the order passed by the CIT(A) as categorically agreed to the relief claimed by the assessee and passed the order on merit of the case and it cannot be said that there is any mistake apparent in the case of assessee.
4. The Ld. DR for revenue supported the order passed by CIT(A).
5. Before analysing the impugned order, let us examine the scope of section 154 of the Act which empower the revenue authority to make rectification in its order, the Hon’ble Apex Court in Land Mark case of ITO vs. Volkart Brothers [(1971) 82 ITR 50 (SC)] explained the scope of section. 154. “....A mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long drawn process of reasoning on points on which there may conceivably be two opinions. As seen earlier, the High Court of Bombay opined that the original assessments were in accordance with law though in our opinion the High Court was not justified in going into that question.......an error which has to be established by a long-drawn process of reasoning on points where there may conceivably be two opinions cannot be said to be an error apparent on the face of the record. A decision on debatable point of law is not a mistake apparent from the record.......”
6. Further, the Hon’ble Apex Court in Master Construction Co. (P.) Ltd. v. State of Orissa [(1966) 17 STC 360, 363], expressed the view that an error which is apparent on the fact of the record should be one which is not an error which depends for its discovery on elaborate arguments on questions of fact or law.
Further, the Hon’ble Apex Court in Satynarayan Laxminarayan Hedge vs. Mallikarjun Bhavanappa Thirumala, AIR 1960 SC 137, held that “A mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long drawn process of reasoning on points on which there may be conceivably two opinions. A decision on a debatable point of law is not a mistake apparent from the record”.
Let us, examine the mistake what it comprises? – “Mistake” is an ordinary word, but in taxation law, it has a special signification. It is not an arithmetical or clerical error alone that comes within its purview. It comprehends errors which, after a judicious probe into the record from which it is supposed to emanate, are discerned. The word “mistake” is inherently indefinite in scope, as what may be a mistake for one may not be one for another. It is mostly subjective and the dividing line in border areas is thin and indiscernible.
The plain reading of word (apparent) is that it must be something which appears to be so ex-facie and is incapable of argument or debate.
The Ld. CIT(A) while making rectification in its order dated 31.03.2010 on the petition filed by the AO dated 01.07.2010 has observed that in the case of Bharat R. Patel which was also decided on the same day have treated the amount received as capital gain. The CIT(A) after comparing and discussing both the orders passed by him on the same day rectified the order passed in the case of assessee and treated the amount received by assessee as a capital receipt and held to be chargeable under the capital gain tax.
We have perused the order of CIT(A) in case of Bharat R. Patel and of assessee. Shri Bharat R. Patel who had claimed the sale of development right as a LTCG which was denied to him by the AO and treated the same as income from other sources, however, the same was allowed by CIT(A) in its order dated 30.03.2010. The assessee claimed the amount received against TDR/FSI as a capital receipt which is not chargeable to capital tax. However, the AO treated the same as income from other sources by concluding that it is not a transfer falling within the provision of section 45 of I.T. Act.
Though the assessee and his brother received the amount from builder but since beginning both the brother set up their different claim in respect of amount received under TDR agreement for the purpose of assessment. The case of assessee was considered by CIT(A) on which conceivably two opinion are available. Since Ld.
4 Shri Kirit R. Patel CIT(A) has taken one of the possible views, his order cannot said to suffer from mistake apparent from record. 13. The CIT(A) while exercising the power u/s. 154 of the Act are ignored the principle and basic scope of rectification of order as discussed in paras 5 to 8 supra. Hence, the order dated 20.07.2010 passed by CIT(A) is not sustainable under the scrutiny of law and the same is set-aside. In the result, appeal filed by the assessee is allowed.
Order pronounced in the open court on this 10th February, 2016.